IBC.Code

Question 1

Identify 4 IBC’s guidelines on the use of credit information.

Answer 1

1. Comply with local regulation
2. Credit info should be up-to-date & accurate
3. Require informed consent
4. Cannot deny / cancel policy based only on credit
5. Can’t refuse to quote if insured doesn't give credit score consent
6. PRIVACY: take reasonable steps to address privacy concerns

Question 2

Discuss requirements for a credit-score consent request for personal insurance

Answer 2

• Authorization from the customer to access the credit information
• What info will be collected
• How info will be used
• State consent period (dates)
• Notify customer that they have a right to withdraw consent (but note consequences of withdrawal such as higher than optimal rate)

Question 3

Propose a process to satisfy both customer and IBC’s Code of Conduct regarding use of credit score.

Answer 3

• Submit written statement explaining the event (impact of identify theft on credit score)
• Insurer may accept explanation and offer quote with adjusted credit score
• Informed customer consent is still required
• If customer doesn’t consent, insurer cannot reject (must provide quote without using credit score)

Question 4

Identify 4 considerations when using aggregate credit scores by postal code for pricing.

Answer 4

1. Insurer needs way to handle low-credibility postal codes
2. Comply with all local laws & regulations
3. Credit into should be up-to-date & accurate
4. Require informed/deemed consent
5. Take reasonable steps to address privacy concerns

Question 5

What is the primary argument in favor of insurers using credit scores for pricing?

Answer 5

Loss predictive: Credit scores are statistically significant because individuals with higher scores typically have lower claim costs