September 12, 2019 by Greg Meckbach
Ontario may have a new auto insurance regulator, but don’t expect conditions in that market to improve overnight, A.M. Best Company Inc. suggested in a report released Thursday.
“Measures to improve market and competitive conditions will likely be slow to implement,” A.M. Best said in its Canadian Market segment report, which the Oldwick, N.J. credit rating firm releases in the late summer every year.
A.M. Best referred to Ontario’s Financial services Regulatory Authority, which officially took over from the Financial Services Commission of Ontario this past June.
“Early indications are that FRSA seeks to improve competition and be less restrictive,” A.M. Best said in the market segment report, which refers to measures the provincial government proposed in its 2019-20 budget document released this past April. Among the reforms proposed in the budget were increasing the range of auto insurance coverage choices, which would let clients reduce their premiums.
“Although it is early in the process and measures will take time to implement and season, there may be optimism for improvement in this segment,” A.M. Best said of Ontario auto in the report, released in advance of its annual market briefing scheduled Sept. 13 at the Sheraton Centre in Toronto.
Auto loss costs in Ontario continue to rise, due in large part to the cost of repairing or replacing advanced safety technologies like rear view cameras that tend to get damaged in collisions, A.M. Best noted.
“In a number of cases, the disparity between the rate indication filed by a carrier and the rate approved has been significant,” A.M. Best said in the paper.
FSRA has proposed a “file-and-use” system to help insurers change their rates quickly.
“This means insurers can, when acting within FSRA-defined boundaries, implement rates in a matter of days,” wrote Tim Bzowey, FSRA’s executive vice president of auto insurance, in the regulator’s June newsletter.
At the moment, insurers wanting to raise or lower Ontario auto rates must file those proposed rate changes, along with supporting actuarial data, to the regulator. They must then wait for approval from the regulator before changing their rates.
Legislation creating FSRA was passed in 2016. Creating the new regulator was one of 37 recommendations made in a review completed in 2015 of the mandates of FSCO, the Financial Services Tribunal and the Deposit Insurance Corporation of Ontario. The review panel (which included former Dominion of Canada General Insurance CEO George Cook) said it had heard that FSCO did not have a flexible regulatory approach and that FSCO did not have the right resources, governance structure and accountability to effectively fulfill its mandates.