Canadian Underwriter

IBC posts insurers’ voluntary Code of Conduct related to credit scoring

February 9, 2010   by Canadian Underwriter

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The Insurance Bureau of Canada (IBC) has released a voluntary Code of Conduct related to insurers’ use of credit-based insurance scores.
The code applies to personal insurance only, including auto, homeowner, motorcycle, mobile homes and non-commercial dwelling fire insurance policies. The code does not apply to commercial insurance.
The new code contains 10 general guidelines governing insurers’ use of credit-based insurance scores for the purpose of quoting, underwriting and rating. They include:
•    complying with federal and provincial laws;
•    ensuring that credit information used is current and accurate;
•    gathering prior consent to collect and use credit information;
•    keeping customers’ credit information confidential and private;
•    not using credit as a sole variable;
•    using credit information legitimately, meaning insurance companies should  seek assurance from suppliers of credit information that insurance-related credit inquiries do not adversely affect the consumer’s credit score;
•    handling customer disputes in compliance with federal and provincial laws;
•    ensuring fairness in taking adverse action as a result of credit information (“Upon request of the consumer, the insurer must disclose to the consumer any adverse action taken as a result of credit information.”);
•    not refusing to provide an insurance quote, nor terminating or refusing to renew a policy, on the basis that a consumer has refused to give consent to the use of a credit score; and
•    granting exemptions for extraordinary life circumstances. For example, if credit information is adversely affected by listed tragedies such as the death of a spouse, child or parent, the insurer would grant a reasonable exemption for credit-based underwriting rules.
The full Code can be found at:

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