Section 2 : Alberta and Ontario regulation

Question 1

What rating variables are explicitly prohibited in Alberta for auto insurance?

Answer 1

Alberta prohibits the use of credit scores, gender, and marital status in rating and underwriting auto insurance.

Question 2

Are gender and marital status allowed for underwriting in Alberta?

Answer 2

No. Both are prohibited for rating and underwriting purposes in Alberta.

Question 3

What rating variables are prohibited in Ontario for private passenger automobile insurance?

Answer 3

Ontario prohibits the use of credit scores, occupation, employment status, level of education, and homeownership.

Question 4

Are gender and marital status prohibited for rating in Ontario?

Answer 4

No. Ontario allows gender and marital status, unlike Alberta, where they are prohibited.

Question 5

Does Alberta require or encourage a winter tire discount?

Answer 5

No. Alberta does not currently mandate a winter tire discount nor is it a focus of its reform recommendations .

Question 6

What is Ontario’s position on winter tire discounts?

Answer 6

Ontario mandates that insurers offer a discount for winter tires under the Insurance Act. The discount must be clearly described and applied when conditions are met .

Question 7

Which province mandates a winter tire discount?

Answer 7

Ontario mandates it; Alberta does not.

Question 8

What are the three pillars of Alberta’s proposed reform?

Answer 8

1. Stable, affordable premiums
2. Improved care for injured Albertans
3. Sustainable insurance system with meaningful choice .

Question 9

What regulatory body governs PPA filings in Ontario?

Answer 9

The Financial Services Regulatory Authority of Ontario (FSRA).

Question 10

What must accompany all rate filings in Ontario?

Answer 10

A comprehensive actuarial memorandum with support for all rating variables, assumptions, and changes. FSRA scrutinizes any assumptions lacking empirical support.

Question 11

How do Alberta and Ontario differ in their accident benefit systems?

Answer 11

Ontario uses a no-fault system with mandatory Accident Benefits coverage. Alberta uses a modified system and is proposing reforms to simplify the care model and reduce legal costs .

Question 12

Can accident benefit claims be used in premium determination in Alberta?

Answer 12

No. Insurers must not use accident benefit claims to determine premiums.

Question 13

What is Alberta’s position on using cannabis legalization as a rating factor?

Answer 13

Insurers are not allowed to adjust rating programs or assumptions based on cannabis legalization.

Question 14

Are rate capping and CLEAR adoption subject to AIRB approval? (Alberta)

Answer 14

Yes. Rate capping and adoption of CLEAR tables must be filed and approved by AIRB.

Question 15

Are immediate roadside suspensions (IRS FAIL) surcharged the same as criminal code convictions? (Alberta)

Answer 15

Yes, but only one surcharge can apply if both IRS FAIL and criminal code conviction result from the same event.

Question 16

Can conviction for failure to wear a seatbelt be surcharged in Alberta?

Answer 16

No. Convictions under the Vehicle Equipment Regulation, like seatbelt use, cannot be surcharged.

Question 17

What must be done if historical COVID-19 relief affects data used in filings? (Alberta)

Answer 17

Insurers must adjust historical data to pre-COVID-19 levels and provide support for any adjustments.

Question 18

What is the AIRB stance on credit scores as rating variables? (Alberta)

Answer 18

Credit score use is prohibited in Alberta for rating purposes.

Question 19

Are “Gender X” drivers allowed in Alberta?

Answer 19

Yes. Insurers must accommodate “Gender X” and ensure no discriminatory pricing.

Question 20

What deductible levels must be offered in Ontario?

Answer 20

$500 deductible must be established for Comprehensive, DCPD, and Collision. Higher/lower deductibles may also be offered.

Question 21

What is the mandatory definition of a retiree in Ontario to qualify for a discount?

Answer 21

A person age 65+ or receiving a registered pension and not working in employment or business.

Question 22

Are winter tire discounts mandatory in Ontario?

Answer 22

Yes. All insurers must offer a winter tire discount on PPA insurance.

Question 23

What is the Graduated Licensing System in Ontario?

Answer 23

Level One (G1):

• Entry-level license (learner’s permit)
• Must be accompanied by a fully licensed driver
• Insurers are not allowed to rate Level One drivers in Ontario.

