What Intact likes about proposed bill on territorial ratings

Canada’s largest insurer is supportive of one element of a private member’s bill that would rescind an Ontario regulatory bulletin that sets limits on territorial rating factors.

Bill 42, the Ending Discrimination in Automobile Insurance Act, was tabled Oct. 15 by backbench Progressive Conservative MPP Parm Gill. The bill would amend the Automobile Insurance Rate Stabilization Act to rescind the Financial Services Commission of Ontario’s Bulletin A-01/05. The bulletin, released in 2005, sets out updated guidelines for insurers to use when proposing changes to rating by territory.

One of the revised guidelines for territorial rating defined a maximum number of territories – no more than 55 territories in the province of Ontario and no more than 10 territories in the City of Toronto.

“Ontario historically limited the number of territories that you could use to 55. When you look at other jurisdictions, you’re in the hundreds of territories,” Intact Financial Corporation CEO Charles Brindamour said Wednesday during an earnings call announcing its 2018 Q3 financial results. “Ontario, for some reason, had this artificial constraint on the number of territories. The private bill on the table today is killing that constraint, which is a good thing. “We’re well-equipped from a segmentation point of view with all the tools that we have in the tool box to do well in that environment.”

First debate on Bill 42 is expected in March 2019. As an overarching statement, “we don’t believe that restricting segmentation, whether it’s location-based rating or other forms, is in the best interests of drivers and consumers,” added Darren Godfrey, Intact’s senior vice president of personal lines, during the conference call.

Intact supports rescinding the FSCO bulletin “and the way we can use territories in ratings. That’s an important piece of the bill that we very much support,” Godfrey said.

Longer-term, the insurer believes that lessening regulatory burden is important, as it increases price points in the market, drives further competition “and ultimately drivers lower premiums in Ontario and elsewhere in the country, as we continue to push towards less regulation.”

Private members’ bills are often defeated, but “can sometimes pivot towards government policy,” Godfrey said. Intact is working with the provincial government related to Bill 42 to ensure the government understands the possible ramifications of restrictions on segmentation. “We are quite confident we can illustrate the benefit to consumers of more options and more competition in the marketplace.”

Brindamour said his view of the current government is that they are focused on reducing fraud and “unleashing competition so that Ontarians get a better deal. With that mindset, in my view, you get a better outcome in the market, and I’m confident those principles will guide their decision-making pattern.”

Another private member’s bill, the Ending Automobile Insurance Discrimination in the Greater Toronto Area Act (Bill 44), was defeated Nov. 1 in the Ontario legislature. The bill, by NDP MPP for Brampton East, Gurratan Singh, proposed making the Greater Toronto Area one single territory for the purpose of determining motorists’ insurance premiums.