Aviva fined $600,000 for auto insurance non-compliance - what went wrong?

The Financial Services Regulatory Authority (FSRA) of Ontario has imposed fines totalling $600,000 ($300,000 each) against two Aviva insurance businesses over auto insurance failings.

The administrative penalties relate to non-compliance with ‘Take-All-Comers’ requirements for auto insurance at both Aviva Insurance Company of Canada and S&Y Insurance. Both companies are said to have been fully cooperative with the investigation, as per the FRSA.

An FSRA investigation into the province’s top 12 auto insurance providers found “systemic non-compliance” with FSRA Take-All-Comers requirements.

Why have Aviva insurance companies faced auto insurance fines?

The Take-All-Comers legally requires that auto insurers provide all Ontario consumers with access to timely auto insurance quotes based strictly on the Approved Underwriting Rules by the FSRA. Under current rules, insurers must accept business from all consumers who meet conditions.

The organization found 817 instances where both AIC and S&Y failed to issue a quote to a consumer or brokerage, despite that quote being the lowest available. Violation of the Act is recognized as an “unfair or deceptive act or practice”, the FSRA said.

In February of 2022, the Aviva Group, which owns AIC and S&Y, confirmed that it would “cease all related algorithmic rules and instructional messages programmed in proprietary and third-party quoting, binding and operating systems, comparative quoting technology, and sales lead generation technology which are not consistent with the Company’s approved underwriting rules on file with FSRA”, as directed by the regulator.

However, it was later found that AIC and S&Y did not properly ensure that the Unapproved Underwriting Rule and daily sales lead limits were no longer in use.

As a result, the FSRA has issued the following penalties:

• •$150,000 on S&Y Insurance Company for failing to comply with sections 237 and 238 of the Act between November 15, 2021, and April 30, 2022;
• •$150,000 on S&Y Insurance Company for failing to comply with an obligation assumed by undertaking, pursuant to paragraph 441.3(1)(2) of the Act, between February 25, 2022, and April 30, 2022;
• •$150,000 on Aviva Insurance Company of Canada for failing to comply with sections 237 and 238 of the Act between November 15, 2021, and June 20, 2022; and
• •$150,000 on Aviva Insurance Company of Canada for failing to comply with an obligation assumed by undertaking, pursuant to paragraph 441.3(1)(2) of the Act, between February 25, 2022, and June 20, 2022.

How the fines were calculated

The FSRA concluded on the four separate fines of $150,000 based on the following criteria:

1. The degree to which the contravention or failure was intentional, reckless or negligent.
2. The extent of the harm or potential harm to others resulting from the contravention or failure.
3. The extent to which the person or entity tried to mitigate any loss or take other remedial action.
4. The extent to which the person or entity derived or reasonably might have expected to derive, directly or indirectly, any economic benefit from the contravention or failure.
5. Any other contraventions or failures to comply with a requirement established under the Act or with any other financial services legislation of Ontario or of any jurisdiction during the preceding five years by the person or entity.

The organization found that both S&Y and AIC’s actions were negligent, but not intentional or reckless.

“Aviva strives to provide Ontarians with access to timely auto insurance quotes and the lowest possible rates, and we take our regulatory commitments seriously,” an Aviva spokesperson told Insurance Business. “We have fully cooperated on this matter and have taken the necessary steps to ensure we are fully compliant with all-comers regulations.”