Level Two (G2):

* Intermediate stage with fewer restrictions * Can drive alone but still has some limitations (e.g., alcohol tolerance, passenger limits) * Can be rated for insurance

Question 24

What driver levels in Ontario’s graduated licensing system can be rated?

Answer 24

Only Level Two drivers and above. Level One cannot be rated.

Question 25

What is the rule for novice drivers in Ontario's GL system regarding discounts?

Answer 25

Level Two drivers with no at-faults or convictions get a 10% discount for one year.

Question 26

What are the key differences between Ontario and Alberta regarding caps on auto insurance rate changes and territorial relativities?

Answer 26

Alberta: * 10% cap on total overall premium rate increases in 12 months. * Can exceed 10% only with strong actuarial support and AIRB approval. * No specific ±10% cap on territorial relativities. Ontario: * No fixed overall premium rate increase cap like Alberta. * ±10% cap applies specifically to changes in territorial relativities per territory. * FSRA requires rate changes to be fair, actuarially justified, and within ±10% for territorial differentials unless otherwise justified. Please not that if you have –15% change for Territory 4 (for example) , it could be acceptable, as long as: * It aligns with indicated changes based on data. * It is well supported by actuarial evidence. *It is applied consistently and fairly across all policyholders.

Question 27

Why does Alberta impose a cap on territorial rate differentials?

Answer 27

To prevent unfair premium variations and ensure regional fairness in rating.

Question 28

Can insurers in Alberta exceed the 10% territory cap?

Answer 28

Only if they provide strong actuarial support and the AIRB approves it.

Question 29

What key rating factors are prohibited in both Alberta and Ontario?

Answer 29

Credit score, income, and employment status.

Question 30

What factors are banned only in Alberta?

Answer 30

Gender and marital status are banned in Alberta but allowed in Ontario.

Question 31

What rating variables are prohibited only in Ontario?

Answer 31

Homeownership, education, occupation, credit card ownership, and bankruptcy history.

Question 32

Can a lapse in insurance be used as a rating factor?

Answer 32

Alberta permits some use; Ontario bans it unless the lapse involved illegal behavior.

Question 33

What must Alberta insurers provide for acquisition or merger filings?

Answer 33

A non-actuarial filing with a revenue-neutral impact and dislocation tables.

Question 34

In Ontario, what must be included in Appendix B2?

Answer 34

Certificate of the Actuary—attesting to accuracy and compliance with the law and actuarial standards.

Question 35

Are experience trends impacted by COVID-19 allowed without justification in Alberta?

Answer 35

No. COVID-19 impacts must be identified and adjusted for when developing rate level indications.

Question 36

What discount must be filed for Ontario retirees?

Answer 36

A retiree discount applied to standard Accident Benefits coverage.

Question 37

Is there a legal requirement for using winter tires in Alberta?

Answer 37

No. But the Alberta reform committee recommended mandating them.

Question 38

Is there a legal requirement for winter tire discounts in Ontario?

Answer 38

Yes. The discount is mandatory and must be offered for PPA insurance policies

Question 39

What was the Alberta reform committee’s rationale for mandating winter tires?

Answer 39

Improve safety and reduce accident frequency in winter conditions.

Question 40

What is the Alberta committee's proposed solution for auto insurance instability?

Answer 40

Replace the hybrid tort/no-fault model with a pure no-fault system.

Question 41

Why does the committee argue tort should be removed?

Answer 41

It increases delays, costs, and poor health outcomes.

Question 42

What funding model is proposed for catastrophic injury care?

Answer 42

A shared pool of funds contributed from each auto insurance premium.

Question 43

Which province supports a pure no-fault model (Ontario vs Alberta)

Answer 43

Alberta (as per reform recommendations); Ontario retains a threshold tort model.

Question 44

Which province allows gender in rating variables? (Ontario vs Alberta)

Answer 44

Ontario does; Alberta does not.

Question 45

Who regulates rates in Alberta vs Ontario?

Answer 45

Alberta: AIRB (Automobile Insurance Rate Board). Ontario: FSRA (Financial Services Regulatory Authority of Ontario).

Question 46

Which province has a cap system for new drivers? (Alberta vs Ontario)

Answer 46

Alberta uses the Grid to cap premiums for young/new drivers.

Question 47

What is the role of the AIRB in Alberta's regulatory system?

Answer 47

It sets rate guidelines, reviews filings, and ensures fairness in pricing.

Question 48

What are the core guiding principles of Alberta’s proposed reform?

