Automobile Insurance Rate Stabilization Act, 2003, S.O. 2003, c. 9

Automobile Insurance Rate Stabilization Act, 2003

S.O. 2003, CHAPTER 9

Historical version for the period January 1, 2013 to June 12, 2013.

Note: On a day to be named by proclamation of the Lieutenant Governor, sections 1-6, subsections 7 (1)-(3) and (5)-(12) and sections 8-13 are repealed by the Statutes of Ontario, 2003, chapter 9, subsection 14 (1). See: 2003, c. 9, s. 14.

Last amendment: 2012, c. 8, Sched. 2.

Definitions

1. In this Act,

“authorized rate” means, in respect of a contract of automobile insurance, the rate the insurer is authorized under this Act to charge on the issue or renewal of the contract; (“taux autorisé”)

“automobile insurance” has the same meaning as in the Insurance Act; (assurance-automobile”)

“contract” has the same meaning as in section 1 of the Insurance Act; (“contrat”)

“insurer” means a person who undertakes or agrees or offers to undertake a contract of automobile insurance and includes the Facility Association; (“assureur”)

“Superintendent” means the Superintendent of Financial Services appointed under the Financial Services Commission of Ontario Act, 1997. (“surintendant”) 2003, c. 9, s. 1; 2005, c. 31, Sched. 2, s. 1.

Application of Act

2. (1) This Act applies to insurers and contracts of automobile insurance to which sections 410 to 417 of the Insurance Act would apply but for sections 4 and 5 of this Act. 2003, c. 9, s. 2 (1).

Same

(2) This Act does not apply to an insurer in respect of any category or coverage of automobile insurance for which the insurer is not required to make an application for approval under section 410 of the Insurance Act by reason of an exemption granted under subsection 413 (1) of that Act. 2003, c. 9, s. 2 (2).

Facility Association

(3) This Act applies to the Facility Association only with respect to the Personal Vehicles – Private Passenger Automobile category of automobile insurance. 2003, c. 9, s. 2 (3).

Temporary insurance rate freeze

3. Subject to sections 5, 6 and 7, every insurer, on issuing or renewing a contract of automobile insurance after October 22, 2003, shall use only the rate for each category and coverage of automobile insurance that was approved or was deemed to have been approved under the Insurance Act as of October 23, 2003. 2003, c. 9, s. 3.

Suspension of applications for approval

4. (1) Except as permitted under section 5, no insurer shall, while this section is in force,

(a) apply to the Superintendent for approval under section 410 of the Insurance Act; or

(b) submit a new application or resubmit an application to the Superintendent under subsection 411 (5) of the Insurance Act. 2003, c. 9, s. 4 (1).

No applications to be approved

(2) Except as permitted under section 5, the Superintendent shall not, while this section is in force, approve any application made under section 410 of the Insurance Act. 2003, c. 9, s. 4 (2).

Superintendent deemed to have refused to approve

(3) The Superintendent shall be deemed to have refused to approve any application made by an insurer under section 410 of the Insurance Act unless,

(a) the application was approved or was deemed to have been approved under that Act on or before October 23, 2003; or

(b) the application was made in accordance with section 5. 2003, c. 9, s. 4 (3).

ss. 411, 412 and 412.1 of Insurance Act not applicable

(4) Sections 411, 412 and 412.1 of the Insurance Act do not apply to any application for approval that the Superintendent is deemed under subsection (3) to have refused to approve. 2003, c. 9, s. 4 (4).

Application for approval of first authorized rate

5. (1) An insurer shall apply for approval under section 410 of the Insurance Act and the Superintendent shall consider the application if,

(a) the insurer proposes to issue a contract of automobile insurance to which this Act applies; and

(b) there is no rate or risk classification system approved or deemed to have been approved under the Insurance Act as of October 23, 2003 for use by the insurer for the coverage or category of insurance to be provided by the insurer under the contract. 2003, c. 9, s. 5 (1).

Prior application

(2) The Superintendent shall consider an application for approval made under section 410 of the Insurance Act before section 4 came into force if the conditions described in clauses (1) (a) and (b) are satisfied. 2003, c. 9, s. 5 (2).

Limitation on application

(3) The following rules apply in respect of an application referred to in subsection (1) or (2):

1. The application shall be limited to the risk classification system and rates the insurer intends to use in respect of the coverages and categories provided under contracts to be issued after October 22, 2003 for which no rates or risk classification systems have been approved or deemed to have been approved under the Insurance Act as of October 23, 2003 for use by the insurer.

