FSRA takes aim at take-all-comers rule

Sept. 11, 2023 — ONTARIO’s regulator said it has found systemic non-compliance by large insurers with the province’s take-all-comers rule for auto coverages.

The Financial Services Regulatory Authority of Ontario released a report last month that outlines that and other findings from a multi-year review of insurer practices that included public consultations and insurer examinations.

The regulator said it found that instead of filing new underwriting rules for approval, insurers chose to engage in non-transparent and illegal practices that made it more difficult for certain types of consumers to obtain auto insurance quotes.

“This systemic non-compliance led to consumer harms, unfair competition and diminished market health,” FSRA said.

The take-all-comers rule mandates insurers to accept business from all consumers who meet their approved underwriting rules.

The regulator said that during its review, some brokers hesitated to speak up about insurers not following the rule due to fears of backlash, such as losing their broker appointment or facing financial consequences from the insurers involved.

To address this, FSRA set up broader whistleblower protection. But the regulator said it noticed some brokers were involved in the non-compliance themselves. In some cases, it said, non-compliance led to higher broker profits through specific commission arrangements.

FSRA said it will ensure future take-all-comers compliance by supervising insurers to confirm the effective implementation of planned remedial actions and by identifying other sources of non-compliance.

This includes conducting secret-shopper initiatives and ongoing supervision of auto insurers extending beyond the 12 insurers that were included in the regulator’s review.

FSRA said any future instances of non-compliance with the take-all-comers rule will be met with a zero-tolerance approach.

“The take-all-comers requirement is a cornerstone of ensuring Ontario consumers have access to auto insurance at the lowest available rate,” FSRA CEO Mark White said, noting that it is very difficult for consumers and regulators to identify when insurance quotes for qualifying customers are withheld or delayed.

“Our eventual success in rooting out this non-compliance required perseverance and the use of governance, controls and processes within the insurance companies themselves to self-identify and remediate these consumer harms,” Mr. White said.

The regulator undertook a multi-phased policy and supervisory approach over several years to identify and address non-compliance across the market.

The regulator said if consumers are not getting a quote promptly, they should report it to the insurance company’s complaint office. And if the matter is still not resolved, consumers should report it to FSRA.

In its report, FSRA said that through discussions with the public and supervisory assessments, it identified several concerns with insurers adhering to the intended spirit of the take-all-comers policy.

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