Actuarial Notes

Regulation 664: Automobile Insurance

By King's Printer for Ontario · 2016 · R.R.O. 1990, Reg. 664

Study guide: Exam 6C

Ontario's Automobile Insurance regulation under the Insurance Act, R.R.O. 1990, Reg. 664, in its version in force from 4 July 2016 to 5 June 2019. That version's last amendment is O. Reg. 252/16, and its contents run from definitions, instalment payments, notice and refusal to issue contracts, through direct compensation, statutory accident benefits settlements and dispute resolution, to the prescribed and prohibited elements of a risk classification system, group marketing plans, public adjusters and transition.

On the syllabus

  • Exam 6C — objective A1; Sections 1–5 and 16 of the amended version as of 4 July 2016.

1–2 Definitions

  • Section 1 defines a commercial vehicle, a public vehicle (an ambulance, bus, funeral vehicle, limousine or taxi, among others) and a fleet: at least five automobiles, at least five of them commercial vehicles, public vehicles or vehicles used for business purposes, either under common ownership or management or available for hire through a common online-enabled application.
  • Section 2 is revoked (O. Reg. 391/02).

3 Monthly Premium Payments (Section 234 of the Act)

  • An insurer need not let an insured pay the premium in instalments unless six conditions are all met: the insurer and its affiliates insured at least 10,000 private passenger automobiles in Ontario the previous year; the contract is written on Ontario Automobile Policy 1 or Ontario Policy Form 2; it insures no commercial or public vehicle; it does not insure five or more vehicles under common ownership or management; the annual premium exceeds $300; and no more than one of the insured's policies was terminated for non-payment in the previous 36 months.
  • The insurer may require an initial payment of two monthly instalments and all payments by pre-authorized payment from the insured's account at a financial institution.
  • For contracts entered into or renewed on or after 1 June 2016, instalment interest may not exceed 1.3 per cent of the total premium for a term of twelve months or more, 0.65 per cent for six to twelve months and 0.22 per cent for less than six months (3, 1.5 and 0.5 per cent before that date).
  • An insurer that chooses to offer instalments is held to the same requirements.

4 Exemption from Notice (Section 236 of the Act)

  • Insurers are exempt from section 236 of the Act for every contract of automobile insurance that insures a fleet.

5 Refusal to Issue Contracts (Section 237 of the Act)

  • No insurer may decline to issue, refuse to renew or terminate a contract, or refuse to provide or continue a coverage or endorsement, solely because the applicant is or was insured by the Facility Association or another insurer declined them.
  • In deciding whether to issue, renew or terminate, the insurer may not consider, among other things, a physical or mental disability; occupation or employment circumstances; income; employment history; whether the person has a credit card; credit history or credit rating; bankruptcy; residence history; home ownership; gross or net worth; indebtedness; late or dishonoured premium payments on a contract not terminated for them; or past claims for incidents in which the person was not at fault.
  • For private passenger automobiles it may not consider a minor accident occurring on or after 1 June 2016 unless the automobiles were involved in more than one minor accident in the previous three years with the driver at fault in any of them.
  • A minor accident is one with damage to each automobile of no more than $2,000, paid by or on behalf of the driver at fault, no personal injuries and no payment by any insurer.
  • For a contract providing only third party liability, uninsured automobile coverage and statutory accident benefits, the insurer may not consider past claims for damage by perils other than collision or upset.
  • An insurer may not terminate a contract because a group marketing plan ends or the insured leaves the group.

5.1 Added Coverage to Offset Tort Deductibles Endorsement

6–8.1 Direct Compensation — Property Damage (Clause 263 (5) (b) of the Act)

9 Indemnification for Statutory Accident Benefits (Section 275 of the Act)

9.1–9.2 Settlements — Statutory Accident Benefits

10–14 Dispute Resolution (Section 280 of the Act)

14.1 Prescribed Elements of Risk Classification System (Sections 410 to 417 of the Act)

15 Application of Sections 410 to 417 of the Act

15.1 Expedited Risk Classification and Rate Approval (Section 411 of the Act)

16 Prohibited Risk Classification Elements (Sections 410 to 417 of the Act)

  • Insurers may not use the elements of a risk classification system this section describes in classifying risks for any coverage or category of automobile insurance.
  • No element may use past claims from accidents on or after 1 September 2010 for which the insured was 25 per cent or less at fault, or the existence of other health, hospitalization, income-continuation or sick-leave plans.
  • No element may use a lapse in coverage unless the insured drove uninsured during it, or the lapse resulted from termination for non-payment, a licence suspension on conviction, or an accident or conviction the insured did not disclose.
  • No element may use, except as the section permits: income; employment history; occupation (other than for commercial, public or business-use vehicles); having a credit card; credit history; credit rating; bankruptcy; residence history; home ownership; gross or net worth; indebtedness; late or dishonoured premium payments; or a minor accident on or after 1 June 2016 (unless there was more than one at-fault minor accident in three years).
  • Membership in an organized group may be used only if the group has at least 100 members besides associate members, has a group marketing plan meeting section 17, and is a trade union, professional, occupational or alumni association, a non-profit entity in existence at least 24 months, a group of employees of one employer, or a qualifying group of credit union members.

17 Group Marketing Plans

18–19 Public Adjusters — Statutory Accident Benefits (Section 398 of the Act)

19–25 Transition

Sources