2. The application may only be made before the Superintendent orders the insurer to make an application under section 7.

3. Sections 411, 412 and 412.1 of the Insurance Act do not apply in respect of the application.

4. Subject to section 7, the Superintendent’s decision with respect to the application is final for all purposes. 2003, c. 9, s. 5 (3).

Application to charge higher rates

6. (1) An insurer may apply to the Superintendent for approval to charge rates that exceed the authorized rates if the insurer believes it is just and reasonable in the circumstances having regard to the insurer’s financial circumstances, but the Superintendent shall not approve the application unless the criteria in clauses (2) (a) and (b) are satisfied. 2003, c. 9, s. 6 (1).

Criteria for approving higher rate

(2) The Superintendent shall not approve a rate proposed by the insurer or a rate that is less than the proposed rate but more than the authorized rate unless,

(a) the insurer demonstrates to the Superintendent’s satisfaction that a rate exceeding the authorized rate is just and reasonable in the circumstances, having regard to the insurer’s exceptional financial circumstances; and

(b) the Superintendent considers that it is in the public interest to approve a rate that exceeds the authorized rate. 2003, c. 9, s. 6 (2).

Not more than one application

(3) An insurer shall not make more than one application under this section. 2003, c. 9, s. 6 (3).

When no application may be made

(4) An insurer shall not make an application under this section if,

(a) the insurer has made an application referred to in section 5; or

(b) the Superintendent has ordered the insurer to make an application under section 7. 2003, c. 9, s. 6 (4).

Material to be provided

(5) The Superintendent may require an applicant to provide such information, material and evidence as the Superintendent considers necessary in order to make a decision with respect to the application. 2003, c. 9, s. 6 (5).

Effective date of rate increase

(6) A rate increase approved by the Superintendent under this section takes effect on the date or dates specified in the Superintendent’s decision. 2003, c. 9, s. 6 (6).

Decision final

(7) The decision of the Superintendent under this section is final for all purposes. 2003, c. 9, s. 6 (7).

Order requiring application for approval

7. (1) The Superintendent shall order every insurer that is subject to this Act to apply to the Superintendent for approval of,

(a) the risk classification system the insurer intends to use, as of the date specified in the order, in determining the rates for each coverage and category of automobile insurance specified in the order; and

(b) the rates the insurer intends to use, as of the date specified in the order, for each coverage and category of automobile insurance specified in the order. 2003, c. 9, s. 7 (1).

When application due

(2) An order of the Superintendent under subsection (1) shall direct the insurer to make the application no later than January 23, 2004 or such later day as the Superintendent may specify in the order, but the Superintendent shall not specify a day that is more than 30 days after January 23, 2004. 2003, c. 9, s. 7 (2).

Application

(3) On receipt of an order under subsection (1), an insurer shall make the application in a form approved by the Superintendent and shall, on or before the date specified in the order, file the application together with such information, material and evidence as the Superintendent may require in the order. 2003, c. 9, s. 7 (3).

(4) Repealed: 2003, c. 9, s. 14.

Additional information

(5) The Superintendent may require an applicant to provide such additional information, material and evidence as the Superintendent considers necessary in order to make a decision with respect to the application. 2003, c. 9, s. 7 (5).

Superintendent’s powers

(6) After considering an application and any additional information, material or evidence relating to the application, the Superintendent may do one or more of the following:

1. Approve all or part of the application.

2. Refuse to approve all or part of the application.

3. Require the applicant to reduce or otherwise vary one or more of its current or proposed rates.

4. Require the applicant to vary one or more of its current or proposed risk classification systems. 2003, c. 9, s. 7 (6).

Criteria for refusing to approve or requiring reduction, etc.

(7) The Superintendent shall refuse to approve all or part of an application and may require the applicant to reduce or otherwise vary a current or proposed rate or a current or proposed risk classification system if,

(a) the current or proposed risk classification system or current or proposed rate is not just and reasonable in the circumstances;

(b) the current or proposed risk classification system is not reasonably predictive of risk or does not distinguish fairly between risks;

(c) the current or proposed rate would impair the applicant’s solvency; or

(d) the current or proposed rate is excessive in relation to the applicant’s financial circumstances. 2003, c. 9, s. 7 (7).

Written submissions

(8) The Superintendent shall give the insurer an opportunity to make written submissions before making an order refusing to approve all or part of an application or requiring the insurer to reduce or otherwise vary one or more of its current or proposed rates or one or more of its current or proposed risk classification systems. 2003, c. 9, s. 7 (8).

