The Financial Services Regulatory Authority of Ontario (FSRA) has published the final chapter of its Automobile Insurance Rating and Underwriting Supervision Guidance. In it, the regulator introduces two new filing streams for insurers, including fast track filing and prior approval.
According to the new guidance document, fast track-approved insurers will be able to implement new rating changes in one business day, while prior approval insurers will not be able to implement changes until formal approval is provided. They say insurers will have access to the different processes, depending on the purpose and complexity of their filing and their accreditation status.
Enhances oversight
“Accredited insurers who consistently demonstrate adherence to FSRA’s fair consumer outcomes will benefit from streamlined processes for certain types of filings. The new supervisory model enhances oversight of industry rating and underwriting practices, holding insurers to higher standards of accountability,” they write.
The notion of accreditation for insurers which demonstrate sound practices was proposed in September 2024 when the regulator published the first three chapters of the guidance for comment. That comment period closed November 15, 2024.
The guidance is intended to be read in conjunction with the first three chapters, with the regulator’s Filing Manual and with the regulator’s latest Annual Review Guidance. The manual supplements the guidance with detailed filing specifications, while the annual guidance is updated twice annually based on available industry data. “Insurers are required to submit filings in accordance with the latest version,” the guidance states.
They add that the proposed guidance aims to increase transparency about elements influencing auto insurance rates, giving consumers the ability to make informed decisions. “It emphasizes improved rating accuracy and robust consumer protection measures,” they state.
Streamlines processes
The latest chapter focuses on the regulator receiving, reviewing and making decisions on applications for auto insurance rates, risk classification and underwriting changes, including fees, forms and endorsements. “This chapter is intended to transition automobile insurance rating and underwriting filing processes, as well as non-standard form approvals, to outcomes-focused, principles-based and risk-based regulation,” it states. “It streamlines processes and ensures that FSRA has the information needed to assess insurers delivery of fair consumer outcomes and eligibility for accreditation.” They add that the guidance applies to all insurers writing all types of auto insurance in Ontario, regardless of their accreditation status.
“Automobile insurance filings should comply with all relevant legal requirements, principles and expectations set out in chapters 1-4 of this guidance, the latest Filing Manual and the latest Annual Review Guidance. All automobile insurance filings must be accompanied by actuarial justifications,” they add. “Insurers are expected to provide evidence of both quantitative and qualitative measures to support their filings. Insurers are expected to follow the Canadian Institute of Actuaries’ Standards of Practice and ensure that all actuarial work is well-documented and supported by clear evidence, including peer review.”
The deadline for commenting on the new guidance document is February 10, 2025.
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