FSCO follows up on credit scoring bulletin; review isn’t over yet

“Almost all” insurers in Ontario have indicated to the province’s insurance regulator, the Financial Services Commission of Ontario (FSCO), that they understand FSCO’s concerns about credit scoring, expressed in a February 2009 bulletin, and that if they don’t already conform to the practices outlined in the bulletin, they plan to do so in the near future.
“In response to the replies that have been received, FSCO is in the process of following up with insurers that submitted remediation plans with their forms, or identified issues that require further review,” the regulator said in a follow-up bulletin.
In its February 2009 bulletin, FSCO says explicitly about credit scoring: “Insurance companies are not to use criteria prohibited for rating or underwriting purposes (e.g., criteria related to a consumer’s social, personal and/or economic status) to decline to provide quotes, to hinder or delay a consumer’s efforts to obtain insurance coverage or an insurance quote, or as a basis for differential treatment (whether by affiliated insurers or otherwise) of consumers in the quoting, application or renewal process.
“Such practices include, but are not limited to, screening, prioritizing or delaying quotes; segmenting risks within groups of affiliated insurers, whether by back-end systems, scoring models, filters or otherwise; and instructions or suggestions to agents or brokers concerning placement of risks.”
FSCO said it is continuing to “actively review” the credit scoring issue.
“Statements from automobile insurance industry participants that suggest the review is complete, or that FSCO has determined that specific insurance companies are in conformance with the bulletin, are incorrect and should be disregarded,” the regulator says in its Bulletin A-03/09—Automobile Insurance Quoting and Underwriting Practices.
At the end of Bulletin A-03/09, FSCO invites all insurance companies to review its Report on the Five-Year Review of Automobile Insurance “and to pay particular attention to” Recommendation 7.
In Recommendation 7, FSCO asks the province’s Ministry of Finance to “consider prohibiting objectionable quoting practices including delays in providing quotes, requiring written applications for quotes and certain screening techniques.”
The ministry has said on its Web site that it plans to make public its reaction to the report in July.