Nova Scotia moves date for Facility to change underwriting rules

In response to urging from the Facility Association (FA), the Nova Scotia government has decided the industry’s pool for high-risk drivers will change its risk classification system at the same time the rest of the industry is required to do so.FA was originally required to change its classification system in effect to eliminate classification based on such factors as age and gender by April 1. It will now be required to do so November 1, along with the voluntary insurance market.Having the FA change its rules earlier would have made it an even more attractive market for certain groups, says FA president and CEO David Simpson. “We would have been the market of choice for underage [i.e. under 25] drivers across Nova Scotia.” Overall, Simpson says, getting rid of age, gender and other risk classifications is not good public policy, but if it is to be done, regulators needed to be aware of the “unintentional” negative effect it could have by making FA an attractive market. The Nova Scotia Insurance Review Board, in a letter to Environment and Labour Minister Ron Russell, noted that the delay should keep more drivers out of FA and would avoid “raising issues of fairness and equity amongst consumers”.Minister Russell, in a press release, noted the improvements which have already begun to take place with regards to reducing the number of drivers in the high-risk pool. He points to new business in FA dropping by 32% between January 2003 and January 2004.Simpson confirms the situation has improved, but adds “we still have rates that in some cases are below the market”. Studies have shown that when FA rates are below or equal to the voluntary market, more drivers end up in the pool, and when FA rates are set well above those of the voluntary market, drivers move back to regular insurers.