PEI draft regulations could ban credit scoring | Canadian Insurance

PEI draft regulations could ban credit scoring

Government accepting feedback on issue until January 11, 2013

The government of Prince Edward Island has developed draft regulations that, if passed, would ban the use of credit scoring.

A government press release states that insurance companies have increasingly been using personal financial information, including credit scores, income, and level of debt, when determining whether to offer insurance to a consumer and, if so, at what rate.

Read: Credit scoring catch-up

A consultation paper on the use of personal financial information by insurers states the PEI “government has received complaints that this practice has resulted in some individuals either not being offered insurance, or only being offered insurance at unaffordable rates.”

The paper also states that this practice is not currently widespread, but if it is not banned it might become so.

Read: CCIR offers no solution to credit scoring issue

“That in turn may lead to significant availability and affordability issues within the province, with respect to these insurance products,” says the paper.

The government is currently welcoming feedback on whether to ban credit scoring or not.

“In essence, what we are looking at is the question of whether someone’s personal financial information should be used in determining their eligibility for insurance coverage,” said Environment, Labour and Justice Minister Janice Sherry, in a press release.

“Along with that is the question of whether personal financial information should be used by insurers in determining the rates clients will pay if accepted.”

Submissions will be accepted until January 11, 2013.