Harmonized policy on the use of credit information in underwriting will not happen: CCIR

Posted on Jan 09, 2012

The Canadian Council of Insurance Regulators (CCIR) is currently reviewing the results of a consultation it conducted last year on credit scoring, but it doesn't appear likely that a harmonized approach to credit scoring will be the outcome.
"Frankly, there will be no harmonized policy on use of credit information in underwriting," CCIR chairwoman Danielle Boulet said in a Dec. 13 speech at a Canadian Association of Financial Institutions in Insurance (CAFII) board of directors meeting.
"Some jurisdictions feel it is a valid tool to underwrite and price insurance, but other jurisdictions have banned its use already and still others are moving to do so.
"Ultimately, this is a government decision dependent upon a combination of political and socio-economic conditions within a jurisdiction, and a jurisdiction's level of tolerance in relation to any potential risk identified."
The CCIR published an issues paper related to the use of credit scoring for the purpose of underwriting insurance in June 2011. It posted the responses of stakeholders to its issue paper in September.
Most recently, New Brunswick's department of justice posted draft regulations for public consultation in December that would ban credit scoring in residential property and auto insurance lines. 
Newfoundland and Labrador officially banned the use of credit scores in underwriting home or personal property insurance on May 13. A prohibition against using credit scores for private automobile insurance came into effect on June 1, 2011.