In an effort to improve how auto insurance serves Ontario’s drivers, the Financial Services Regulatory Authority (FSRA) is seeking public and auto insurance industry commentary on its “Take-All-Comers” rule. The purpose of the rule is to ensure no motorist can be denied coverage, requiring all auto insurers in the province to include all classes of risk in their underwriting rules and pricing.
FSRA – Ontario’s regulator for auto insurance – says the input will help it supervise auto insurers and protect the public. They want to hear from consumers, insurers, brokers and agents.
Consumers wishing to take part in FSRA’s consultation process can participate by clicking on this link. FSRA encourages all motorists with good driving records who may have had problems getting coverage to participate in its consultation process. The opportunity to comment is open to all Ontario consumers until June 5, 2020.
What Is Ontario’s Take-All-Comers Rule?
Whenever an insurer raises its auto rates after FSRA permits it to do so, a consumer has the option to shop around for a lower auto insurance premium. If a motorist is considered to be a high-risk driver and their rate is increased, they can apply to another insurer for coverage. The driver cannot be denied coverage unless the insurance company has filed a rule with FSRA that states they will not insure a particular driving profile.
The rising cost of repairing vehicles and addressing injury claims are the source of rising premiums. Insurance fraud is also a contributing factor. In its most recent decision, FSRA gave 21 insurers the go-ahead to hike their rates, marking the ninth consecutive auto premium increase in Ontario.
As outlined under Ontario’s Insurance Act, the Take-All-Comers rule has three main requirements:
- Section 237 prohibits insurers from declining to issue, terminating, or refusing to renew an auto policy or endorsement on any prohibited grounds set out in the regulations;
- Section 238 prohibits insurers from declining to issue, terminating, or refusing to renew an auto policy or endorsement, except on grounds filed with FSRA; and
- Section 2(1)(8) of Regulation 7/00 Unfair or Deceptive Acts or Practices (“UDAP”) requires insurers to provide consumers with the lowest rate available when it receives a request for a quotation for automobile insurance, an application for automobile insurance made to an affiliated insurer, or an offer by an affiliated insurer to renew an existing contract of automobile insurance, in accordance with the insurer’s declination grounds and approved rates and risk classification systems.
In launching its consultation, FSRA is asking consumers to answer the following questions:
- Have you been denied auto insurance in spite of believing you qualified to receive a quote?
- Was your auto insurance policy cancelled and you didn’t understand why?
- Did it take a long time to get a quote or did you never receive a quote after requesting one?
How High-Risk Drivers May Influence Auto Insurance Rates
FSRA’s consultation process comes on the heels of the Facility Association’s (FA) decision to revise its private passenger vehicle ratings and underwriting rules. FA is an insurer of last resort for drivers who can’t secure auto insurance elsewhere because they may be considered a higher-than-average risk.
If the FA loses money due to the volume of claims it processes, it can pass on the deficit to regular auto insurers, which may result in higher premiums for all drivers. According to Canadian Underwriter, the number of FA’s private passenger vehicle policies in Ontario rose by 29.2% in late 2018 to 3,024 from 2,335 in late 2017.
FSRA says it will review various activities and practices by insurers and brokers that may be contravening the rule and will conduct supervisory reviews of insurance companies to identify risks or instances of consumer harm. Additionally, FSRA says it will work with the Registered Insurance Brokers of Ontario to ensure a coordinated approach is taken across the province’s auto insurance system.