The Financial Services Regulatory Authority of Ontario (FSRA) announced August 3 that it has imposed administrative penalties in the amount of $600,000 against two Aviva Canada Inc. companies for contravening so-called Take-All-Comers requirements contained in sections of the province’s Insurance Act.
Under the Act, companies are required to provide all Ontario consumers with access to timely auto insurance quotes and must strictly adhere to approved underwriting rules in selling automobile insurance to consumers or on the renewal of their policies. The Take-All-Comers requirements include the obligation for insurers to offer the lowest rates available, in accordance with the insurers’ approved underwriting rules for each consumer’s circumstances and to accept all auto insurance business from consumers that meets their approved rules.
According to a recent report, entitled Take-All-Comers Thematic Review Report, FSRA became aware of certain business practices in the industry which appeared to contravene the Act. “FSRA undertook a review of Take-All-Comers, which confirmed that there was intentional non-compliance industry-wide. Instead of filing new underwriting rules for approval by FSRA, insurers chose to engage in non-transparent and illegal practices that made it more difficult for certain types of consumers to get auto insurance quotes. This systemic non-compliance led to consumer harms, unfair competition, and diminished market health. FSRA responded by taking action to restore compliance and consumer trust in the system,” the regulator writes in its report.
As part of its review, FSRA directed firms to cease all methods of influencing or dissuading consumers and directed insurers “to cease all related algorithmic rules and instructional messages programmed into proprietary and third-party quoting, binding and operating systems, comparative quoting technology and sales lead generation technology which were not consistent with the insurer’s approved underwriting rules.”
In accordance with FSRA’s requirements, Aviva and others provided a 90-day plan to the regulator which identified remedial efforts to reach compliance. The company’s CEO also signed an undertaking which, among other things, required the company stop using algorithmic rules and instructional messages programmed in third-party operating systems and sales lead generation technology not consistent with approved underwriting rules which have been filed to the regulator. Prior to the completion of Aviva’s 90-day plan, however, FSRA commenced an investigation.
It found that two subsidiaries, Aviva Insurance Company of Canada and S&Y Insurance Company did not fully ensure that the unapproved underwriting rules and daily sales lead limits had stopped being used. “As a result, AIC and S&Y were in breach of the undertaking in the 817 instances that a quote was not displayed to a consumer or brokerage and thus was not offered to a consumer even though it was the lowest rate available.”
Although Aviva took certain steps to comply with the Take-All-Comers requirements, including creating an executive steering committee and working group and verbally directing all aggregators to remove its participation from their websites, due to a contractual requirement, one aggregator continued to generate comparative quotes. “The Aviva Group spoke to that aggregator and verbally reinforced the importance of compliance with Take-All-Comers requirements,” the regulator acknowledges. It also sent instructions to brokerages to stop using aggregators platforms in connection with providing quotes or soliciting sales. Despite these efforts and despite the fact that both subsidiaries had ceased using aggregators by June 2022, FSRA says the firms did not satisfactorily comply with FSRA’s interpretation of the rules.
Broken down, the firms were each fined $150,000 for failing to comply with the Act and $150,000 each for failing to comply with the undertakings signed by Aviva’s CEO.
“We take our regulatory commitments seriously. We have fully cooperated on this matter and have taken the necessary steps to ensure we are fully compliant with all-comers regulations,” said Aviva's spokesperson to the Insurance Portal.
