Insurance Amendment Act (Risk Classification Systems for Automobile Insurance), 2012 Singh, Jagmeet — Bill 45 (40th Parliament, 1st Session)

Bill 45, 40-1

Ontario — Bills

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Bill 45, Insurance Amendment Act (Risk Classification Systems for Automobile Insurance), 2012

Singh, Jagmeet

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[40] Bill 45 Original (PDF)

Bill 45 2012

An Act to amend the Insurance Act with respect to risk

classification systems for automobile insurance

Note:

This Act amends the Insurance

Act . For the legislative history of the Act, see the Table of

Consolidated Public Statutes – Detailed Legislative History at

www.e-Laws.gov.on.ca.

Her

Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Ontario, enacts as follows:

1. (1) Subsection 121 (1) of the Insurance Act is

amended by adding the following paragraph:

15.0.0.1 prescribing

information that must be provided in addition to the explanations required

under subsections 230.1 (1) and (2) and prescribing the time period within

which the information and explanations must be provided;

(2) Paragraphs 36, 36.1 and 36.2 of

subsection 121 (1) of the Act are repealed and the following substituted:

36. prescribing

rules relating to the manner in which the factors to be used in a proposed risk

classification system may be used;

36.1 prescribing

rules relating to the determination of the weight given to the factors used in

a proposed risk classification system in accordance with subsection 410 (1.1);

36.2 prescribing

the weight that may be given to the factor set out in subparagraph 1 iv of

subsection 410 (1.1) for the purposes of subsection 410 (1.4);

36.3 providing

for transitional matters relating to the implementation of subsection 410

(1.1);

36.4 prescribing

elements of a risk classification system in addition to the element set out in

subsection 410 (1.5) that insurers or a class of insurers are prohibited from

using in classifying risks for a coverage or category of automobile insurance;

37. prescribing,

for the purpose of

section 413.1, maximum monetary amounts and percentages by

which the rate for a class of risks in respect of a coverage or category of

automobile insurance may increase or decrease as a result of the application of

section 410 or a regulation made in respect of risk classification systems;

2. The Act is amended by adding the following

section:

Information from insurer, new contract

230.1

(1) Before

entering into a contract of automobile insurance with a person, an insurer

shall, in plain language that is clear and concise, provide a written

explanation to the person of the risk classification system it used to

determine the rate and any other prescribed information.

Same, renewal of contract

(2) If the renewal of a contract of automobile insurance

with a person includes a rate increase of 5 per cent or more and the increase

is unrelated to a claim made to the insurer, the insurer shall, in plain

language that is clear and concise, provide a written explanation to the person

of the reason for the increase and any other prescribed information.

Section 410 of the Act is amended by

adding the following subsections:

Requirements for risk classification system

(1.1) A proposed risk classification system for

determining the rates for each coverage and category of automobile insurance shall

meet the following criteria:

1. The

elements of the proposed risk classification system must use the following factors

in decreasing order of importance:

i. Subject

to subsection (1.2), the driving safety record of an insured person.

ii. The

number of kilometres that an insured person drives annually.

iii. The

number of years of driving experience of an insured person.

iv. The

population of the statistical area in which the driver's primary residence is

located.

2. Subject

to the regulations, the elements of the proposed risk classification system may

use factors in addition to those set out in paragraph 1 but any additional factors

shall, when taken together, be given no more weight than the factor set out in

subparagraph 1 iv.

Driving safety record

(1.2) For the purposes subparagraph 1 i of subsection

(1.1), only accidents in which the insured person was principally at fault, as

determined in accordance with the regulations, may be considered in determining

the person's driving safety record.

Statistical area

(1.3) For the purposes of subparagraph 1 iv of subsection (1.1),

a statistical area is an area that is classified by Statistics Canada for its

statistical area classification in its most recent census of Canada.

Same

(1.4) If a driver's primary residence is located in a

statistical area with a population of less than 10,000, the weight given to the

factor set out in subparagraph 1 iv of subsection (1.1) shall be the weight

prescribed by the regulations.

Geographical region as prohibited element

(1.5) Insurers are prohibited from using a geographical

region in which an insured person resides as an element in classifying risks

for a coverage or category of automobile insurance.

