Updates on Canadian Automobile
Auto insurance in Canada is a highly regulated line of business which various from province to province
Auto regulation typically mandates the use of regulatory approved insurance forms and the charging of premiums pursuant to a regulatory approved rate schedule. Because of the highly regulated nature of the line of business, and the fact that a contravention of the rules typically results in significant fines, the Lloyd’s team recommends that coverholders, brokers and managing agents contact the Lloyd’s Canada team to discuss any plans to commence with the underwriting of the auto line of business or any contemplated changes to existing auto books of business.
In general, auto regulation in Canada is divided between commercial auto insurance and personal (or private passenger vehicle) insurance. Furthermore, there is an important regulatory distinction in commercial auto between fleets of vehicles and individual rated commercial automobiles.
Fleet Insurance
An automobile fleet typically consists of five or more vehicles that are under common ownership and are used for business, commercial or public purposes. A trailer that is towed behind the vehicle and is not self-propelled cannot be included in the automobile count to make up the five vehicles.
Fleet policies can include a variety of automobiles such as Light and Heavy Commercial vehicles and even Private Passenger Vehicles (PPV) if used principally for commercial purposes.
For fleet auto insurance there is no requirement to obtain prior approval from the applicable provincial or territorial regulator for the rate/pricing schedule to be used in calculating the applicable premium. However, the forms used to insure fleets must either receive the prior approval of the relevant regulatory body, or strictly adhere to provincially issued templates without any deviation made to such templates.
Individually Rated Commercial Automobile (IRCA) Insurance
Automobile policies with less than five commercial use automobiles are referred to as Individually Rated Commercial Automobiles (IRCA).
In contrast to fleets, an individually rate commercial automobile requires the premium charged to be in accordance with a rate filing which has received the prior approval of an applicable provincial or territorial regulator. Furthermore, the forms used to insure IRCA business must either receive the prior approval of the relevant regulatory body, or strictly adhere to provincially issued templates without any deviation made to such templates.
Private Passenger Vehicle (PPV) Insurance
PPV insurance used to insure the personal use of an automobile as opposed to business use, is registered in the name of an individual and may not be used to carry passengers for compensation. PPV insurance requires the premium charged to be in accordance with a rate filing which has received the
prior approval of an applicable provincial or territorial regulator. Further, the forms used to insure PPV business must either receive the prior approval of the relevant regulatory body, or strictly adhere to provincially issued templates without any deviation made to such templates.
Due to the highly regulated nature of auto insurance in Canada we wish to remind all our stakeholders that:
- PPV and IRCA insurance may only be written in the Province of Quebec under a binding authority and must use the Lloyd’s automobile rates and forms that have been filed and approved; and
- PPV and IRCA insurance may only be written in the Province of British Columbia as excess of the Insurance Corporation of British Columbia (ICBC) Autoplan Insurance program.
If you have any questions regarding automobile business in Canada, please contact our Lloyd’s Canada office.