Auto Insurance

Lawsuit alleges insurer used credit scores to lowball accident claims

By: Jessica Mach on May 15, 2018

A Toronto man has launched a class action lawsuit against his auto insurer, The Personal Insurance Company, for accessing his credit score after he filed an accident claim.

The lawsuit said that insurers do not need to see their customer’s credit information to assess and resolve claims. It further alleged that if The Personal Insurance Company, a subsidiary of Desjardins General Insurance Group Inc., asked for that information, the company must have been using it for improper purposes.

In November 2012, Kalevi Haikola was rear-ended by a Cadillac in Toronto’s east end. Haikola, now in his seventies and a retired bank loans manager, suffered whiplash and a jaw injury from the accident.

Several days after the accident, an adjuster at the insurance company “aggressively” asked him for access to his credit score. Haikola told the National Post last year that he reluctantly agreed because he was still “shaken up” by the collision. He received $6,000 from the insurer for health-related expenses.

But, Haikola remained suspicious of the request, and eventually complained to the Canada’s Privacy Commissioner, a government body that aims to protect privacy rights. In March 2017, the Privacy Commissioner ruled that The Personal Insurance Company had no defensible reason to access its customers’ credit scores.

The company argued that it needed credit scores to help weed out fraudulent claims, but the Privacy Commissioner did not agree that credit scores would help with this task.

In February, the company told the Privacy Commissioner that it had stopped collecting credit information in its claims process. But after Haikola was rear-ended again in March 2018, the company asked again for access to his credit score — in addition to even more invasive financial information, according to the Waddell Phillips Professional Corporation, the law firm representing Haikola.

Haikola is determined to challenge the practice because he believes it allows for discrimination — particularly towards the poor.

Insurance companies can easily figure out which customers are having financial trouble when they have access to their customers’ credit scores. They can then use that information to offer a claims payout that is much lower than what the customer is actually entitled to.

Haikola is convinced that the practice of lowballing low-income insurance customers is rampant.

His lawsuit aims to ensure that insurance customers “will not be given differential treatment based upon their personal financial circumstances.” It also claims that people involved in auto collisions are particularly vulnerable.

“It’s discrimination against the poor,” he said in 2017. “If you were struggling, and for some reason you became unemployed and your unemployment benefits are about to run out, you’d say … ‘I’ll take anything.’”