Ontario Car Insurance Regulator Wants Your Input on Proposed UDAP Rule

Ontario’s car insurance regulator, the Financial Services Regulatory Authority (FSRA), is seeking public feedback on its proposed Unfair or Deceptive Acts or Practices (UDAP) rule. UDAP aims to make supervising the provincial insurance system more transparent. It also focuses on making consumer protection stronger by defining what is unfair or otherwise harmful to consumers.

Consumers have until March 18, 2021, to submit a comment or ask a question about the proposed rule.

FSRA received input on UDAP provisions that were barriers to innovation, particularly concerning incentives (including rebates and inducements) earlier in 2020. As part of FSRA’s Take All Comers consultation, the regulator is undertaking a review of the existing UDAP rule.

How will new UDAP rules benefit consumers?

FSRA says consumers would benefit from an updated UDAP rule because it gives insurers a way to offer their customers incentives. That could be rebates on a driver's auto policy for good driving behaviour (which may enhance the benefits a usage-based insurance program provides, such as a pay-as-you-go policy), or rewarding a customer with a gift card for exhibiting behaviour that reduces insured risk.

“FSRA does not expect the proposed changes to make premiums go up," says Malon Edwards, Senior Communications Officer, Issues and Media Public Affairs at FSRA. "By allowing more competition and innovation, and setting clear standards for consumer protection, the proposed rule is intended to benefit insurers and consumers alike."

Updating the UDAP rule would also ensure consumers’ rights are more adequately protected. Section 439 of the Ontario Insurance Act prohibits “unfair or deceptive acts or practices”. The regulation may apply to insurers, brokers, intermediaries, adjusters, and goods and service providers engaged in the insurance sector such as health service providers, vehicle repair shops, automobile storage facilities, and tow truck operators.

“If approved, the new UDAP rule will replace the existing UDAP regulation. The proposed rule focuses on the need for stronger consumer protections by clearly defining outcomes that are unfair or otherwise harmful to consumers,” Edwards says. “This includes the unfair treatment of consumers, abusive claims practices, and behaviour that is deliberately intended to mislead consumers.”

After March 18, 2021, and considering the comments it receives from the public, Edwards says FSRA will submit the proposed rule to the Ontario Finance Minister for approval.