Ontario auto reforms: Credit scoring and Unfair or Deceptive Acts or Practices
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As part of its measures to protect auto insurance consumers, the Ontario government included a reform to project objectionable quoting practices including the use of credit scoring, delays in providing quotes and other certain screening techniques.
ILSTV asked Barb Sulzenko-Laurie, IBC’s Vice President of Policy about the decision to ban the use of credit history in premium-setting.
Barb Sulzenko-Laurie:
The use of credit information or credit history of an individual for underwriting purposes and pricing purposes in Ontario has been banned for a number of years. Essentially what the government is doing is just imposing a stricter enforcement of the regime. And that’s ok. Many insurers feel that freer access to different types of underwriting criteria will allow them to differentiate high risk people from low risk people. That can result in more appropriate, best pricing for individual policyholders. That’s been a trend that was originally developed in England and has really taken over in the States and was starting to move to Canada as the industry was becoming more and more competitive. It has been the case in Ontario and in Alberta that in the case of auto insurance, insurers have not been allowed to use credit history in the past so they will not be allowed to use it in the future and there is stricter enforcement of that rule.
Another new measure affects affiliated insurers. Barb explains.
Barb Sulzenko-Laurie:
There’s another provision that says that if you have a group of companies that are affiliated with each other and an individual comes to a broker that works for those companies or one of those companies, and wants a quote on price, that the quote has to be provided on the basis of the lowest quote from all of the affiliated companies. So that will probably result in some change in the market structure of the industry and it will probably result in some loss of jobs.
