IBAO’s CEO Randy Carroll was featured on CBC’s News investigative consumer show, Marketplace to discuss the continuing debate in regards to the use of credit scoring for measuring home insurance premiums earlier this month.
The show’s host, Wendy Mesley, spoke with several frustrated Canadian consumers who saw incredible increases in their home insurance once their insurance company began using credit scoring as a means to measure their risk.
Watch the show here:
http://www.cbc.ca/marketplace/2010/rate_hike_outrage/main.html
The basic principal being applied here is that many insurance companies are now using consumer credit scores as a tool to measure financial health. They say that if you suffer from a lower score, you are statistically more likely to make a future claim.
What does this mean for those of us paying home insurance premiums? It signifies that regardless if you have never made a claim in the past or have never missed a payment to your insurance company, some insurance companies will still measure your rate on your overall credit score.
As you may have guessed, this process has unfortunately been leaving those who are most financially in need paying more than those who are more financially stable.
Now in regards to the insurance companies saying they have statistical facts to back up their choices, Randy Carroll added “It doesn’t mean it’s right and it doesn’t mean it is a tool we should be using. Insurance needs to be about affordability and availability; it doesn’t need to be about a social or lifestyle rating.”
Shockingly, Marketplace claims that 87% of Canadians have no idea that their credit scores are being used to measure their rates. A fact that IBAO agrees with, “some players in the industry have taken it upon themselves to take advantage of consumers consent that was given at the time of application, that could have been 15 years ago, could’ve been last year. It’s still wrong.”
To view the show in its entirety, visit: http://www.cbc.ca/marketplace/2010/rate_hike_outrage/main.html