The Financial Services Regulatory Authority of Ontario (FSRA) has announced that its first insurance rule has been approved by the Minister of Finance.
FSRA’s Unfair or Deceptive Acts or Practices (UDAP) Rule applies to life & health as well as property & casualty insurers. An official release said that the rule will be effective as of April 01, 2022.
The regulator noted that the UDAP rule replaces existing similar provincial regulation in Ontario, and that it will lead to benefits such as improved outcomes in claims; protect customers from “improper practices” such as unfair discrimination and fraud; reducing regulatory burden by being less prescriptive to allow industry innovation; and supporting the transition to principles-based regulation.
FSRA also highlighted that the rule further aligns regulation with its “Fair Treatment of Customers” guidance.
Perhaps one of the most notable clauses in the UDAP is a statement on prohibited conduct in automobile insurance quotations, applications, and/or renewals. As per it, the FSRA has barred agents, brokers and insurers from using consumers’ credit information, as well as asking or requiring a consumer to provide consent to the collection and use of their credit information other than the sole purpose of whether to offer premium financing.
FSRA’s UDAP also prohibits insurers from offering payment, rebates, and/or gifts of value if they are being used to induce customers into taking action relating to an insurance product.
"This is a positive move forward to promote safety, fairness and choice for insurance consumers right across Ontario," said FSRA CEO Mark White. "The UDAP Rule empowers FSRA to supervise insurance industry conduct and protects consumers by clearly defining outcomes that are unfair or otherwise harmful."
