Effective April 15, 2020, section 2 of the Ontario Regulation 7/00 – Unfair or Deceptive Acts or Practices made under the Insurance Act (Ontario) (the “Regulation”) was amended by adding the following subsections:
“(3) Despite paragraphs 1 to 3 of subsection (1), a rebate of all or part of an automobile insurance premium is not prescribed as an unfair or deceptive act or practice if,
(a) an emergency is declared under the Emergency Management and Civil Protection Act;
(b) the rebate is issued in response to the declared emergency; and
(c) the insurer files an undertaking with the Chief Executive Officer, in the form approved by the Chief Executive Officer.
(4) Subsection (3) applies from the day an emergency is declared under the Emergency Management and Civil Protection Act to the day that is one year after the day on which the declared emergency is terminated under that Act.”
The Ontario government’s regulatory action allows insurers in Ontario to respond to the state of emergency declared in the province on March 17, 2020 (the “State of Emergency”) by rebating all or part of an automobile insurance premium to their customers in order to relieve financial hardship due to the COVID-19 outbreak without violating the anti-rebating provisions of the Regulation.
The Financial Services Regulatory Authority of Ontario (“FSRA”) has published an Interpretation, an Approach and Information Guidance, dated April 15, 2020 which includes FSRA’s interpretation of the legal framework for emergency auto insurance premium rebate programs and the process for implementing such programs. There are a number of recommendations and requirements contained in this Guidance, which insurers should review prior to implementing emergency premium rebating programs.
Insurers providing any rebate to their customers during this emergency will only be protected by this amendment from March 17, 2020 to the day that is one year after the day on which the State of Emergency is terminated in Ontario.
Insurers who wish to implement emergency premium rebating programs must submit an undertaking to FSRA agreeing to be bound by such undertaking, the breach of which would be deemed to be an offense under section 447 of the Insurance Act and shall void application of section 2(3) of the Regulation.
