Risk Classification and Underwriting Criteria, Non-Payment Terminations, and Fee Filing Guideline

With this Bulletin, the Financial Services Commission of Ontario (FSCO) is highlighting two
regulation changes recently passed by the Ontario government concerning risk classification and underwriting criteria and non-payment terminations. Also, a simplified fee filing guideline is being released.

Risk Classification and Underwriting Criteria Restrictions

 

Ontario Regulation 664 has been amended to add certain financial information and other "lifestyle" factors to the existing list of underwriting and risk classification criteria that are expressly prohibited. The regulation changes are effective upon filing of the regulation.
The amended regulation specifies that:

(a) in deciding whether to issue, renew or terminate any contract, or to provide or continue any coverage or endorsement, an insurer shall not consider a person’s:

• employment history,
• credit card possession,
• credit history,
• credit rating,
• bankruptcy or history of bankruptcy,
• residence history,
• home ownership,
• gross or net worth,
• indebtedness, and
• late or dishonoured premium payments that did not result in termination of an auto policy.

(b) except as otherwise expressly permitted, no element of a risk classification system shall use any of the following factors:

• level of income,
• employment history,
• occupation, profession or employment circumstances, unless a contract is for a commercial or public vehicle or a vehicle used in the course of carrying on a business, trade or profession,
• credit card possession,
• credit history,
• credit rating,
• bankruptcy or history of bankruptcy,
• residence history,
• home ownership,
• gross or net worth,
• indebtedness, and
• late or dishonoured premium payments that did not result in termination of an auto policy.

Non Payment Terminations

Regulation 777/93 has been amended to include requirements with which an insurer must comply before terminating an insured’s auto insurance contract due to non-payment of premium. An insurer cannot terminate the contract if the insurer receives the outstanding payment, plus any applicable administration fee, before the end of the notice period (no less than 30 days if the insurer gives notice by registered mail and no less than 10 days if the notice is given by personal delivery). If the amount is not paid by the time and in the manner specified in the regulation, then the contract is deemed to be terminated at the end of the notice period.

If, in a given policy term, an insured has received two notices of non-payment but has paid the amount owing in time to avoid termination, then on the third non-payment notice, the insurer may proceed to cancel the policy whether or not the insured person tenders the late payment. The third notice acts as a termination notice and the policy terminates no earlier than the 15th day after the notice is given by registered mail, or no earlier than the fifth day after the notice is given by personal delivery.

This amendment applies to all contracts entered into or renewed on or after June 1, 2005.

Policy Forms Changes

Copies of Regulation Changes

Fees Filing Guideline

Contact

Attachments:

• Fees Filing Guidelines for Automobile Insurance Policies  Size: 53 kb​
• Certificate of the Officer/Designate  Size: 31 kb​