We need the right to know our "Insurance Score"

Disclaimer:  What you read here are my recollections and opinions of events that I experienced with Allstate - and should not be considered statements of fact.  

What do you know about your insurance score?

• Do you know that you have an insurance score?
• Do you know what it is, and how to improve it?
• Do you know how it is calculated, if it is error free, and how to fix it?
• Most importantly, do you know how it affects your home insurance premium?

For many Canadians, the answer is no. Yet, this elusive number significantly impacts what you pay to protect your home. It’s time to bring this secretive score into the light.

Why you should care about your mysterious insurance score?

Unlike products such as milk, computers, or cars, where everyone pays the same price, home insurance works differently.  The price of home insurance does not depend solely on the property being insured but on the person insuring it - risk associated to you.  Insurers assign you an insurance score, a numerical value they use to estimate your risk and likelihood of filing claims.

Despite its influence, the insurance score remains shrouded in secrecy, leaving consumers in the dark about how it’s calculated or how to improve it.  This lack of transparency is a glaring problem in an industry that underpins financial security for millions.

Canadians deserve access to their insurance scores

Home insurance is an essential safeguard against unexpected events, yet the insurance industry, frustratingly, lacks the honesty, fairness, and transparency that Canadians value.  While factors like the size, age, and location of your home are straightforward, others—like your credit score—are less intuitive but just as impactful in the price of your insurance.

Credit scores, often used in calculating insurance scores, can result in dramatically different premiums for homeowners in similar circumstances.  The influence of  credit scores can result in two families, with similar homes in the same area, paying greatly different premiums— with the homeowner with a poor credit score paying much more, or even being denied insurance.  Despite this, most homeowners remain unaware of their insurance score, its calculation, or its accuracy.

This lack of transparency leaves people powerless.  Without knowledge of their score or how to address inaccuracies, consumers have no way to know how to improve the score, nor a process by which to fix errors.  This raises questions about fairness and accuracy.

It is time for the home insurance industry in Canada to follow the transparency standards seen in the credit industry. Here’s why we should have the right to access and understand our insurance scores — vital for fairness and consumer empowerment.

Lessons from credit score disclosure

In the banking industry, credit scores were a dark mystery shrouded in secrecy but consumer activism led to laws requiring transparency.  Today, Canadians can access their credit scores, understand the factors influencing them, and correct errors.  Access to your credit score is vital because, as a study by Consumer Reports found that:

• Only 74% of participants were able to access their credit reports.
• 44% discovered errors.
• 27% found errors serious enough to affect their credit score.

A low (bad) credit score, even though erroneous, can cost a person hundreds of dollars more per yer in credit card interest and thousands of dollars more on larger loans.

Akin to a credit score that reports on your financial health, the home insurance industry calculates, using a myriad of mysterious factors, an insurance score to evaluate your evaluate “insurance health”.  Insurance companies do not care about your ability to pay your premium because premiums are paid in advance, but how likely a homeowner is to make a claim - how much of a risk you are. 

The worrisome aspect of using information in credit scores to develop your insurance score is that credit scores often have errors, and there are people with no credit scores — simply because they never had a credit card because they found no need for it.  Unfortunately, the insurance industry remains opaque, denying consumers the right to understand or challenge their insurance scores, which, if erroneous, can result in unfairly high premiums.

A model for improvement in the insurance industry

Laws mandating credit score transparency have proven beneficial, providing insights into how financial behaviour impacts creditworthiness.  We now have free access to our credit reports and can take steps to improve our scores.  The credit industry’s journey toward transparency offers a clear roadmap for the insurance sector. By mandating disclosure of insurance scores, Canadians could benefit from:

• Awareness of perceived personal “insurance health”.
• Insights into the factors influencing your score.
• Processes to correct inaccuracies and errors.
• More fair insurance practices and pricing.

Just as credit scores moved from the shadows into the light, it’s time for insurance scores to do the same — when it comes to protecting our homes, there should be nothing to hide.  If the credit industry can provide this level of openness, there is no reason why the insurance industry cannot follow suit.  I wonder, why does the insurance industry refuse to be proactive with honesty and transparency?  Is it because opacity benefits profits?

A call to action: our right to know

For the sake of us all, let’s demand the transparency we deserve.

Knowledge is power.  In a country that prides itself on honesty, integrity, and equity, the secrecy surrounding insurance scores is unacceptable.  When people understand what affects their insurance scores, they can make informed decisions and take proactive steps to improve their score - strengthening their financial well-being.

To bring fairness to the insurance industry, Canadian legislators and regulators should:

• Mandate disclosure of insurance scores annually during policy renewals or upon request.
• Provide clear explanations of the factors influencing these scores.
• Share actionable tips to improve scores and reduce premiums.  
• Establish an appeal resolution mechanism for consumers to correct inaccuracies or address concerns about unjust scoring methods.

Insurance industry leaders should embrace this and open the books not only because it is the right thing to do but because it is good business.  Many Canadians view the insurance industry with skepticism, often citing unclear pricing practices. By disclosing insurance scores and explaining their impact on premiums, insurers can, by their commitment to fairness and transparency, demonstrate respect for their customers.  Trust builds loyalty, which benefits the bottom line.

A personal story: the cost of corporate indifference

Behind every insurance statistic is a unique human story.  Consider the experience of my mother, Ljubica Zidaric, a 75-year-old visually impaired widow, and an Allstate customer for 30 years.  Despite her loyalty, her premiums have risen significantly, far outpacing inflation —being overcharged by nearly $10,000 over eight years.

Seeking answers, we contacted Allstate to help us understand why her premiums are so high.  Instead of being treated with dignity and respect, rather than receiving honesty and clarity, we encountered corporate stonewalling and bullying from employees of the cold-hearted corporation.  Customer service reps offered vague explanations, the agency manager refused to help, and even the CEO would not respond to our concerns — leading us to wonder if he even cared about us.  When we turned to the Allstate ombudsman, we were told there were no errors, but our questions about the insurance score and high premium went unanswered.  The Allstate ombudsman then “passed the buck” and told us to submit a complaint to the General Insurance OmbudService (GIO).

Our hope for an answer was quashed within 30 minutes of submitting our complaint — the “independent”, but industry-funded, GIO dismissed our case as outside their mandate.

Ljubica’s experience highlights the emotional toll of navigating a system that seems purpose-built to exhaust and demoralize.  No one should have to battle uncaring employees, opaque algorithms, corporate stonewalling, and ineffective oversight bodies to receive fair treatment. Yet, these obstacles seem to be the norm, not the exception. 

The Path Forward

The time for change is now.  Transparency in insurance scores isn’t just about fairness; it’s about restoring trust and empowering consumers. Just as credit scores emerged from the shadows, so too must insurance scores. Canadians deserve nothing less.

Note:  In this story, I provide the names of the employees involved since they are corporate representatives that interact with customers and have a significant influence over the customer's problem resolution, and each of these people have publicly advertised themselves on LinkedIn.  By this transparency, if others are fated to deal with these corporate representatives they can know what to expect.