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How many Ontario motorists got placed in the residual market


January 28, 2019   by Greg Meckbach


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The number of Ontario auto policies in the residual market has increased by nearly a third in little more than a year, figures released to Canadian Underwriter show.

Since the fall of 2017, there has been “some uptick” in the number of private passenger vehicle policies insured by the Facility Association Residual Market (FARM), Norm Seeney, vice president of finance and member services for the Toronto-based Facility Association, wrote in an email.

The residual market is an insurer of last resort for motorists who can legally drive but are considered high risk by insurers. In essence, the insurance for drivers in the Facility Association is covered collectively by insurers who must belong to the association.

The Facility Association recently sent Canadian Underwriter statistics showing policy counts in both the risk-sharing pools and residual market. The number of policies in force in the residual market for private passenger vehicle in Ontario was 3,024 in November 2018. This is up 29.2% from 2,335 in October 2017.

Several insurers reported last year it was difficult to get approval from the Ontario government to charge rates that are high enough to cover climbing claims costs.

Ontario makes up two-thirds of the population (as of 2016) of the provinces served by the residual market, but only 10% of the policy counts in November 2018 and 8% in November 2017.

Canada’s total population count in 2016 was 35.1 million, of whom 13.4 million live in Ontario. Nearly 20 million live in the provinces served by the Facility Association.

Canada-wide, there were 29,688 policies in force in the residual market in November 2018, up less than 1% from 29,556 in October, 2017. Of the 29,688 policies in force in the residual market in November 2018, about 35% (10,247) were in Newfoundland and Labrador.

With a population in 2016 of about 520,000, Newfoundland and Labrador makes up about 3% of the population of the nine provinces and territories served by the residual market.

Of the 29,688 residual market policies in force this past November, 6,103 were in New Brunswick, (down 12% from 6,914 in October 2017) and 5,137 were in Nova Scotia (up 26% from 4,081 in October 2017).

Of the other provinces and territories in which the Facility Association insures motorists, the number of policies in force this past November were:

  • 1,951 in the Northwest Territories (down from 2,175 in October, 2017);
  • 1,675 in Alberta (up from 1,569 in October, 2017);
  • 1,951 in the Northwest Territories (down from 2,175 in October, 2017);
  • 1,263 in Prince Edward Island (down from 1,413 in October, 2017); and
  • 150 in the Yukon Territory (down from 193 in October, 2018).