Insurance companies demanding credit checks?

[sxtasy]

Just started a new policy and the insurance company is demanding a credit check or my premium goes up by $500! I am even paying for my entire policy in advance for the year. My credit is fine, but I've never had to do this before and I don't like the idea out of principle. Apparently this has just recently been implemented by all companies. Just wondering what you guys think of this.

[codetrap]

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[revelations]

More and more industries will be using a credit score to assess the character reliability of an applicant in the future. Thats how I chose my tenants for eg.

Its not rocket science that those with a low score, year after year, tend to be in an increased "risk" category for private insurers who want to make a profit.

I just hope that they somehow average the score, say over a decade. Divorce, medical needs, disasters, etc can cause short term setbacks.

[Zhao Kan]

http://www.finance.alberta.ca/public...lletin0408.pdf

SUPERINTENDENT OF INSURANCE
INTERPRETATION BULLETIN # 04-08

In accordance with section 792.1 of the Insurance Act I have interpreted, by
means of this Bulletin that requiring a person to permit access to their credit report or
score in order to receive a policy premiums quote is an unfair practice. Unfair practices
are prohibited by section 509 (1) (c) of the Insurance Act. This section states:
“No insurer, insurance agent or adjuster may engage in any unfair,
coercive or deceptive act or practice.”
The purpose of this Bulletin is to advise insurance companies licensed in Alberta
that they may not request that a prospective client provide them with permission to
obtain that individual’s credit report or score as a pre-condition for obtaining a policy
premium quote.
Failure to comply with section 509(1) (c) will result in an investigation and
possible regulatory action which includes an administrative penalty of up to $25,000 for
each contravention.
This Bulletin is effective immediately. Any questions regarding this Bulletin may
be forwarded to Arthur Hagan, Deputy Superintendent of Insurance at (780) 422-1592.

so it is illegal for them to do a credit check while you are a prospective buyer of their services but:

Currently, Alberta does not have a specific insurance regulation regarding the
use of a person’s credit score with respect to the purchase of insurance. However, with
respect to automobile insurance, the “consent” on the approved automobile insurance
application form was amended in 2006. The following sentence is now included in the
“consent” provision: “If I apply for a premium payment plan, I authorize you to obtain
and use my credit report.” I interpret this to mean that unless the applicant applies for a
premium payment plan, without a specific authorization obtained outside of the
insurance application process, automobile insurers are not authorized to obtain or use
an applicant’s credit report or score regardless of whether the application is for
compulsory or optional automobile insurance coverages.

So they should already have your permission if it is that type of plan, and if it’s an old policy or a plan they aren't allowed to, well, maybe they don’t have your permission, and maybe they can’t do anything about forcing you to do that, and are actually violating Alberta law. Big companies do do that, and laws vary from province to province. For example, running credit checks for determining insurance rates in Quebec is completely legal, but in Ontario it is very against the law, as is asking how long you’ve lived in your current home, held your current job, etc (which are common practices in Alberta).

You can contact the superintendent of insurance to see if you are being unfairly treated. There is fair trading act laws and insurance laws that govern unfair practices.

[email protected]

[sxtasy]

Thanks for the info. I should clarify this is for auto insurance and I have 16 years claim free insured history. I am a low risk client. Your second link, codetrap, says this is banned in Alberta? I wonder if I should be a pain in the ass about it, or if I should just suck it up and let them check away? I don't won't to piss off our resident insurance broker too much though

[Zero102]

What insurance company are you dealing with?

[sxtasy]

Economical Mutual Insurance

[Crazyjoker77]

I just finished calling around to 18 different companies getting quotes and I found most of them do want to perform a credit check.

I think they get away with it in the wording. Its not that there penalizing you for not consenting but they wont get the discount... In the end its the exact same thing but its all semantics.


That being said they are only soft credit checks and won't affect your actual score.


One thing I did find a little bit shady is that a few companies are now going back 9 years for claims history instead of the usual 5 that its always been. This is the first time I've ever even heard of this...

[guessboi]

Originally posted by Crazyjoker77
I just finished calling around to 18 different companies getting quotes and I found most of them do want to perform a credit check.

I think they get away with it in the wording. Its not that there penalizing you for not consenting but they wont get the discount... In the end its the exact same thing but its all semantics.


That being said they are only soft credit checks and won't affect your actual score.


One thing I did find a little bit shady is that a few companies are now going back 9 years for claims history instead of the usual 5 that its always been. This is the first time I've ever even heard of this...

Aviva checks last 9 years for their 9* rating.
Most other companies look at last 6 years.

All said and done - it is a soft credit check = no impact on your score.

[sxtasy]

I already dislike insurance companies and I've never had to do a credit check with any insurance company before. It just pisses me off that they want to make customers jump through more hoops, especially when I am extending them a credit by paying a year in advance.

I have dealt with Icbc for five years and surprisingly found them much easier to deal with while being more affordable.

[gwill]

This whole notion of soft credit checks make me laugh. Say you decide to get Telus, get auto insurance, go grab a new cell phone, get Epcor in your new home.. All these soft credit checks will matter. I don't blame the op for not being comfortable on this being a necessity by the companies. They survived before without doing it so why start it now?

Why don't we have geico in canada? It would make getting quotes so much easier.

[sabad66]

Originally posted by sxtasy
especially when I am extending them a credit by paying a year in advance.

Maybe it's not about them getting their money every month... it's probably more to judge your risk profile. My guess is some Chief Actuary out there did some research and came to the conclusion that people with shitty credit are more likely to get into a car accident so that is why they need it to determine your rates.

[sabad66]

Originally posted by gwill
This whole notion of soft credit checks make me laugh. Say you decide to get Telus, get auto insurance, go grab a new cell phone, get Epcor in your new home.. All these soft credit checks will matter.

No, they don't matter if it's truly a soft check. The problem is that some companies (or dumbass reps who will tell you anything to get you to sign up) will tell you they are just doing a soft check but end up doing a hard check. That's when it will affect you. For example here:

http://calgary.ctvnews.ca/can-credit...ting-1.1841013

[sxtasy]

Originally posted by sabad66

Maybe it's not about them getting their money every month... it's probably more to judge your risk profile. My guess is some Chief Actuary out there did some research and came to the conclusion that people with shitty credit are more likely to get into a car accident so that is why they need it to determine your rates.

Yes you are probably right, still seems ridiculous to me though. They don't care that I run studded hankooks in the winter, which I would imagine would have a greater impact on my risk assessment.

[btimbit]

Intact asked me last month for a credit check, but it wasn't required and I simply refused. They didn't press the issue.

On that note, such bullshit that they even ask. I don't give my credit report out to anyone unless it's for a loan. Back when I was renting it was one thing that turned me off most landlords. I'm not buying the damn thing, so I'm not jumping through a million hoops. That said, I completely understand why they do it. Just not for me.