IBC proposes its voluntary code on credit scoring as the basis for future regulatory framework

Insurance Bureau of Canada (IBC) is holding up its voluntary Code of Conduct for Insurers’ Use of Credit Information as the basis for some kind of regulatory framework on credit scoring.
Such a regulatory framework would be an alternative to banning the use of credit scoring outright.
IBC made the suggestion in a submission responding to an issues paper issued by the Canadian Council of Insurance Regulators (CCIR) in June 2011. The CCIR’s paper calls for industry and consumer feedback on seven potential risks to consumers related to insurers’ use of credit scoring.
In its submission, IBC says its voluntary code of conduct addresses each of the seven potential risks to consumers of credit scoring outlined in the CCIR issues paper. It also notes companies representing 85% of the personal lines market share of IBC and Canadian Association of Direct Response Insurers (CADRI) members have made a formal commitment to adhere to the code.
“The code could serve as a framework for oversight of company practices, as an alternative to a total ban on the use of credit information,” IBC’s submission says. “To this end, several options are available for consideration by provincial governments.”
These options include:
•Making companies’ compliance with the code a legal requirement.
•Continuing the code’s current [voluntary] status, requiring proof of companies’ compliance through auditing, in the event of a complaint, failing which administrative action could be taken.
•Conducting periodic risk-based governance-style surveys to assess industry compliance.