Answer 48

Private sector delivery, affordability, timely outcomes, and long-term sustainability.

Question 49

Ontario : Describe two conditions that an insurer must meet to submit a simplified filing

Answer 49

* No rating algorithm change other than new discount if new discount has been introduced by other companies * Overall rate change ≤ 0%"

Question 50

Justify whether each of the following situations are permitted by the Ontario regulator. a. The insurer cancelled the automobile policy of an insurance at renewal after learning that the insured is without employement

Answer 50

Prohibited. Insurers can’t use employment history for underwriting

Question 51

Justify whether each of the following situations are permitted by the Ontario regulator. b. An insurer declined to renew a policy of automobile insurance based on the individual data of an insured participating in a Usage-Based Insurance program to investigate a suspicious automobile claim

Answer 51

Prohibited. Insurer can’t use UBI program information to refuse to renew a policy

Question 52

Justify whether each of the following situations are permitted by the Ontario regulator. c. An insurer used the data of insured participating in a Usage-Based Insurance program to investigate a suspicious automobile claim

Answer 52

Prohibited. Insurer can’t use UBI program information for claim-related purpose

Question 53

Justify whether each of the following situations are permitted by the Ontario regulator. d. An insurer declined to renew a policy of automobile insurance after the insured was convicted of criminal drunk driving

Answer 53

Permitted. Insurers can use conviction and/or diving record for underwriting.

Question 54

Can UBI be used for rating and Underwriting in Alberta and Ontario?

Answer 54

Rating : ✅ Yes Usage-Based Insurance is allowed for rating in both provinces, with regulatory approval. Underwriting :❌ No. UBI is prohibited for underwriting in Ontario; Alberta also discourages its use without explicit approval.

Question 55

Can minor driving convictions be used for rating in Alberta and Ontario?

Answer 55

✅ Yes. Both allow them, but Alberta prohibits surcharges for specific minor offences like seatbelt or vehicle equipment violations.

Question 56

Can gender and marital status be used for rating or underwriting in Alberta and Ontario ?

Answer 56

Alberta ❌ No. Alberta prohibits both for rating and underwriting. Ontario ✅ Yes. Ontario allows both.

Question 57

Can credit score, credit history, or bankruptcy be used for rating or underwriting in Alberta or Ontario?

Answer 57

❌ No. All are prohibited in both provinces.

Question 58

Can occupation, education, or income be used for rating or underwriting in Ontario and Alberta?

Answer 58

Ontario : ❌ No. Ontario prohibits all three. Alberta : ⚠️ Not explicitly prohibited, but strongly discouraged — subject to AIRB fairness review.

Question 59

Can home ownership, residence history, or credit card ownership be used for rating in Ontario?

Answer 59

❌ No. Ontario prohibits these factors.

Question 60

Can a lapse in insurance coverage be used for rating in Alberta and Ontario?

Answer 60

✅ Alberta: Yes, if justified. ❌ Ontario: Only if due to fraud or illegal lapse.

Question 61

Can not-at-fault accidents be used for rating or underwriting in Alberta or Ontario?

Answer 61

❌ No. Both provinces prohibit using not-at-fault accidents in rating or underwriting.

Question 62

Can an insurer increase premiums due to a minor at-fault accident in 2015 in Ontario?

Answer 62

✅ Yes, if it occurred before June 1, 2016, because the regulation didn’t yet prohibit it. ❌ No, if the same accident happened on or after June 1, 2016 and meets the definition of “minor accident.” Definition of minor accident : * No one was injured * Only property damage occurred * The cost of repairs was $2,000 or less (including both vehicles) * The insured was not convicted of any offence in relation to the accident * The insured paid for the damage themselves (not through insurance)

Question 63

Ontario : An insurer refuses to insure a driver who rents their home and does not own property. Is this permitted?

Answer 63

❌ No – Ontario prohibits the use of homeownership status in underwriting and rating decisions (Reg 664, s.16).

Question 64

Ontario : An insurer increases the premium due to a lapse in coverage where the insured voluntarily cancelled the policy while not driving. Is this permitted?

Answer 64

❌ No, unless the lapse was due to a conviction, an unpaid premium, or a violation of the Compulsory Automobile Insurance Act. Voluntary lapses without violations cannot be used.

Question 65

Ontario : An insurer denied coverage based on the insured's credit history and bankruptcy record. Is this permitted?

