Outdated laws disallow insurers from offering digital insurance solutions: IBC

Ontario’s Insurance Act and its regulations prevent insurers from doing business and communicating with their customers through digital or mobile platforms, the Insurance Bureau of Canada (IBC) noted on Monday.

Canadian Underwriter asked IBC about some of the red tape that could be cut in the insurance industry to help increase innovation.

Steve Kee, IBC’s director of media and digital communications, pointed to 15 sections of Ontario’s Insurance Act and its regulations that prevent insurers from doing business and communicating with their customers through digital or mobile platforms. “The Act and regulations require communications using mail, registered mail, delivery or personal delivery – 19^th century communications with 21^st century customers,” he said.

In particular, he pointed to the following sections of the Act and regulations:

• Section 134(3) – Where note or cheque for premium not honoured;
• S. 148, Statutory Conditions 6(1) – Termination;
• S. 148, Statutory Conditions 15 – Notice;
• Reg. 777/93: Statutory Conditions – Automobile Insurance: S. 11(1);
• Reg. 777/93, S. 11(1.1) (a) (b);
• Reg. 777/93, S. 11(1.2) (a) (b);
• Reg. 777/93, S. 11(1.3)(b);
• Reg. 777/93, S. 11(1.7);
• Reg. 777/93, S. 11(5);
• Reg. 777/93, S. 12;
• Reg. 676: Uninsured Automobile Coverage, S. 5(1);
• S. 232(2) – Policy issued where no signed application;
• S. 232(3) – Insured entitled to copy;
• S. 269(1) – Particulars of insurance; and
• S. 269(2) – Demand for particulars.

All of these sections relate to outdated communications methods, Kee observed.

For example, Section 134(3) of the Act says: “Where a cheque, bill of exchange or promissory note is given, whether originally or by way of renewal, for the whole or part of any premium and the cheque, bill of exchange or promissory note is not honoured according to its tenor, the insurer may terminate the contract forthwith by giving written notice by registered mail.”

In another example, part of Section 12 of Reg. 777/93 says that “written notice may be given to the insured named in this contract by letter personally delivered to the insured or by registered mail addressed to the insured at the insured’s latest post office address as notified to the insurer.”

Ontarians should have the option of receiving all of their insurance information digitally, Kee said, adding that consumers in Ontario should have the option of receiving their proof of insurance pink slips digitally.

The Financial Services Commission of Ontario’s (FSCO) Bulletin No. A-18/93 requires insurers to print and mail proof of auto insurance cards to their customers through registered mail and does not allow use of email.

Some of these regulatory suggestions are contained in IBC’s January 2017 report, Cutting the Red Tape: IBC’s Submissions for Ontario’s Red Tape Challenge.