CCIR Report On Credit Scoring Is Inconclusive

The Canadian Council of Insurance Regulators (CCIR) Credit Scoring Working Group released its Findings Report: Use of Credit Scores By Insurers in late November 2012.   Unfortunately, the report has little new to offer despite spending a considerable amount of time looking at the issue.

The working was established in 2009 to gather the facts surrounding credit‐based insurance scores and how they are used in today’s regulatory environment.  Public consultation was undertaken in 2011.  That process turned out to be a disappointment as only 15 submissions were received and all from either the insurance sector or credit bureaus.

No feedback was received from consumers. That is not surprising because insurance consumers are not really organized. There are consumer groups, such as the Consumers Association of Canada, but their scope of issues are so broad and their resources so stretched that it is unlikely that you would ever get them to respond to these types of consultation.  That is why organizations tend to rely on marketing research firms to reach out to consumers.

The report itself highlights what we already know about this issue, insurers and brokers are on different sides of the debate on the use of credit scores.  The report acknowledges the IBC Code of Conduct for Insurers’ Use of Credit Information. However, it notes that not all insurers are members of IBC and not even all IBC members have “signed on” to the Code, which makes it difficult to consider this code an industry standard.

As well, since few regulators have authority (outside of automobile insurance) to reject underwriting criteria, the decisions on which, if any, actions to take on the use of credit scoring for underwriting rest with the policymakers in the various provincial and territorial governments.

So we are essentially in the same spot we were in 2009.