Canadian Underwriter

How long it’s taking now to approve Ontario auto rate filings

June 18, 2020   by Greg Meckbach

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The average Ontario auto insurance filing now takes less than two weeks to get approved, the provincial regulator told Canadian Underwriter.

The Financial Services Regulatory Authority announced this past October a “file and use” system for private passenger auto. For insurers whose filings meet the “standard” criteria, FSRA aims to respond within 25 days.

“The average filing is getting approved in half the time we committed to in our service standard and none have taken the full 25 days,” a FSRA spokesperson said June 12 in an email to Canadian Underwriter.

Not all rate filings can be approved this way. For example, insurers who want to raise the average rate by more than 5% in a 12-month period would not meet the standard filing criteria. The same goes for insurers wanting to change territorial definitions or introduce new rating models [such as generalized linear models, generalized additive models, decision trees and machine learning].

In 2016, Insurance Bureau of Canada was advocating for a file-and-use process for private passenger auto in the “Red Tape Challenge,” in which the government invited industry groups to identify processes that make it a burden for companies to comply with regulations.

Under the new file and use system, if a response is not received within the 25-day window, the filing is deemed approved.

Two years ago, Heartland Farm Mutual Inc. CEO Louis Durocher described to Canadian Underwriter why the system at the time was making it difficult for insurers covering auto.

“Our knowledge (now) of what rate increase we need may not reflect the reality just a few months from now,” Durocher told CU in the summer of 2018.  “It’s a target that is moving.”

The new standard filing rules cannot be used if the rate change would result in a rate increase of more than 15.0% in any 12 month period to any one customer at renewal.

What auto insurers can do, under the new file and use system, is change, add and delete discounts. Provided they are using variables, rules and surcharges that are already approved for use in Ontario, insurers may use the new file and use system to:

  • Add and delete rating variables;
  • Change, add and delete rating rules; and
  • Change, add and delete surcharges.