Bill 5 Automobile Insurance Rate and Risk Classification Filings



No. A-03/04
- Auto
Property & Casualty
[To the attention of all insurance companies licensed
to transact automobile insurance in Ontario]

The purpose of this bulletin is to outline filing requirements for rate applications for private passenger automobile insurance required under section 7 of the Automobile Insurance Rate Stabilization Act, 2003 (Bill 5).


Insurers must take into account the cost impact of all auto reforms to-date. These reforms include those from Bill 198 (the Keeping the Promise for a Strong Economy Act (Budget Measures), 2002), changes to regulations, and changes to the standard auto insurance policy.



Cost Savings Due to Auto Reforms


The changes that insurers are to take into account in filing revised automobile insurance rates include those set out below.


Changes to Third Party Liability

  1. Increase of the deductibles which apply to awards for pain and suffering from $15,000 to $30,000, and from $7,500 to $15,000 for Family Law Act awards.
  2. Deductibility of CPP disability benefits.
  3. Introduction of a definition, through regulation, for permanent serious impairment of an important physical, mental or psychological function.
  4. Expansion of the ability to sue for excess health care expenses to include those with serious and permanent impairment.
    5. Inapplicability of the deductible for pain and suffering awards over $100,000 and Family Law Act awards over $50,000.

Changes to Statutory Accident Benefits

  1. Expansion of definition of catastrophic impairment.
  2. Introduction of the Pre-approved Framework (PAF) Guidelines for Whiplash Associated Disorder (WAD) I and II that are expected to reduce the cost of treating minor whiplash injuries. Please note that updated PAF Guidelines will be released in the near future to ensure the PAF Guidelines are operating as intended.
  3. Introduction of a process for claimants and insurers to jointly select a designated assessment centre (DAC) within the claimant’s geographic region.
  4. Requirement of prior approval of assessments under s.24 of the Statutory Accident Benefits Schedule (SABS) except in certain circumstances.
  5. Introduction of a fast track DAC review process for assessment requests and PAF issues including paper reviews.
  6. Restriction of settlement of SABS claims for future benefits until one year after the accident.
  7. Increase of accountability within the automobile insurance system and reduction of potential for abuse and occurrence of has errors and omissions insurance.
  8. Introduction of health care provider and DAC fee schedules.
  9. Limit of 12 weeks of income replacement benefits for insured persons who come within the WAD I PAF Guideline.
  10. Limit of 16 weeks of income replacement benefits for insured persons who come within the WAD II PAF Guideline.
  11. Limit on transportation expenses for treatment and assessments for distances in excess of 50 kilometres.
  12. No attendant care benefits for persons who come within the WAD I or II PAF Guidelines.
  13. Limits on income considered for income replacement benefits to the amount reported for income tax purposes and no income replacement benefit payable on future contracts.

Changes to Physical Damage and/or Direct Compensation-Property Damage

  1. Application of comprehensive deductible to theft claims.
  2. Clarification of the application of the deductible where there has been total loss of the vehicle.
  3. Clarification of use of Original Equipment Manufacturers (OEM) parts in vehicle repairs.
  4. Elimination of mandatory pre-insurance inspections.
  5. Introduction of standard $500 collision deductible.
  6. $300 limit on tow truck charges and storage fees (except in Northern Ontario).

Rate Filings


As required by the Order of the Superintendent of Financial Services made under section 7 of the Automobile Insurance Rate Stabilization Act, 2003, all insurers writing private passenger automobile insurance in Ontario must submit a filing to FSCO not later than Friday, January 23, 2004. Under the provisions of the legislation, an insurer can only make one filing.


A filing submitted may only propose changes by coverage that are uniform across all current territories. There may be no change to any other rate differentials, surcharges, discounts or rating rules.


The attached Bill 5 Simplified Rate Filing Guidelines package has been developed to assist insurers in this process, and may be used only if the insurer is proposing a rate reduction of at least 10%, on an all-coverages-combined basis. Where previously approved rates have already taken into account cost savings from the auto reforms, the cost savings taken into account will count towards the 10%. Please note that the rating examples, included as Appendix C to the Bill 5 Simplified Rate Filing Guidelines, have been updated.



An insurer that does not use the simplified filing must file at the level of detail outlined in the standard Section 410 Filing Guidelines - Major, appropriately certified by an actuary. The filing submitted must clearly indicate that it is submitted under the provisions of Bill 5. Each insurer must fully account for the cost savings from the auto reforms. Insurers must use the rating examples contained in Appendix C to the Bill 5 Simplified Rate Filing Guidelines when submitting the detailed filing (and not the original rating examples contained within the standard Section 410 filing guidelines). Also, as noted above, insurers can only propose changes to base rates that are uniform across territories. Insurers may not change their rating algorithm, differentials or discounts and surcharges through Bill 5 filings.

Technical Note



Attached is a technical note outlining the cumulative impact of these auto reform changes by coverage based on an independent actuarial costing. Insurers submitting detailed filings can use this information without providing further details on costing of the auto reform changes. If insurers submitting detailed filings do not use this costing, insurers must provide an analysis of the impact of all auto reforms, outlining all assumptions in detail.


Also, insurers are expected to take into account the auto reform on loss trends. It can be expected that loss trends for bodily injury, medical/rehabilitation and disability income will decrease as a result of the cost control measures.



FSCO Contacts


If you have any questions about this bulletin, please contact your rate analyst in the Automobile Insurance Division.

Bryan P. Davies
Chief Executive Officer and
Superintendent of Financial Services
January 9, 2004


Attachments (PDF):


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