The Financial Services Commission of Ontario (FSCO) is highlighting a number of automobile insurance reforms that will become effective on September 1, 2010.
Tightened restrictions aimed at protecting disadvantaged drivers were unveiled, along with other changes to auto insurance Wednesday. In addition, Ontario regulations now ban credit scoring in auto insurance lines as an “unfair or deceptive act or practice.”
Credit scoring by insurers has become a contentious issue since the country’s economy turned sour in 2008, bringing job losses and higher debt loads. Many Canadians have discovered to their chagrin that their financial difficulties have led to higher premiums or even cancelled coverage.
They will need approval from the Financial Services Commission of Ontario to change rates, and will need time to change their systems and train their brokers, agents, underwriters and claims adjusters
The Canadian Council of Insurance Regulators has established a task force to study the issue, but it will be some time before it produces a report. Meanwhile, earlier this year, the Insurance Bureau of Canada published a consumers’ guide on credit scoring and a voluntary code of conduct for its members.
A definition of “credit information” includes a person’s credit rating, credit score, credit-based insurance score, occupation, place of residence, number of dependants, education, profession, place(s) of employment, income, debts, cost of living and assets.
Auto insurance will have to apply to pass on additional costs as a result of Ontario adopting the 13 per cent harmonized sales tax after July 1.
Randy Carroll, chief operating officer at the Insurance Brokers Association of Ontario, says he is satisfied that the tighter restrictions on the use of credit scores and economic status will work for auto insurance.