PC MLAs say government should restrict use of credit scores by auto insurers | CBC News (2024)

Shane Magee · CBC News

· Posted: Feb 16, 2024 3:41 PM EST | Last Updated: February 16

Two former Higgs government cabinet ministers on Friday questioned auto insurance companies using aperson'scredit scorewhen calculating premiums.

Progressive Conservative MLA Dorothy Shephardsays she's "offended"insurance companies can use the information.

"It would put a ton of people at a disadvantage,"Shephardsaidat a legislative committee meeting Friday.Shephard called itan overreach.

"Ithink that, quite frankly, government should do something about it."

Michèle Pelletier, the New Brunswick consumer advocate for insurancewas answering questions from MLAsat the committeemeeting, and heagreed.

Jeff Carr, another former PC cabinet minister, said he's heard from constituents denied coverage because of their credit.

"We're held hostage by insurance companies basically at the end of the day," Carr said.

"If people don't know that you're there to advocate for them, they just don't know. And I think disqualifying somebody from obtaining insurance because of their credit check is just wrong."

Pelletiersaid companies are using the score to offer discounts to drivers on their policies.It's a practicePelletierhas repeatedly argued against at theNew Brunswick Insurance Board, which regulates autoinsurance rates.

Pelletiernoted several provinces, including Ontario, restrict the practice.In New Brunswick, theissue has been debated for more than a decade.

Legislation passed by theformer Shawn Graham Liberal government to ban itsuse wasn't implemented because supporting regulations weren't implemented.Successive governments have eyed the issue without acting.

Pelletier previously said that, despite the lack of a formal ban,insurers for about a decade avoidedusing credit scores.

"There was kind of an understanding they would not use it, but they have asked and, since it was not prohibited, the New Brunswick Insurance Board is permitting it," Pelletier said in 2021.

Pelletier told MLAs Friday that she would welcome a move to add credit scores to the list of factors such as age andmarital status that insurance companies can't consider.

"So I would be more than happy if that would be put in."

CBCNews has requested comment from the province about the committee discussion.

The issue has arisen in a series of insurance board rulings in recent years where insurance companies have argueda person's credit score can predict whether they may make a claim in the future.

The board issued a decision last fall that ruled on a request by Echelon Insurance tooffer discounts ranging from five to 25 per cent, depending on a person's score. The company said more than 92 per cent of its Quebec policyholders had consented to the information being used.

Pelletier, the board noted, had argued it shouldn't be allowed becauseit could negatively impact those who can least afford insurance.Echelon argued it should be allowed because it's a factor used by other companies.

The board approved its use.

'Reasonable' factor, board has ruled

"Faced with evidence of a reasonably strong correlation, the Panel accepts that the use of this variable leads to rates that are reasonable insofar as they align as well as possible with the best estimate of expected loss cost for the coming policy period," the board'sdecision states.

"In the absence of a legislative prohibition, this is a reasonable rating variable."

In another decision released in December, the board allowedAviva General Insurance to use a person's credit score, if the customer consents.

"The voluntary adoption of credit score as a rating variable in New Brunswick has been increasing in the last several years by most insurers," the Aviva decision states. "The Panel accepts that there is an apparent correlation between credit score and auto insurance risk and, in the absence of statutory prohibition, it can be a reasonable and appropriate rating variable."

The decision says the board would continue to review the requests for use of credit scores on a case-by-case basis "to ensure that policyholders are protected against unfair rating practices."

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