In 2018, the Ontario Trucking Association (OTA) requested that the insurance industry review the process of commercial vehicle insurance issued by Servicing Carriers (Nordic Insurance Company, the Cooperators General Insurance Company and RSA Insurance) on behalf of the Facility Association. Following a series of meetings, the OTA, along with a coalition made up primarily of insurers, sent a letter to the FA calling for a review of Commercial Residual Market insurance to ensure it is delivering on its intended mandate. That review has been successfully implemented and positive change is coming – good news for both the insurance sector and the trucking industry.

The Facility Association (FA), which administers an automobile insurance residual market on behalf on the industry in nine provincial jurisdictions – except British Columbia, Manitoba and Saskatchewan – have revamped their rating and commercial underwriting rules to improve alignment with the insurance regular market.  Most of changes are expected to come into effect August 1, 2020 subject to regulatory approval.

Many of the implemented changes stem from  recommendations coming out of  a May 2019 meeting between OTA, insurance industry representatives and the Facility Association (FA) executive team. There was consensus of concerns about exposure from a small percentage of carriers, brokers who appear to be misrepresenting relevant details when applying for residual market insurance in order to receive favourable insurance premiums.

“A level competitive playing-field is extremely important in the trucking industry. The changes announced by the Facility Association will go a long way to benefiting compliant carriers who manage their risk and safety performance, ensuring the Facility Association (FA) is available to those who truly need and deserve this type of coverage and flush out those carriers and brokers who have been manipulating the system to eliminate accurate insurance costs,” said Geoff Wood Senior VP, Policy, Ontario Trucking Association.

When applied for and issued properly, insurance with the FA has a legitimate and important role in supporting the trucking industry. The intent of this review was not to eliminate these legitimate uses, but rather to assess the Residual Market insurance policy framework and ensure proper rating of carriers reflects road safety and fleet responsibility in this market.

“From an insurance carriers perspective, applying consistent underwriting rules to our commercial book of business is essential and these changes will ensure we can remain competitive in the regular market and that the focus on the residual markets are being used for legitimate purposes,” said Angelique Magi, VP Specialty Solutions Transportation, Intact Insurance.

“We are extremely encouraged by the changes adopted by FA. This is a good step, in helping the insurance brokerage business to eliminate unfair competition and will restore faith in the residual market system which plays an important and necessary short-term role in the trucking industry. Brokers and trucking fleets who have been manipulating the system will now be forced to make drastic changes which will have a positive impact in both; the trucking and insurance industries. More importantly, this should result in our highways being safer for everyone,” says Robert Potts, NFP/ Dalton Timmins Insurance Brokers.

With a modernized Facility Association regime in place to deter fraud and misrepresentation industry and governments can now focus their efforts on systems to ensure government licencing systems check insurance coverage in real-time and that sufficient regulatory financial commitment levels are being met.

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