B.C. brokers maintain call for ban on credit scoring; alternative would be to regulate based on U.S. model

The Insurance Brokers Association of B.C. (IBABC) maintained its support of a ban against credit scoring in a submission to the Canadian Council of Insurance Regulators (CCIR).
But if credit scoring is to be allowed, the regulatory framework should follow that of the National Conference of Insurance Legislators (NCOIL) in the United States, IBABC’s submission says.
NCOIL first adopted its Model Act Regarding Use of Credit Information in Personal Insurance in 2002. It adjusted its extensive document in July 2009 to address credit-scoring exemptions for “extraordinary life circumstances.”
In its submission, IBABC references a section of the CCIR’s June 2011 issues paper on credit scoring, in which the CCIR notes it is up to each provincial insurance regulator to determine its tolerance for credit scoring.
“We are disappointed that no broader regulatory market conduct [framework] relating to CBIS [credit-based insurance scoring] is being contemplated,” IBABC’s submission says. “We submit that its connection with blanket consents and other market conduct regulations in the Bank Act and PIPEDA [privacy legislation] makes this a national issue.”
IBABC says Canadian legislation should incorporate some of the limitations and exemptions to credit scoring applied in some United States, such as those for extraordinary life events: deaths, divorces, catastrophic illnesses, etc.
The Insurance Bureau of Canada (IBC)’s voluntary code of conduct on credit scoring does address the issue of “extraordinary life circumstances,” although in contrast NCOIL’s document lists seven or eight specific examples.
“If NCOIL-type legislation were enacted, insurers would be forced to make better disclosure about the risk factors and credit data used to establish premiums,” IBABC says in its submission to the CCIR.