Why auto regulator fined Aviva and S&Y $300K each

Ontario’s insurance regulator has fined Aviva Insurance Company of Canada (AIC) and its subsidiary S&Y Insurance Company (S&Y) $300,000 each for breaching the province’s “take all comers” rule for auto insurance.

In a settlement with the Financial Services Regulatory Authority of Ontario (FSRA), Aviva and S&Y acknowledged third-party quote aggregators were using unapproved filters that suppressed their companies’ auto insurance quotes to the public without their awareness.

“In the comparative quoting technology used by aggregators, the rules for whether a quote will be provided could, depending on the platform, be manifested as filters [that] restrict the provision of a quote if triggered,” said the agreement statement of facts contained in the settlement posted on FSRA’s website. “Accordingly, filters should only reflect approved underwriting rules as mandated by the take-all-comers requirements.”

Aggregators are intermediaries that operate online platforms providing price comparisons to consumers for automobile insurance. Licensed brokers purchase sales leads from aggregators.

However, in two separate circumstances, and without the companies’ awareness, the aggregators’ filters were suppressing insurance quotes to the public. In a statement to CU, Aviva said the issue has since been resolved.

“Aviva strives to provide Ontarians with access to timely auto insurance quotes and the lowest possible rates, and we take our regulatory commitments seriously,” a company spokesperson said in an email to CU. “We have fully cooperated on this matter and have taken the necessary steps to ensure we are fully compliant with all-comers regulations.”

In Aviva’s situation, “in limited circumstances, AIC required potential consumers to complete and submit a written application (OAF 1) following receipt of a quote, but prior to binding a policy for automobile insurance coverage,” the settlement agreement states. “This requirement was communicated to aggregators, along with a conditional quote. AIC expected that aggregators would display the conditional quotes to brokers but did not verify whether this was the case.”

FSRA said its investigation found 201 instances between Feb. 26, 2022, and June 20, 2022, in which “AIC’s quote for private passenger automobile insurance was the cheapest among insurers included in a comparative quote, but was not displayed by aggregators to the brokerages.”

(The Aviva Group provided approximately 5.6 million quotes for private passenger auto insurance in Ontario through all distribution channels between Feb. 26, 2022, and June 20, 2022, according to the agreed statement of facts.)

The Aviva quotes were not displayed “due to the fact that, unbeknownst to AIC, the aggregators did not display the AIC quote where a written application requirement was triggered. Since AIC’s quote was not displayed to a brokerage, it could not be offered to a consumer even though it was the lowest rate available.”

Related: What FSRA says about the ‘take all comers’ auto insurance rule

In S&Y’s situation, “as a result of one aggregator continuing to generate comparative quotes sought by consumers using the aggregator’s website due to a contractual requirement, this aggregator continued to make use of daily volume limits, as set out in more detail below, which can be characterized as an unapproved underwriting rule until Apr. 30, 2022,” says the agreed statement of facts.

“S&Y had daily volume limits on the number of sales leads it would purchase from aggregators due to the capacity of its call centre. These volume limits were never filed with FSRA as underwriting rules.”

FSRA said its investigation of S&Y uncovered 616 instances between Feb. 26, 2022, and Apr. 30, 2022, when “S&Y’s quote for private passenger automobile insurance was the cheapest among various insurers but was not displayed by the aggregators to consumers.”

In the settlement agreement, FRSA noted the two companies cooperated with the regulator’s investigation. “Neither AIC nor S&Y intentionally or knowingly contravened the take-all-comers requirements between Feb. 26, 2022, and June 20, 2022, and Feb. 26, 2022, and Apr. 30, 2022, respectively,” the agreed statement of facts states.

The two companies fully corrected the issue by terminating their participation on all aggregator platforms on Apr. 30, 2022 (S&Y), and June 20, 2022 (Aviva), before Aviva submitted a final audit report to FSRA, as FSRA notes.

In addition, “S&Y has determined that it will not enter into agreements to supply quotes through any aggregator, and AIC has determined that it will not permit any broker acting on its behalf to supply AIC quotes obtained from any aggregator unless and until S&Y and/or AIC, as the case may be, have implemented sufficient controls to provide reasonable assurance that no aggregator will withhold any quotation based on any unapproved underwriting rule,” the settlement agreement states.

Feature image courtesy of iStock.com/CreativaImages