What FSRA’s changes to auto termination notices mean for insurers

Financial Services Regulatory Authority of Ontario (FSRA) has changed its approved auto policy forms to align with the government’s amendments to the Insurance Act, in what is widely being considered a welcomed change by the industry.  

Most notably, this change includes the addition of electronic communication and pre-paid courier as valid notices of termination of auto insurance contracts.   

Effective as of Jan. 1, 2022, the OAP-1 now reads that those whose contracts are terminated will receive “ten days notice by sending the notice by prepaid courier, or ten days notice by sending the notice through electronic means,” upon consent.  

Consumers who prefer paper copies will continue to receive them by mail with 30 days’ notice.   

“The change will make it faster and easier for insurance companies and consumers to do business, by providing additional flexibility,” FSRA says in an email statement to Canadian Underwriter. “In this case, both consumers and insurers benefit from the additional flexibility to help limit costs and increase opportunities for competition in the marketplace.” 

In an email statement, Insurance Bureau of Canada (IBC) notes to Canadian Underwriter that they were “encouraged” by these recent changes made by FSRA. 

“The most recent change allows consumers to conduct all insurance transactions digitally. This brings the industry in line with consumer expectations of being able to conduct insurance activities online, if they so choose,” the statement reads.  

Colin Simpson, CEO of the Insurance Brokers Association of Ontario (IBAO), shares similar sentiments. “The changes that FSRA put through, in our view, are definitely a step in the right direction to modernize the services and the method in which we serveour consumers.”

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FSRA explains how this paperless option benefits the industry. “Should a consumer opt-in, insurers will now be able to cut costs by ending contracts over email, reducing their reliance on postage and mail processing. The change will also help reduce barriers for insurers to operate mostly or entirely online, which increases competition and options for consumers.”

Simpson notes that this change falls in line with one that IBAO themselves have made in the past year — going paperless.   

“We talk to all different shapes and sizes of consumers, so we see across the whole gambit of what consumers look like,” he said. “When you do that, you start to understand how consumers want to interact with either their insurance companies or the brokers directly … we’re only getting more used to dealing with things electronically, even doing our banking electronically. So, this is just a natural step forward.”  

“We will commend FSRA for continuing to move forward on their agenda of ensuring that consumers have choice in the marketplace and can be serviced in the method within which the consumer chooses,” Simpson adds.  

Consumers who opt for these new delivery options need to ensure that they are receiving them through a secure email and that their inbox is well-managed so that the email will be visible, Simpson notes.  

“Given that they have to provide specific consent in order to receive cancellations electronically, that is a judgment that they need to make based upon their own circumstances,” he adds.  

The changes to the notices also make it imperative that consumers respond to their notice within ten days, shortening it from the previous 30-day allowance for those who choose to receive it via mail. 

“Given the immediacy of digital transactions, the length of time for cancellation notification is shortened if the notification is sent digitally,” IBC states.   

When asked whether this creates a disadvantage for consumers, Simpson comments that “most people are used to responding quite instantaneously electronically.”  

“You have to bear in mind that this is all on the pretext that the consumer has agreed to this form of communication in this manner. So, ten days should be sufficient,” he says.  

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