November 2, 2010 by Canadian Underwriter
Insurance Brokers Association of Ontario (IBAO) is urging the Ontario government to ban the use of credit scoring to price home and personal property.
IBAO president Bryan Yetman spoke at Queen’s Park as part of the association’s Awareness Day. In his speech, he suggested the correlation between a person’s credit score and his or her likelihood of making a claim is not immediately obvious to consumers.
“Most consumers understand that their proximity to a fire hydrant or the fact that they have a theft alarm can impact their rates,” said Yetman. “They do not, however, understand what their credit score has to do with the likelihood of their home catching fire or being hit by lightning.”
Yetman added that while credit scoring is banned for underwriting auto lines, some consumers ‘bundle’ their insurance policies (purchase their auto and home policies from the same provider), thus allowing an insurer to circumvent existing prohibitions.
“The result is drastically increasing home insurance premiums, as well as the creation of an affordability and availability problem for many of Ontario’s insurance consumers.”