How this regulator is tackling the “take all comers” auto insurance rule

The Financial Services Regulatory Authority of Ontario (FSRA) is actively monitoring insurers for its “take it all” guidelines.

“We are asking them to review their practices. We ask them to report on this review later in [2022]and to establish remediation plans for any practices where there are violations,” FSRA CEO Mark White said at the first-ever FSRA 2022 exchange event on Thursday.

On November 15, 2021, FSRA released its guidelines for all, which reiterate that auto insurers are required by law to provide all Ontario customers with timely auto insurance quotes and quotes the lowest available to them.

“This includes the requirement to accept all business that meets the FSRA-approved underwriting criteria of insurers,” White said during a fireside chat about the future of financial services regulation, innovation and the public. In Ontario, more than 10 million people have auto insurance policies, and “we want to make sure insurance is available to eligible consumers, rates are fair and reasonable, and underwriting rules are applied fairly. “, did he declare.

However, White said the regulator has observed, through “targeted oversight and reviews…that insurers and their distribution representatives may not honor their obligation to offer auto insurance to all tariff-eligible consumers.” lowest available”.

“Now this is hidden harm because consumers are likely unaware that there was a lack of a quote from an insurer that might have given them a lower rate,” White said. . “It’s an example of how FSRA needs to be that voice for consumers where they can’t see what’s going on because of the lack of transparency.

FSRA CEO Mark White with moderator Clare O’Hara reporting on Wealth Management to The Globe and Mail at the first ever 2022 FSRA Exchange event.

White made his comments following a question from moderator Clare O’Hara, a wealth management reporter at The Globe and Mailwho asked what FSRA is doing to ensure consumers are treated fairly when shopping for auto insurance.

White acknowledged that some breaches of the all comers rule may have been inadvertent or an attempt to curb auto insurance fraud. But he also noted that there were examples of insurers not offering cover to renewal customers or those who did not have a home insurance policy (auto customers only). Other examples included not offering coverage to consumers who have had an accident, those who reside in certain locations, or consumers who have a short history of obtaining insurance. FSRA is also looking at situations involving the removal of authority from brokers and agents and then some insurers not responding themselves with a timely submission.

White said the regulator reviews complaints to try to determine if there are patterns of behavior. “Ultimately, as a risk-based regulator, we really want to understand what are the processes within insurers and in their distribution channels that either protect consumers from unfair outcomes or lead to unfair practices. which lead to unfair results.”

A spokesperson for the Insurance Bureau of Canada said IBC member companies will continue to follow all FSRA guidelines and strive to provide the best possible service to customers.

“The IBC has raised concerns with FSRA that Ontario remains one of only three jurisdictions in the world still using the draw rule (CAT),” the spokesperson added. . “Moving away from the TAC rule would increase insurers’ ability to fight fraud, while encouraging greater competition. Together, this would be another tool to help reduce the cost of car insurance for all drivers. Maintaining the TAC appears to run counter to the principles-based regulatory environment that the FSRA is moving toward.

O’Hara also asked White about underwriting practices that can affect insurance rates, such as the use of zip codes. Auto insurance pricing territories, which include ZIP codes, “have actually been the law for years, and insurers are required to set rates using the territories,” White explained.

He suggested that consumers who might benefit from a higher rate due to factors such as geographic location consider user-based insurance. “UBI is offered by a number of insurers now,” White said. “It uses modern technology to assess real driving behaviors, not just based on criteria [where] you fit into different lockers and then it adjusts your rates accordingly based on your actual driving behavior.

White noted that FSRA guidelines allow insurers to include up to 5% markup in their pricing. Pricing takes into account many factors, and the ultimate costs of pandemic-related changes in driving behavior will not be known for several years due to the nature of injury claims.

“While this trend will not continue indefinitely, I am very pleased that it has been widely reported by multiple sources that Ontario insurance rates have dropped significantly in 2021, including declines on average across the entire province and in many major markets like Toronto and Brampton,” Blanc said.

In order to examine new auto insurance models, FSRA’s Office of Innovation has just launched its “test and learn” environment to “validate and evaluate new and innovative products, services and business models that do not do not fit within existing regulatory parameters to see if they can be introduced in Ontario without risking harm to the public.

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