Shawn Doherty, chief financial officer of FA, a market of last resort for high-risk drivers who can’t find insurance in the voluntary market, outlined several aspects of new legislation to establish the province’s 15% rate cut and anti-fraud reforms. One of these aspects has been “underplayed,” but may be the source of an availability issue if it is not qualified in some way, he suggested.
Specifically Doherty was referring to Bill 5, amendments to the Automobile Insurance rate Stabilization Act, 2003, which would give the province’s insurance regulator the power to force insurance companies to file for rate changes.
“The superintendent [of the Financial Services Commission of Ontario] would be able to order an insurer to file new rates before a certain [date], as well as order the insurer to begin using the new rates as of a specific date,” according to Willie Handler of Willie Handler and Associates. “An insurer's rates would be presumed to be not ‘just and reasonable’ if in the superintendent's opinion they do not contribute to the 15% rate reduction target.
“In addition, the superintendent would be able to refuse a rate filing if the proposed risk classification system is not reasonably predictive of risk, the proposed rates would impair the insurer's solvency or the proposed rates are excessive in relation to the insurer's financial circumstances.”
FSCO’s additional power is required so that it can enforce the 15% rate reduction contained in the government’s budget. But it’s a slippery slope between the regulator acting as “rate reviewer” and “rate setter,” said Doherty. (continued.)
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