Saint John, New Brunswick — The New Brunswick Insurance Board continues to approve insurer requests allowing credit scores to determine driver insurance rates, despite criticism that the practice carries discriminatory implications.
Notably, the independent Office of the Attorney General has criticized the practice as unfair, given that the province has the most drivers per capita with poor credit, compared to other provinces across Canada.
Former attorney general Kelly Lamrock said that the use of poor credit to determine auto premiums was comparable with price discrimination by gender and age, saying in an interview with the CBC, “Poverty tends to lead to bad credit.”
“We do not think that you should be making judgments about an individual because that individual happens to be a member of a group that tends to have certain outcomes. You cannot use that as a basis for setting rates.”
Similarly, the Office of the Attorney General (OAG) raised concerns with the insurance board about how credit discrimination allows companies to subvert anti-discrimination laws, potentially targeting groups such as seniors and single people.
“The OAG argues that the inclusion of credit scores in the rating formula may adversely impact those in vulnerable socioeconomic groups as it may lead to increased premiums,” wrote the board in summarizing the government’s legal argument.
New Brunswick’s largest auto insurer, Wawanesa, defended the practice in 2021, saying that credit score reflected an individual’s level of risk-taking, risk tolerance and financial responsibility—bad driving being an example of risk-taking.
“Those policyholders who are likely to generate the highest costs will be charged more than those who are likely to generate lower costs,” said Wawanesa.
“The OAG notes the difficulty in establishing a direct causal relationship between credit score and exposure to automobile insurance losses, it argues that credit score may be a proxy for other restricted rating variables,” wrote the board.
