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CCIR seeks public comment on credit scoring

The Council issues paper that details why insurers use credit scoring, and risks to consumers as a result.

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In the Council’s paper, Use of Credit Score by Insurers, CCIR documents an insurers’ use of credit-based insurance scores. It identifies what CCIR sees as consumer risks that can potentially arise from the use of credit scoring in underwriting based on desired regulatory outcomes: that consumers are treated fairly and can make informed decisions, stated a media release. The paper then assesses to what extent these outcomes are already addressed under existing law, which may vary from jurisdiction to jurisdiction.

Specifically, CCIR is seeking the views of consumers and the industry on whether all potential risks described in the paper have been identified, and whether the potential risks identified are already addressed under law, and if so, how.

There are differing views between jurisdictions and between stakeholders regarding the use of credit-based insurance scores, added the release. Some groups have proposed eliminating its use arguing it is not fair to consumers, while others defend its use as a valid actuarial tool to underwrite and price insurance. The paper is neutral and makes it clear that the question of whether or not to ban the use of credit-based insurance scores goes beyond the scope of CCIR’s review. 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, according to CCIR.

To view the paper and find information about commenting, click here.