Time for making order

(9) The Superintendent shall make an order in respect of an application under this section not more than 60 days after the later of,

(a) the day the application is filed; or

(b) the day the additional information, material or evidence is provided, if the Superintendent has required the applicant to provide additional information, material or evidence under subsection (5). 2003, c. 9, s. 7 (9).

Effective date of order

(10) An order of the Superintendent under this section takes effect on the date or dates specified in the order. 2003, c. 9, s. 7 (10).

Order final

(11) An order of the Superintendent under subsection (9) is final for all purposes. 2003, c. 9, s. 7 (11).

Applications by affiliates

(12) Section 414 of the Insurance Act applies with necessary modifications to applications under this section. 2003, c. 9, s. 7 (12).

Insurers to charge authorized rate

8. No insurer shall charge a rate in respect of a contract of automobile insurance that exceeds the authorized rate. 2003, c. 9, s. 8.

Deemed approval under the Insurance Act

9. After the repeal of section 4, the rates and risk classification systems of an insurer as approved under section 7 shall, for the purposes of sections 410, 411, 412, 415 and 417 of the Insurance Act, be deemed to be the rates and risk classification systems approved for use by the insurer under the Insurance Act. 2003, c. 9, s. 9.

Superintendent may investigate

10. The Superintendent may examine and investigate the affairs of an insurer to determine if the insurer is committing any act or pursuing a course of conduct that is a contravention of this Act or that might reasonably be expected to result in a situation that would constitute a contravention of this Act. 2003, c. 9, s. 10.

Superintendent’s order after contravention of Act

11. (1) If, in the opinion of the Superintendent, an insurer is committing any act or pursuing a course of conduct that is a contravention of this Act or that might reasonably be expected to result in a situation that would constitute a contravention of this Act, the Superintendent may, without giving prior notice, make an order to take effect immediately on its making,

(a) requiring the insurer to cease doing or to refrain from doing any act or pursuing any course of conduct identified by the Superintendent;

(b) requiring the insurer to perform any act that, in the opinion of the Superintendent, is necessary to remedy the situation, including requiring an insurer to reimburse an insured in respect of any excess premium paid by the insured to the insurer by reason of the insurer’s contravention of this Act; or

(c) suspending or cancelling the insurer’s licence under the Insurance Act. 2003, c. 9, s. 11 (1).

Reconsideration at request of insurer

(2) At the request of an insurer that is the subject of an order under this section, the Superintendent shall, after giving the insurer an opportunity to make written submissions, reconsider the order. 2003, c. 9, s. 11 (2).

Superintendent’s powers

(3) After reconsidering an order under this section, the Superintendent shall confirm, modify or revoke the order. 2003, c. 9, s. 11 (3).

Order final

(4) An order under this section may be reconsidered at the request of the insurer only once and, subject to the decision of the Superintendent after a reconsideration under subsection (2), is final for all purposes. 2003, c. 9, s. 11 (4).

Definition

11.1 In sections 11.2 to 11.7,

“requirement established under this Act” means,

(a) a requirement imposed by a provision of this Act that is prescribed for the purpose of section 11.3 or 11.4,

(b) a requirement imposed by order, or

(c) an obligation assumed by way of undertaking. 2012, c. 8, Sched. 2, s. 1.

Administrative penalties

11.2 (1) An administrative penalty may be imposed under section 11.3 or 11.4 for either of the following purposes:

1. To promote compliance with the requirements established under this Act.

2. To prevent a person from deriving, directly or indirectly, any economic benefit as a result of contravening or failing to comply with a requirement established under this Act. 2012, c. 8, Sched. 2, s. 1.

Same

(2) An administrative penalty may be imposed alone or in conjunction with any other regulatory measure provided by this Act, including an order under section 11. 2012, c. 8, Sched. 2, s. 1.

General administrative penalties

11.3 (1) If the Superintendent is satisfied that an insurer is contravening or not complying with or has contravened or failed to comply with any of the following, the Superintendent may, by order, impose an administrative penalty on the insurer in accordance with this section and the regulations:

1. A provision of this Act as may be prescribed.

2. A requirement or obligation described in clause (b) or (c) of the definition of “requirement established under this Act” in section 11.1. 2012, c. 8, Sched. 2, s. 1.

Procedure

(2) If the Superintendent proposes to impose an administrative penalty under subsection (1), the procedure set out in section 441.3 of the Insurance Act applies, with necessary modifications. 2012, c. 8, Sched. 2, s. 1.

