Canadian Underwriter

Are you sure you are not violating Ontario’s ‘take all comers’ auto rule?

June 15, 2020   by Greg Meckbach

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If you fail to renew a client’s Ontario auto policy, even if that client missed a payment, you could attract close scrutiny from the provincial regulator.

Ontario law prohibits insurers from declining to issue, terminating, or refusing to renew an auto policy or endorsement, except on grounds filed with Financial Services Regulatory Authority of Ontario (FSRA).

“FSRA is reviewing various activities and practices by insurers and/or brokers that may be contravening the Take-All-Comers rule and will be conducting supervisory reviews to ensure a coordinated approach is taken across the auto insurance system,” FSRA executive vice president Tim Bzowey wrote in the regulator’s June newsletter, released last week.

Canadian Underwriter asked FSRA last week for some examples of practices that could violate the “take all comers” rule.

One would be refusing to quote or renew for reasons not listed in the insurer’s approved underwriting rules on file with FSRA, a FSRA spokesperson responded in an email to Canadian Underwriter Friday

Other examples in the regulator’s email included:

  • Failing to offer a renewal to qualifying customers, including customers who have missed a single premium installment payment;
  • Withdrawing underwriting authority of brokers and agents while failing to respond to qualifying customers’ quote requests in a commercially reasonable period of time; and
  • Requiring the completion of written applications from customers, and for reasons that cannot be characterized as exceptional and warranted by the risk presented.

Insurers have struggled for years to make a decent profit in Ontario auto. In 2018, the industry-wide return on equity was 3.3%, down from 5.4% in 2017 and 6.6% in 2016, reports the General Insurance Statistical Agency.

The “take all comers” rule can sometimes lead to insurers being selected against, as Louis Durocher, CEO of Waterloo-based Heartland Farm Mutual Inc., told Canadian Underwriter in 2018.

At the time, loss ratios in the Ontario auto book were getting worse, Durocher said. He cited as a major factor the advance in vehicle technology that makes the repair cost on a late-model vehicle more expensive than it would have been for an older vehicle in the same collision.

So, as a result of increased claims costs, when an insurer raises rates for high-risk motorists, those motorists may go to competitors looking for lower rates.

“I would suspect other companies have been able to increase rates faster than we have, so now we are getting all of that business and it’s just not sustainable,” Durocher said, giving an example of how the rule can sometimes work to select against insurers. “We just attract that business and you can’t turn it away, because it’s ‘take all comers’ in Ontario.”

FSRA has since implemented a system in which rates can be approved within 25 days, much faster than the system used by its predecessor, the Financial Services Commission of Ontario (FSCO).

FSRA took over regulation from FSCO June 8, 2019.



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