After a year-long review, the Canadian Council of Insurance Regulators (CCIR) has concluded that so-called Best Terms Pricing (BTP) on subscription policies exist in the broader commercial market and do not support the fair treatment of customers.
Best terms pricing (BTP) is a method of pricing a subscription insurance policy where there are multiple insurers covering varying portions of a particular risk. The insurers are paid uniformly based on the highest rate offered, regardless of the risk allocation.
CCIR said that while BTP exists, they cause adverse premium inflation as well as not supporting the fair treatment of customers.
Insurers discontinuing the practice of BTP
“CCIR understands that some insurance companies and brokers using BTP have, appropriately, discontinued the practice, while others are in the process of moving away from it,” the regulators’ organization said.
CCIR's consideration of BTP in the broader commercial market is an extension of regulatory reviews conducted by CCIR members in British Columbia and Alberta with respect to strata or condominium subscription policies. Since these reviews, the CCIR BTP Working Group has engaged with the industry, including both insurers and brokers to better understand the extent of the practice and the impact on consumers.
“Fair and transparent pricing is essential to a successful marketplace and CCIR members expect insurers and brokers to cease BTP practices,” said CCIR. “CCIR members will work collaboratively with each other and the industry to ensure a timely transition from BTP.”
