August 9, 2018 by Greg Meckbach
Ontario’s newly-elected government has been silent on auto insurance reform, but the head of Canada’s largest property and casualty insurance carrier is encouraged by the Progressive Conservative Party’s historical leaning towards loosening rate regulation.
The Progressive Conservative Party was returned to power in Ontario’s provincial election this past June.
“In dialogue over the years with the party in power in Ontario, they have been very receptive to the notion that automobile insurance is very, very competitive, and that making changes to the approval process to unleash competitive forces to a greater extent is seen as a good thing,” Intact CEO Charles Brindamour said in a recent conference call discussing the company’s 2018 Q2 results.
In pricing private passenger auto insurance, Ontario insurers must file their proposed rate changes along with supporting actuarial data with the Financial Services Commission of Ontario (FSCO).
FSCO has the power to deny an insurer’s proposed rate increase if it believes the increase to be excessive. Factors FSCO takes into account include insurers’ assumptions regarding claims costs, expenses and investment income.
“This is an area where I am hoping we will, in the context of the Ontario marketplace, have a more dynamic pricing environment,” said Brindamour. “That would be good for consumers in the long run, and I think the party in power certainly gets that.”
Brindamour was replying to a question from a securities analyst on whether there are any “specific regulatory issues” on his radar screen.
In a 2017 report, Fair Benefits Fairly Delivered, David Marshall, a former CEO of the Workplace Safety Insurance Board, recommended that insurance regulation be “overhauled to encourage insurers to innovate and introduce new products.” Marshall was appointed in 2015 to be a special advisor to Charles Sousa, then the Liberal minister of Finance.
Among other things, Marshall recommended the government “review” how private passenger auto insurance rates are set “with a view to providing more competition in the marketplace.”
In 2014, the Progressive Conservatives promised that, if elected to power, they would introduce a “file-and-use” mechanism for private passenger auto rates. This, the PCs said at the time, would let carriers offer “lower prices quicker” and “encourage a wider range of discount offerings” for motorists. Under a file-and-use system, an insurance company would not have to wait for government approval before changing its rates, but it would have to file the rate change with the the government.