They want to What????

Will insurance companies check my credit score when I apply for Insurance?
If so, can I stop them from doing so?  
Does this affect my premium? 


The CBC article (link below) states that 55% of companies use credit scores.  Almost half of the companies that do use credit scores do so without your knowledge. 

NOTE - in Alberta and Saskatchewan auto insurance policies do not cost more regardless of your credit score.  In Alberta there is legislation to prevent it under the auto insurance act.  In Saskatchewan the practice is not being used by Saskatchewan Government Insurance.  Alberta went through a dramatic change in legislation six years ago.   At that time certain people were finding it extremely difficult to find insurance at a reasonable price.  Insurance companies choose to withdraw from certain markets (those under age 25 as an example) leaving only a hand full of companies that would offer coverage, and they did so at premiums that were largely unreachable by many of the younger drivers especially if they lived in a Metro area.   This limited access to a number of people who could least afford it.   So rules were changed so that all insurance companies that sell insurance in Alberta must provide insurance to everyone who wants it.    

This debate has come front and center as many consumers do not like the fact that credit scores are being accessed by insurance companies without permission.   The truth is personal information sharing is not something new for the insurance industry.  A data bank of information about your insurance history already exists and is used by insurance companies every time you apply for or renew your insurance.  When you sign an application for insurance you give permission to the insurance company to check personal information.   If you don't sign the application you will not get insurance from that company.  

So the only way in which you can know for sure is to ask your broker and insist on a concise reply as to whether your insurance company will be accessing your credit score. 

What can you do about it if you don't like it?  You can refuse to insure with a company that uses credit scores.  There are companies that don't use them.   If enough people do so, it will get the message across.  You may make your voice heard by your MLA.  If enough people do so, legislation to prevent it from being used in the determination of your insurance premium could be a reality. 

My Opinion on the Topic

What people really want is easy access to insurance at a fair stable price.   What I desire is, a person can come to me for insurance and I can offer it at a reasonable price without hassle.

People get angry when the price of anything doubles overnight and that anger gets directed at people who have the least to say about it.

The problem that I see developing is companies will withdraw from this market and not offer insurance to those with a low credit score, much like they did when they withdrew from the underage auto market.  Once one company does so, access is limited.  Company A's withdrawal causes Company B to withdraw as they don't want to get saddled with a disproportionate number of people with bad credit scores.  Soon most companies withdraw from the market causing limited access to those that can least afford it.  Prices become less and less predictable for everyone.  This is one of those factors that insurance companies just have to except as part of the risk of doing business.  This risk when spread over all of the insurance companies equally is more than manageable since a low percentage of Canadians actually have low credit scores.

Read more: http://www.cbc.ca/consumer/story/2010/04/08/consumer-insurance-credit-score.html#ixzz10MPeYIo3

UPDATE - November 9, 2010


Ontario is in the process of banning the use of credit scores for home insurers.  Auto insurers were banned from doing so in 2005.  (Not sure why governments would ban it in the auto insurance sector and not in the home insurance sector at the same time)  I back this legislation, too bad we aren't doing it in Ab and SK.

News Article - Ontario Brokers Support Bill to ban credit Scoring