Regulation (July 01, 2010)

ONTARIO REGULATES FAIR PRICING AMONG INSURER AFFILIATES

The Financial Services Commission of Ontario (FSCO) has amended its Unfair or Deceptive Acts or Practices (UDAP) regulation to ensure fair pricing among insurance company affiliates and their distribution channels.

The UDAP now requires “affiliated insurers and their agents/brokers to provide a consumer with the lowest rate that is available having regard to all of the circumstances, including the means of distribution.”

According to FSCO’s bulletin: “Some insurer groups have two or more affiliated insurers that have been used to segment business, commonly into a ‘standard’ market and a ‘preferred’ market.

“The distinction between these insurers is not always clear in the insurers’ filed declination rules or risk classification systems.”

The new UDAP regulation will require all affiliated insurers and associated agents/brokers to provide a rate on renewal for all of the affiliates for which the consumer qualifies, taking into account all methods of distribution.