Answer 65

❌ No – Ontario bans the use of credit score, credit history, and bankruptcy status for rating or underwriting.

Question 66

Ontario : An insurer refuses to insure someone due to their profession as a delivery driver. Is this permitted?

Answer 66

✅ Yes, if the vehicle is used for business purposes (i.e., commercial classification). ❌ No, if the vehicle is a personal-use PPA and the profession is unrelated to use.

Question 67

Ontario : An insurer applied a surcharge due to a medical plan held by the insured through their employer. Is this permitted?

Answer 67

❌ No – Ontario prohibits rating based on the presence or absence of external benefit plans.

Question 68

Ontario : An insurer refused to insure a newly licensed driver with no driving history.

Answer 68

✅ Yes – Insurers may decline to underwrite based on lack of driving experience, but must file this criteria with FSRA and apply it consistently. Under Ontario's "Take-All-Comers" rule, insurers are obligated to offer automobile insurance to all eligible consumers who meet their filed underwriting criteria. This means that while a lack of driving history can be a valid underwriting criterion, it must be explicitly included in the insurer's filed rules.

Question 69

Can postal code be used to determine auto insurance premiums in Ontario?

Answer 69

✅ Yes. Territorial rating is allowed if justified and FSRA-approved.

Question 70

Can claims where the insured was 25% or less at fault be used for rating or underwriting in Ontario?

Answer 70

❌ No. Ontario prohibits use of claims where the driver was 25% or less at fault.

Question 71

Can a lapse in auto insurance coverage be used as a rating factor in Ontario?

Answer 71

❌ Generally no — except if the lapse was due to: Violation of the Compulsory Automobile Insurance Act Non-payment of premiums License suspension from a vehicle-related offence Unreported accidents or convictions that would affect premium

Question 72

Justify whether each of the following situations are permitted by the Ontario regulator. a. After a recent promotion, an insured informed their personal automobile insurer of their new salary and their premium increased.

Answer 72

❌Prohibited. Insurer can’t use insured profession to set premium. * Prohibited. Insurer can’t use income level for rating purpose."

Question 73

Justify whether each of the following situations are permitted by the Ontario regulator. b. An insured moved from their downtown residence to the suburbs. Their personal automobile premium decreased.

Answer 73

✅ Allowed, if the change is due to her changing rating territory. ❌ Prohibited, if the change is due to the use of residence history"

Question 74

Justify whether each of the following situations are permitted by the Ontario regulator. c. An insured recently started driving for a car-sharing service. Their insurer found out and wants to charge the insured a higher premium.

Answer 74

✅ Allowed. His insurer is in his right to charge more since the additional risk is related to the use of a vehicle for mercantile activities. ✅ Allowed. There is a larger exposure as the mileage driven annually will be higher."

Question 75

Justify whether each of the following situations are permitted by the Ontario regulator. d. An insurance company is advertising a premium discount on personal automobile policies by virtue of owning a credit card.

Answer 75

❌ Prohibited. Insurer can’t use the fact that insured has a credit card or not to affect pricing. ❌ Prohibited. An insurer can’t use credit information to set premium."

Question 76

Justify whether each of the following situations are permitted by the Ontario regulator. e. An insured's usage-based insurance program data was used to deny their personal automobile claim.

Answer 76

❌ Prohibited. Insurer can’t use UBI program information to adjust or deny a claim. ❌ Prohibited. Insurer can only use UBI program information for discount-setting."

Question 77

Fully discuss the circumstances under which an insurer in Ontario could file automobile rates using the simplified guidelines

Answer 77

"* Rate change less equal 0% And any 3 of the following: * Territorial change between X and X * Other change between X and X * No change to algorithm * No new line of business written * PPA filing * No change rating structure * Can change classification, discount, variables and rules * Can add new discount already used in industry except UBI * No increase greater than X to any consumer"

Question 78

c. Provide two reasons FSCO may refure to approve an automobile rate filing

Answer 78

*Proposed risk classification system or rates are not just and reasonable in the circumstances *Proposed risk classification system is not reasonably predictive of risk or does not distinguish between risks *Proposes rates would impair the solvency of the applicant OR are excessive in relation to the financial circumstances of the insurer *Use of prohibited rating variables *Proposed more than 55 territories *Assumptions can't be justified *No retirement discount offered