Credit scoring, higher home insurance premiums on the radar in New Brunswick

Although 2009 has been “a year of stability” in the auto insurance market for consumers in New Brunswick, “lurking in the background” are such issues as credit scoring, the rise in home insurance premiums and the province’s minor injury cap, the province’s Consumer Advocate for Insurance says in its 2009 annual report.
The Consumer Advocate observed an overall rate reduction of 1% for all companies writing private passenger automobile insurance in the province in 2009.
“It was the fifth consecutive year of rate reductions for private passenger automobiles, bringing the average rate at $751,” the report says.
The advocate credited the new territories system for “working well.” It also noted the positive effect of a new law that prevents insurers from using a lapse of coverage for less than two years for underwriting or rate classification purposes.
But while the auto market may be stable, there are emerging issues, the annual report says. One is credit scoring.
“The use of credit scoring by insurance companies as an underwriting tool for personal property is not a new practice but it’s becoming more and more prevalent, especially in the house insurance market,” the Consumer Advocate reported. “We have serious concerns with this practice and we feel very strongly that it is not in the best interest of consumers seeking to purchase or renew their insurance….
“As matter of social policy it should not be allowed in the property and casualty industry market.”
In addition, the home insurance market is showing signs of “instability,” the report says.
“One of the biggest issues is the fact that home insurance premiums are on the rise,” the report says. “This is due to increased flood claims and increased rebuilding costs.
“Under-insurance is another issue that has caused some required adjustments in coverage and thus resulting in adjustments in premium levels.
“There appears to be some signs of instability in the market and hopefully this will not result in issues of availability and affordability as we experienced in auto insurance, not too long ago.”
The issue of the province’s minor auto injury cap is ongoing.
“In New Brunswick the issue is not settled yet and it remains to be seen if this will occur in the near future, either through legislation or through court judgments,” the Consumer Advocate said of the province’s minor injury cap.