The Financial Services Regulatory Authority of Ontario (FSRA) has published guidance for comment which proposes new automobile insurance rating and underwriting supervision requirements and possible accreditation for insurers that demonstrate sound practices in the areas discussed. Reportedly, accreditation may give insurers greater flexibility around certain filing requirements.
The first three chapters of the guidance, Automobile Insurance Rating and Underwriting Supervision Guidance, are available for comment until November 15. The fourth and final chapter of the guidance outlining the regulator’s new filing approach is due out in 2025.
Improved rating accuracy
Part of the regulator’s stated Automobile Insurance Rating and Underwriting Regulation Reform Strategy, “FSRA is now consulting on new guidance to ensure that Ontario drivers are paying the right price for the right auto insurance coverage,” they state in the guidance consultation documents. “The proposed approach promotes greater transparency of the factors that influence auto insurance rates, helping consumers make informed choices about their insurance. FSRA’s approach focuses on improved rating accuracy and strong consumer protection measures.”
The first three chapters of the guidance discuss fair consumer outcomes (chapter 1), automobile insurance rating and underwriting operations, controls and governance (chapter 2) and accreditation, proactive supervision and assessment approach guidance (chapter 3).
Risk profile
“FSRA is introducing a model in which consumers may have greater confidence that the price they are paying is aligned with their risk profile,” the guidance states before discussing unfair bias and discrimination, the trustworthiness of systems and the availability of information to support informed decision making.
“Consumers and insurers will be better served by the new approach which supports innovation in pricing consumers accurately, focuses regulatory activities on risks of consumer harm, promotes a better functioning market and enhances accountability for consumer outcomes,” they write. “The guidance intends for insurers to internalize desired consumer outcomes by embedding them into rating and underwriting decision-making.”