To the attention of all insurance companies in the Province
of Ontario licensed to transact auto insurance
Recently approved changes to the Facility Association’s Plan of Operation will result in the elimination of the four point rule to be replaced by individual insurer underwriting rules effective January 1, 1998. As a result of these changes, all insurers are required to file their underwriting rules with the Ontario Insurance Commission (OIC). The request for this filing is being made under the authority of sections 31(1) and 238(2) of the Insurance Act (the Act).
Filings should be sent to the OIC by August 11, 1997 in order to allow sufficient time for review. The new filings will be effective January 1, 1998, but insurers will need to have their rules in place by the end of October, to allow sufficient time to comply with notice of non-renewal provisions under the Act.
Enclosed are the updated guidelines entitled “Section 238 Underwriting Rules Filing Guidelines” (Attachment A). The forms and a description of how the forms are to be used are set out in the guidelines. These guidelines are to be used for filing the proposed underwriting rules that will be effective January 1, 1998 and for filing any proposed changes to underwriting rules thereafter.
Also enclosed are Technical Notes for Automobile Insurance Underwriting Rules (Attachment B). The Technical Notes will assist you in understanding the various considerations to take into account when developing your underwriting rules. One key objective is that insurers file fair underwriting rules to ensure that only truly high-risk drivers are forced to seek coverage from the Facility Association. Insurers must apply the rules uniformly and without exception.
As you know, a written explanation must be provided to any consumer who is declined automobile insurance in the regular market. This written explanation should be clear and understandable to the consumer, and include the exact underwriting rule on which the refusal is based.
If you have any questions, please contact your rate analyst in the Rates, Classifications and Actuarial Services Branch. The enclosed attachments are available in French upon request.
July 11, 1997