November 24, 2020 by Greg Meckbach
Insurers should be allowed to terminate auto policies electronically if consumers consent, the Insurance Brokers Association of Ontario’s CEO says.
In its budget document released Nov. 5, the Ontario government said the next phase of its previously-announced “blueprint” for auto insurance changes is to “focus” on several reforms.
One of those proposed reforms is “increasing competition and innovation in the auto insurance sector by modernizing outdated, burdensome requirements. This includes permitting insurers to electronically terminate policy contracts, with consumer consent, to enable fully digital insurers to operate in Ontario.”
This proposed reform is about the evolution of business, and not just in the insurance industry, IBAO CEO Colin Simpson said in a recent interview.
“The government would like to ensure that if consumers would like to have that choice, that they will permit the insurance companies to cancel electronically. This, to be honest, only makes sense in today’s digital age. I am sure digital brokers will take up with that. The key is with consumer consent,” Simpson told Canadian Underwriter.
“There are always going to be consumers who are not going to like that, who want the physical paper notice, which is what we would definitely support, and brokers in general will support what consumers want.”
One of Ontario’s auto insurance statutory conditions stipulates that carriers wanting to terminate a policy (for reasons such as non-payment of premiums) must give the client notice in writing, by registered mail or personal delivery of a paper notice.
Ontario Regulation 777/93 section 11.1 states: Subject to section 12 of the Compulsory Automobile Insurance Act and sections 237 and 238 of the Insurance Act, the insurer may, by registered mail or personal delivery, give to the insured a notice of termination of the contract.
The regulation then delves into detail on how much notice is required for non-payment of premium, how much notice is required for other reasons and what the notice must state.
If the government were to allow electronic notice, it would need to have a process for consumers to consent, Simpson suggested. “If the consumer prefers electronic communication, we have to be in a position to service them that way. One of the challenges of the industry is trying to get there.”
IBAO is leading a Going Paperless project. The association is working with brokers, carriers and vendors across Canada, as well as the Centre for the Study of Insurance Operations, noted Simpson.
One aim of the project is to look at what processes can be made available digitally, said Simpson.
Feature image via iStock.com/izusek