Take All Comers
Take-All-Comers Rule
Ontario’s auto insurance regulator, The Financial Services Regulatory Authority of Ontario (FSRA), is taking aim at insurers who avoid issuing auto policies to people living in certain cities or are otherwise in violation of the “Take-All-Comers” rule. In an effort to improve how auto insurance serves Ontario’s drivers, FSRA sought input from industry insiders and the general public on the Take-All-Comers rule.
By law, insurers are required to provide all Ontario consumers with access to timely auto insurance quotes and the lowest rates available to them. As an Ontario insurance provider, failing to renew a client’s auto policy (even if that client missed a payment) could attract close scrutiny from the provincial regulator. Ontario law prohibits insurers from declining to issue, terminating, or refusing to renew an auto policy or endorsement except on grounds filed with FSRA.
Here is a breakdown of what the Take-All-Comers rule is, how it protects consumers, and the possible consequences to the insurance industry if it is not followed.
What Is the Take-All-Comers Rule?
The Insurance Companies Act is the primary legislation governing all federally incorporated or registered insurance companies in Canada. The purpose of the rule is to ensure that no motorist can be denied coverage, requiring all auto insurers in the province to include all classes of risk in their underwriting rules and pricing. These consumer protection features comprise Ontario’s “Take-All-Comers” rule.
Insurers, agents, and brokers have legal obligations to:
- Provide consumers with the lowest rate available
- Offer all eligible consumers a quote or a renewal
- Accept all auto insurance business from consumers that meet insurers’ approved rules
As outlined under Ontario’s Insurance Act, the Take-All-Comers rule has three main requirements:
- Section 237 prohibits insurers from declining to issue, terminating, or refusing to renew an auto policy or endorsement on any prohibited grounds set out in the regulations.
- Section 238 prohibits insurers from declining to issue, terminating, or refusing to renew an auto policy or endorsement except on grounds filed with FSRA.
- Section 2(1)(8) of Regulation 7/00 (Unfair or Deceptive Acts or Practices – UDAP) requires insurers to provide consumers with the lowest rate available when they request a quotation for automobile insurance, apply for insurance with an affiliated insurer, or receive an offer to renew an existing contract, in accordance with the insurer’s approved underwriting rules and rates.
A delay in providing a quote is effectively declining coverage and can only be based on criteria listed in the insurer’s approved underwriting rules on file with FSRA.
Why Is the Review and Guidance of the Take-All-Comers Rule Needed?
All insurers, agents, and brokers have a legal obligation to offer any eligible consumer a quote or a renewal. Insurers must accept all auto insurance business from consumers that meet their approved rules. The guidance aims to examine conduct by insurers that makes it difficult for consumers to acquire automobile insurance.
FSRA noted that “when consumers are dissuaded or forced to abandon a request for a quote, which is a critical part of the contract for automobile insurance coverage, it constitutes a declination to issue a contract.”
Following a large industry review and public consultations, FSRA found several practices inconsistent with the rule. Insurers are now required to review their practices, report any breaches, and develop remediation plans to ensure compliance with the law.
Why Did FSRA Undertake This Review of the Take-All-Comers Rule?
FSRA initiated its work on the Take-All-Comers rule in the Ontario auto insurance sector following public consultations. They expanded the scope of their review to examine practices inconsistent with the rule’s intent.
FSRA Examination Findings
The examinations uncovered instances where insurers avoided issuing auto quotes to certain categories of people, including:
- Individuals who experienced prior accident benefits losses (even if they were not at fault, such as passengers and pedestrians)
- Individuals not purchasing a property policy (e.g., homeowner’s insurance)
- Residents of certain Ontario municipalities
- Individuals with less than one year of automobile insurance history in Canada
Other examples of non-compliance included:
- Failing to offer a renewal to qualifying customers, including those who missed a single premium payment
- Withdrawing underwriting authority from brokers and agents while failing to respond to qualifying customers’ quote requests in a timely manner
- Requiring customers to complete written applications for unjustified reasons
What Could FSRA Do If Companies Don’t Comply?
FSRA’s enforcement actions depend on the nature and severity of non-compliance. Actions could range from education and remediation to regulatory intervention. Severe violations could result in administrative monetary penalties or license revocation.
“Auto insurance is necessary to operate a vehicle in Ontario, and FSRA is taking steps to ensure that all consumers can get the best product at the best price available when they purchase or renew their auto insurance policy,” FSRA stated.
What Does Take-All-Comers Compliance Mean for Consumers?
The goal of the guidance is to strengthen conduct standards and improve fairness for consumers. Compliance with the Take-All-Comers rule ensures a level playing field and prevents practices that inhibit consumers from purchasing or renewing their auto insurance when they otherwise qualify. For the insurance industry, it levels the competitive playing field for all providers.
Take all comers Thematic Review
Take all comers Requirements Consulation
