Canadian Underwriter

Privacy class-action lawsuit against insurer over credit scores could settle

August 9, 2019   by Greg Meckbach

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A privacy class-action lawsuit against The Personal Insurance Company could be settled for about $2.2 million, the plaintiffs’ law firm said Friday.

In 2018, Waddell Phillips Professional Corporation filed the lawsuit in Federal Court on behalf of auto claimants with The Personal who had their credit score information accessed by the insurer.

The Personal had been checking some clients’ credit scores when investigating auto claims, if the clients consented, but eventually stopped doing this, said Joe Daly, a spokesperson for parent company Desjardins General Insurance Group Inc., on Friday. The Personal denies any liability or wrongdoing. “We were disputing [the lawsuit] but we decided it made sense to come to an agreement to resolve it,” Daly told Canadian Underwriter.

The settlement still requires court approval but has been agreed upon by the parties. A hearing is scheduled Oct. 7 at Federal Court in Toronto.

Kalevi Haikola made an auto accident benefits claim with The Personal in 2012. Haikola was listed as the representative plaintiff in the class action. The statement of claim alleges that Haikola was asked to give consent for The Personal to get a credit score on FICO.

The statement of claim further alleges that Haikola made a complaint with the federal privacy commissioner.

In a 2017 report on an investigation into a complaint against an unnamed auto insurer, the Office of the Privacy Commissioner noted it has previously found assessing risk and calculating premiums” for home insurance “is an appropriate purpose for collecting credit scores.”

That insurer was later identified as The Personal. For accident benefits, the privacy commissioner noted that the Personal agreed to stop using credit scores.

“We admit we checked credit scores as a way to triage claims as they came in to sort of get a first hint at whether fraud could have been involved,” Daly said Friday, adding claimants were asked for their consent.

“If there was a bad credit score we might have taken a second look at it. It was a way of speeding up the process. We don’t feel we did anything wrong,” said Daly.

Waddell Phillips said Friday there are about 8,525 class members, so if all of them get paid then each class member would get about $150.

The law firm says it plans to ask the court to approve a payment of $500,000 in legal fees, not including disbursements and taxes, plus a stipend to Haikola for the work he did to pursue the lawsuit.

Plaintiffs who allege someone is violating Canada’s Personal Information Protection and Electronic Documents Act (PIPEDA) can take the alleged violator to Federal Court.

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2 Comments » for Privacy class-action lawsuit against insurer over credit scores could settle
  1. Randy says:

    When an insurance company asks you for your credit score and says it’s only to determine what additional discounts you’re going to be entitled to……you’ve been lied to. Here is a perfect example how companies pry into your business. Credit scores and devices monitoring your driving. Come on, people, use your heads. Do NOT insure with such outfits. If you had to accelerate past a large tractor trailer because it was kicking rocks at your car on the shoulder you’ll be accused of street racing and have your claim denied. If you became ill and lost your job and as a consequence you were late paying a few bills…..well, you sound like a crook to these insurance companies and they could take that position.
    When I worked for such a company they were cagey about answering my questions regarding this. If they aren’t willing to explain to their own employees then something is seriously amiss here and wrong.
    These are red flags to stay away from these companies.

  2. Thomas says:

    Since people with low credit scores can still have legitimate need for Accident Benefits coverage this adds the potential to deny coverage suspecting fraud due to past credit history; yeah, this is wrong. An accident Benefit claim needs to be adjusted and assessed on the basis of that claim’s own merits. This has the potential to cause undue pain and suffering which can lead into bigger issues. It’s good that they stopped doing it quite some time ago but it’s disheartening to see that they don’t recognize anything wrong with this.

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