Summary administrative penalties

11.4 (1) If the Superintendent is satisfied that an insurer is contravening or not complying with or has contravened or failed to comply with a provision of this Act as may be prescribed, the Superintendent may, by order, impose an administrative penalty on the insurer in accordance with this section and the regulations. 2012, c. 8, Sched. 2, s. 1.

Procedure

(2) The procedure set out in section 441.4 of the Insurance Act applies, with necessary modifications, to the imposition of an administrative penalty under subsection (1). 2012, c. 8, Sched. 2, s. 1.

Maximum administrative penalties

11.5 (1) An administrative penalty imposed on an insurer under section 11.3 shall not exceed $200,000 or such lesser amount as may be prescribed for a prescribed requirement established under this Act. 2012, c. 8, Sched. 2, s. 1.

Same

(2) An administrative penalty imposed on an insurer under section 11.4 shall not exceed $25,000 or such lesser amount as may be prescribed for a prescribed requirement established under this Act. 2012, c. 8, Sched. 2, s. 1.

Enforcement of administrative penalties

11.6 Section 441.6 of the Insurance Act applies, with necessary modifications, with respect to the payment and enforcement of administrative penalties imposed under this Act. 2012, c. 8, Sched. 2, s. 1.

Regulations

11.7 The Lieutenant Governor in Council may make regulations governing the administrative penalties that may be imposed under sections 11.3 and 11.4 and, without limiting the generality of the foregoing, may make regulations,

(a) prescribing provisions of this Act for the purposes of sections 11.3 and 11.4;

(b) prescribing criteria the Superintendent is required or permitted to consider when imposing a penalty under section 11.3 or 11.4;

(c) prescribing the amount of a penalty, or the method for calculating the amount of a penalty, and prescribing different penalties or ranges of penalties for different types of contraventions or failures to comply;

(d) authorizing the Superintendent to determine the amount of a penalty, if the amount of the penalty or the method for calculating the amount of the penalty is not prescribed, and prescribing criteria the Superintendent is required or permitted to consider when determining the amount of the penalty;

(e) authorizing a penalty to be imposed for each day or part of a day on which a contravention or failure to comply continues;

(f) authorizing higher penalties (not to exceed the maximum penalty established under section 11.5 or prescribed under clause (j)) for a second or subsequent contravention or failure to comply by an insurer;

(g) governing the manner of paying the penalties;

(h) requiring that a penalty be paid before a specified deadline or before a deadline specified by the Superintendent;

(i) authorizing the imposition of late payment fees respecting penalties that are not paid before the deadline, including graduated late payment fees;

(j) prescribing lesser maximum administrative penalties and the requirements established under this Act to which the lesser maximum penalties apply for the purpose of subsection 11.5 (1) or (2). 2012, c. 8, Sched. 2, s. 1.

Offences

12. (1) Every insurer that does any of the following is guilty of an offence and on conviction is liable on a first conviction to a fine of not more than $250,000 and on each subsequent conviction to a fine of not more than $500,000:

1. Contravenes section 7 or 8.

2. Fails to comply with an order of the Superintendent made under section 11.

3. Directly or indirectly furnishes false, misleading or incomplete information, material or evidence to the Superintendent under this Act. 2003, c. 9, s. 12 (1); 2012, c. 8, Sched. 2, s. 2.

Derivative offence

(2) Every director, officer and chief agent of an insurer is guilty of an offence who,

(a) causes, authorizes, permits or participates in the insurer committing an offence under this Act; or

(b) fails to take reasonable care to prevent the insurer from committing an offence under this Act. 2003, c. 9, s. 12 (2).

Penalty on derivative offence

(3) A person who is guilty of an offence under subsection (2) is liable on a first conviction to a fine of not more than $100,000 and on each subsequent conviction to a fine of not more than $200,000, whether the insurer is prosecuted for or convicted of an offence. 2003, c. 9, s. 12 (3).

Restitution

(4) If a person is convicted of an offence under this Act, the court making the conviction may, in addition to any other penalty, order the person convicted to make compensation or restitution in relation to the offence. 2003, c. 9, s. 12 (4).

Notices

13. Section 33 of the Insurance Act applies to documents required or permitted to be submitted under this Act and to orders made under this Act. 2003, c. 9, s. 13.

14. Omitted (provides for repeal of this Act). 2003, c. 9, s. 14.

15. Omitted (provides for coming into force of provisions of this Act). 2003, c. 9, s. 15.

16. Omitted (enacts short title of this Act). 2003, c. 9, s. 16.

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