4. Subsection 412 (6) of the Act is repealed

and the following substituted:

Refusal to approve

(6) The Superintendent shall refuse to approve an

application under

section 410 if,

(

a) the

proposed risk classification system does not comply with

section 410; or

(

b) he

or she considers that,

(

i) the

proposed risk classification system or rates are not just and reasonable in the

circumstances,

(ii) the

proposed risk classification system is not reasonably predictive of risk or

does not distinguish fairly between risks, or

(iii) the

proposed rates would impair the solvency of the applicant or are excessive in relation

to the financial circumstances of the insurer.

(1) Subsections 413.1 (1) and

(2) of the Act are repealed and the following substituted:

Prescribed maximum increase and decrease in rate

(1) No insurer shall, as a result of the application of

section

410 or a regulation made in respect of risk classification systems, increase or

decrease the rate for a class of risks in respect of a coverage or category of

automobile insurance by more than the maximum monetary amount or percentage

prescribed under paragraph 37 of subsection 121 (1).

Application for phase-in of regulations

(2) If the

application of

section 410 or a regulation made in respect of risk

classification systems would require an insurer to increase or decrease the

rate for a class of risks in respect of a coverage or category of automobile

insurance by more than the maximum monetary amount or percentage prescribed

under paragraph 37 of subsection 121 (1), the insurer shall apply to the

Superintendent for approval of a plan that will phase in the increase or

decrease over a period specified in the application by exempting the insurer,

in whole or in part, from the applicable provisions for the specified period.

(2) Clause 413.1 (5) (

a) of the Act is

repealed and the following substituted:

(

a) the

plan will permit the applicable provisions of this Act or the regulations to

apply to the applicant without any exemption at the end of the period specified

in the application;

Commencement

6. This Act comes into force on January 1,

Short title

7. The

short title of this Act is the Insurance Amendment Act (Risk

Classification Systems for Automobile Insurance), 2012 .

EXPLANATORY NOTE

The

Insurance Act

currently requires an insurer to apply to the Superintendent of Financial

Services for approval of the risk classification system it intends to use in

determining the rates for each coverage and category of automobile insurance. The

Bill amends the Act to require that elements of a proposed risk classification

system use the following mandatory factors in decreasing order of importance:

1. The

driving safety record of the insured person, but only in respect of accidents

where the person was found to be principally at fault.

2. The

number of kilometres driven annually by the insured person.

3. The

insured person's years of driving experience.

4. The

population of the statistical area in which the driver primarily resides.

other factors are used, they cannot, when taken together, be given more weight

than the fourth mandatory factor. (see subsections 410 (1.1) to (1.4))

Insurers

are prohibited from using a geographical region in which an insured person

resides as an element in classifying risks. (see subsection 410 (1.5)) Other

elements may continue to be prohibited under the regulations. Insurers must

provide written explanations and other prescribed information regarding rate

determinations in specified circumstances. (see subsection 230.1 (1)) Regulation-making

powers are also provided for transitional matters relating to the

implementation of the new rules.

Date Bill stage Activity Committee

June 7, 2012

Second Reading

Lost on division

June 7, 2012

Second Reading

Debate

March 7, 2012

First Reading

Carried

Debates and Progress

First Reading

March 7, 2012

Committee

Second Reading

June 7, 2012

Mr. Jagmeet Singh, Mrs. Amrit Mangat, Mr. Jeff Yurek, Ms. Cheri DiNovo, Mr. David Orazietti, Mr. John O’Toole, Mr. Todd Smith, Mr. Paul Miller, Mr. Victor Fedeli

June 7, 2012

June 7, 2012

Lost on recorded division.

Committee

Third Reading

Royal Assent

Acts affected - Bill 45

Most Ontario public acts are available electronically; to view copies of the Acts to be amended by this bill visit e-laws

Insurance Act

Legislative Assembly of Ontario

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Document details

Collection	Ontario — Bills
Citation	Bill 45, 40-1
Type	bill
Volume / chapter	p40 s1 bill 45 html
Language	en
Format	html
Source	PROVINCIAL
Identifier	446f4340b7cbf000063ff0f0483eb38ad25ae897

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