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Bill 90, Lower Automobile Insurance Rates Act, 2019

Rakocevic, Tom

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Status

Debates

Acts affected

Original

Bill 90 Original (PDF)

EXPLANATORY

NOTE

The

Bill amends

Part XV (Rates and Rating Bureaus) of the Insurance

Act .

new

section 415.1 applies when the Superintendent is considering approving a

proposed or current rate for a coverage or category of automobile insurance for

an insurer. The provision prevents the Superintendent from approving the

proposed or current rate if it would permit the insurer’s return on equity to

exceed the amount set out in subsection (3) or would result in the insurer’s

operating costs exceeding a specified percentage of the amount collected by the

insurer in insurance premiums, as set out in subsection (4). The

section also requires

insurers to provide the Superintendent with specified information that is

relevant to approvals under the section.

new

section 415.2 requires insurers to provide the Superintendent annually with

information on how much their insured clients pay in insurance premiums each

year, how many accident claims are made to the insurer each year and how much

the insurer pays out on those claims. The information is to be provided based

on the postal codes of the areas in which insured persons reside.

Bill 90 2019

Act to amend the Insurance Act with respect to Automobile Insurance Rates

Her

Majesty, by and with the advice and consent of the Legislative Assembly of the

Province of Ontario, enacts as follows:

(1) Part XV of the Insurance Act is

amended by adding the following sections:

Approval

of insurance rates

415.1

(1) When the

Superintendent is considering whether to approve an insurer’s proposed or

current rate for a coverage or category of automobile insurance under this Part,

the Superintendent shall require the insurer to provide the following information,

in addition to any other information the Superintendent may require:

1. The

insurer’s equity associated with automobile insurance provided in Ontario.

2. The

insurer’s return on equity.

3. A

detailed breakdown of the insurer’s operating costs.

Refusal

to approve

(2) The

Superintendent shall refuse to approve an insurer’s proposed or current rate

for a coverage or category of automobile insurance if,

(

a) the

insurer’s return on equity exceeds the percentage determined under subsection

(3); or

(

b) the

insurer’s operating costs exceed the percentage of the total amount collected

by the insurer in insurance premiums that is established under subsection (4).

Return

on equity percentage

(3) For

the purposes of clause (2) (a), an insurer’s return on equity shall not exceed

the following percentage:

1. For

a rate being approved in 2019, 2020 or 2021, 7 percent.

2. For

a rate being approved in 2022 or in any subsequent year, a prescribed amount

which shall be equal to 7 percent as adjusted taking into account changes in

the capital markets, including interest rates on 10 year bonds issued by the

Operating

cost percentage

(4) For

the purposes of clause (2) (b), an insurer’s operating costs shall not exceed

the following percentage of the total amount collected by the insurer in

insurance premiums:

1. For

a rate being approved in 2019, 20 percent.

2. For

a rate being approved in 2020, 19.5 percent.

3. For

a rate being approved in 2021, 19 percent.

4. For

a rate being approved in 2022, 18.5 percent.

5. For

a rate being approved in 2023, 18 percent.

6. For

a rate being approved in 2024 or in any subsequent year, 17.5 percent.

Exception

(5) Despite

subsections (2) and (4), the Superintendent may approve an insurer’s proposed

or current rate for a coverage or category of automobile insurance even though

the insurer’s operating costs exceed the percentage established under

subsection (4) if, in the Superintendent’s opinion, observing the established

percentage would be unreasonable or unjust in the circumstances.

Annual

provision of information

(6) For

the purposes of clause (2) (b), each year every insurer shall provide the

Superintendent with information about their operating costs including

information about,

(

a) the

allocation of corporate overhead costs;

(

b) expenses

relating to salaries, bonuses and benefits, in particular those relating to the

top five senior executives;

(

c) marketing

expenses and costs for generating and retaining customers, including

commissions; and

(

d) legal

expenses.

Same

(7) The

information about operating costs required under subsection (6) shall relate to

the insurer’s operations in Ontario and across Canada.

Provision

of statistical information based on postal code

415.2

(1) Each

year, every insurer shall provide the Superintendent with the following information

with respect to all persons insured by the insurer in Ontario:

1. The

total insurance premiums paid by insured persons in the previous year.

2. The

total number of accident claims made by insured persons in the previous year.

3. The

total amount paid by the insurer for accident claims in the previous year.

Same

(2) The

information required under subsection (1) shall be classified and presented according

to the first three characters of the postal codes in which insured persons

reside.

(2) Sections

415.1 and 415.2 of the Act, as enacted by subsection (1), are amended by

striking out “Superintendent” wherever it appears and substituting in each case

“Chief Executive Officer”.

Commencement

(1) Subject to subsection (2), this Act comes into force on the day

it receives Royal Assent.

(2) Subsection

1 (2) comes into force on a day to be named by proclamation of the Lieutenant

Governor.

Short

title

The

short title of this Act is the Lower Automobile

Insurance Rates Act, 2019 .

Date Bill stage Event Outcome Committee

April 18, 2019

Second Reading

Vote

Lost on division

April 18, 2019

Second Reading

Debated

March 27, 2019

First Reading

Vote

Carried

Debates and Progress

First Reading

March 27, 2019

Committee

Second Reading

April 18, 2019

Mr. Tom Rakocevic, Mr. Doug Downey, Mr. Faisal Hassan, Mrs. Nina Tangri, Mr. Gurratan Singh

April 18, 2019

Lost on recorded division.

Committee

Third Reading

Royal Assent

Acts affected - Bill 90

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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