Level-Playing Field Addressed in Facility Insurance Market

The Facility Association (FA) revamped their rating and commercial underwriting rules to improve alignment with the regular insurance market.

The Facility Association administers automobile insurance residual market on behalf on the insurance industry in nine provincial jurisdictions, except B.C., Manitoba and Saskatchewan.

The changes ensure that FA underwriters are supplied with the information they need to ensure a commercial policy is rated correctly. For example, additional information FA now will request includes fuel tax reports, NSC profile information; and FMCSA SMS reports. This information helps determine where vehicles are operating, routes travelled and the frequency of travel, which will assist in reducing underreporting of out-of-province and U.S. exposure.

The rules referenced above are in place as of October 1, 2020, except in New Brunswick and PEI, which will come online January 1, 2021.

In late 2018 and throughout 2019, Facility Association identified a significant increase in interurban (trucking) business. Increases in trucking business was observed in multiple locations across the country.

Following feedback from the Ontario Trucking Association and member insurance companies, Facility Association formed a “commercial lines working group” composed of large interurban and commercial vehicle writer, with representation from Intact Insurance, Northbridge Insurance Company, Economical Mutual Insurance and the Cooperators General Insurance Company, as well as representatives from Dalton Timmis Insurance Brokers and the Ontario Trucking Association.

“We are grateful for the work undertaken by FA and insurance industry partners to address the level-playing field issues identified over the past few years. We are now able to move forward with a system that treats everyone the same with respect to their risk and the premiums required to cover that risk,” said Stephen Laskowski, president of the OTA and the Canadian Trucking Alliance.

The working group’s mandate was to conduct a comprehensive review of Facility Associations’ commercial-interurban underwriting rules and propose amendments. Enhanced underwriting rules would equip FA to obtain all necessary underwriting and rating information in a fair and equitable manner and would align with standard market writers. In other words, fleet operators and trucking firms should be restricted from obtaining a lower premium on their insurance in FA because FA has no authority to force the disclosure of the relevant information; nor should public safety be put at risk as a trade-off to market access.

When applied for and issued properly, insurance with the FA has a legitimate and important role in supporting the trucking industry. The intent of the review was not to eliminate these legitimate uses, but rather to assess the residual market insurance policy framework and ensure proper rating of carriers reflects road safety and fleet responsibility in this market.

With modernized Facility Association underwriting rules in place to deter fraud and misrepresentation, industry and governments can now focus their efforts on systems to ensure government licensing systems check insurance coverage in real-time and that sufficient regulatory financial commitment levels are being met.