Personal Finance

Not a good deal - Intact Insurance asks for credit check

  • Last Updated:
  • Nov 25th, 2013 7:10 am
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May 26, 2010
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ksgill wrote:
Nov 22nd, 2013 3:27 pm
The guy is paying cash every year, how does knowing his credit make things less (or more) optimal for the insurance company? They have no right to his credit information.
You are (provincial legislation dependant) correct.

That is why they are asking for it, in exchange for a discount on the insurance. It is hardly a break of privacy, when you have to consent for the credit check! Really not sure what the big deal is here - I'd understand a bit more if they were refusing policy renewals to anyone who did not submit to a credit check, but here they are merely offering a discount for those who allow them to run a credit pull.

I'm really missing where the issue is here? They obviously have some kind of modelling information that projects a higher risk of insurance fraud when a policy holder has a poor credit history (or are planning on illegally selling all your data as Poutinesauce worries about...).
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Jul 28, 2012
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mattieuk wrote:
Nov 22nd, 2013 6:55 pm
You are (provincial legislation dependant) correct.

That is why they are asking for it, in exchange for a discount on the insurance. It is hardly a break of privacy, when you have to consent for the credit check!
Absolutely. If anyone is against credit checks or telematic devices on cars, they have every right, as a consumer, to say no, to shop around and look for a product that doesn't use that. You can't expect a product to please everyone.
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Mark77 wrote:
Nov 22nd, 2013 3:32 pm
Well, there is said to be a correlation between overall credit-worthiness, and for instance, the risk of insurance losses. People who are less responsible with credit, for instance, probably will be less responsible in taking care of their RE-related affairs. As an extreme example, for instance, in the USA, houses in "negative equity" were more likely to experience "spontaneous combustion" than houses that were fully paid off. Many insurers, for this very reason, offer discounts on premiums to people without mortgages.

Its the same reason why, for instance, professional engineers can obtain rock-bottom prices on auto insurance -- engineers, as a group, are said to be substantially less risky than the general population.
What I find amusing is that using the same logic and applying to let's say races and police arrests is usually referred to as discrimination. It's a dangerous path to imply that a person has a certain characteristic based on his belonging to a specific group.

And as someone pointed before, correlation is not causation.
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Thanh wrote:
Nov 22nd, 2013 9:03 pm
What I find amusing is that using the same logic and applying to let's say races and police arrests is usually referred to as discrimination. It's a dangerous path to imply that a person has a certain characteristic based on his belonging to a specific group.

And as someone pointed before, correlation is not causation.
This says it all: credit-card-fraud-experiences-1401849/#post17691444
----------------------------Licensed Credit Bureau member, S1, FI Automotive, CCP forums most banned = x 13 and counting, guess who that is?... stomped to the curb once again
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Mark77 wrote:
Nov 22nd, 2013 3:32 pm
Well, there is said to be a correlation between overall credit-worthiness, and for instance, the risk of insurance losses. People who are less responsible with credit, for instance, probably will be less responsible in taking care of their RE-related affairs. As an extreme example, for instance, in the USA, houses in "negative equity" were more likely to experience "spontaneous combustion" than houses that were fully paid off. Many insurers, for this very reason, offer discounts on premiums to people without mortgages.

Its the same reason why, for instance, professional engineers can obtain rock-bottom prices on auto insurance -- engineers, as a group, are said to be substantially less risky than the general population.
Bad example, there is no privacy in being an engineer.
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Pointseeker wrote:
Nov 23rd, 2013 12:08 am
Bad example, there is no privacy in being and engineer.
The point was, it is to members of particular groups that may be more trustworthy or less prone to insurable risks, to self-identify. Just like the OP was given the opportunity to self-identify his credit record.

By definition, insurance underwriting is discrimination. That's how it works. Riskier risks get hit with higher premiums than less risky risks.
TodayHello wrote:
Oct 16th, 2012 9:06 pm
...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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Mark77 wrote:
Nov 22nd, 2013 2:21 pm
Here's the problem -- an insurer that uses all available data sources can optimize the premiums to the specific amount of risk (in their modelling) that exists for a given piece of insurance. The less information the insurer has available to them, the less optimal the underwriting will be.
The breed of my sister's dog is also information that is not available to them - doesn't mean it's relevant. OP's original question was more related to "why" the credit rating is in anyway relevant to getting insurance coverage where he is not borrowing money and is pre-paying his premiums. If the insurance is for some kind of business failure - then sure it may be relevant. But how can it possibly be relevant for something like life insurance - unless there is some wonky study that says people with bad credit ratings are somehow more susceptible to disability or death.
Mark77 wrote:
Nov 22nd, 2013 2:21 pm
Now, you've been given the option of allowing them access to your credit record as part of the underwriting process. The implication of not providing such access is that you are effectively placed in a pool of people who have chosen not to provide access. These people, as insurance risks, probably are riskier. So its not just that you won't be obtaining the 5% discount offered up-front, but your rates are more likely to rise in the future as they increasingly put you in a risk category associated with higher incidences of losses.
Definitely not riskier - at least not in my case. I would argue it's a sign of risk averseness. I always try to minimize how much people know about me - especially financial data. If they can't justify why they need the info, assuming I have other options, I never give out the info. I am very protective of my information simply b/c I want to minimize fraud, etc. Being proactive re: stuff like that == more responsibility == not as risky.

Obviously, can't extend to everyone, but I would imagine it's true for many people.
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ksgill wrote:
Nov 22nd, 2013 3:27 pm
The guy is paying cash every year, how does knowing his credit make things less (or more) optimal for the insurance company? They have no right to his credit information.
They are not assessing the risk of not paying, they are assessing the risk of generating a claim. Apparently there is a correlation between poor credit history and claims. Personally I don't like it, but the problem is that if one does it then they'll all do it.
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Thanh wrote:
Nov 22nd, 2013 9:03 pm
What I find amusing is that using the same logic and applying to let's say races and police arrests is usually referred to as discrimination. It's a dangerous path to imply that a person has a certain characteristic based on his belonging to a specific group.
Canada's Human Rights (and the various provincial acts) detail what cannot be discriminated against. It's hardly a dangerous path with that legislation in place.

Insurance is all about generalizing people based on certain criteria. That's why many in big cities pay more than those in rural communities; it's more likely for someone in a big city to be involved in a collision OR more likely the sum of their collisions will be greater.
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ksgill wrote:
Nov 22nd, 2013 4:18 pm
A paid off house is not part of your credit report and neither is your profession. Lastly, correlation is not causation.
Actually, this isn't true. A credit report will show your work history, address, if you have a mortgage, and if it is paid in full.
An insurance company can use this info to improve their underwriting. They can also use it to market you other products as well. They should just offer to pay you for a credit bureau hit, not a discount.
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tophomeloans wrote:
Nov 24th, 2013 9:52 am
Actually, this isn't true. A credit report will show your work history, address, if you have a mortgage, and if it is paid in full.
An insurance company can use this info to improve their underwriting. They can also use it to market you other products as well. They should just offer to pay you for a credit bureau hit, not a discount.
True about work history but it still doesn't tell them what you do. For example, it may or may not contain one's position with the company. Also, if I rent a place, I won't have a mortgage listed on my credit report either. Does that mean I own a paid off house?

Having said all that, one can always refuse the credit check if you aren't comfortable with it.
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Offering a discount to those giving consent to access credit info is the exact same thing as penalizing those who don't consent with higher rates. You can choose to not give consent, but it will cost you.

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