Meeting summary - July 19, 2023

Technical Advisory Committee for Auto Rates and Underwriting Regulation Reform

Summary of the meeting of July 19, 2023

Technical advisory committee members present:

Name	Organization
Deborah Upton	Gore Mutual Insurance
Greg Robertson	Robertson Insurance Broker
Jennifer Power	Allstate
Brad Neilson (Substitute)	Intact
Lydia Roy	TD Insurance
Malcom Winer	Travelers Canada
Maria Benjamins	Desjardins
Rahul Gumber	Aviva Canada
Sebastién Vachon	Definity
Sherene Hariprasad	CAA
Stéphane McGee	Onlia
Steve Cohen	Rates.ca
Todd Saunders	Co-operators
Trevor Foster	IBC
Warren Ting	Hamilton Township Mutual Insurance Company

FSRA members present:

Auto/P&C Policy	Glen Padassery, Chris Georgakopoulos, Saad Opal, Melissa Grover, Nuton Dabb, and Manit Ramchandani
Auto/Insurance Products	Cong Wang
Legal	Jordan Solway, Jason Harris, and John Caldwell
External	Cathy O’Neil, Birny Birnbaum, Janek Kmiec (MOF)

General comments

This was the first Auto Rates and Underwriting Regulation Reform (ARURR) Technical Advisory Committee (TAC) held by FSRA. Primarily an introductory meeting, FSRA led the meeting with a presentation of the ARURR strategy and insights gained from previous consultations, setting the groundwork for the committee's future work. The proposed fairness outcomes were introduced as a central theme for the discussions. The meeting was strategically aimed at fostering a dialogue around these fairness outcomes, with an overarching goal to assist FSRA in striking an optimal balance between prescriptive regulation and principles-based regulation.

In an immersive dialogue, committee members explored potential solutions for balancing prescriptive and principles-based regulation. They scrutinized three supervision scenarios, addressing insurer concerns regarding Proxy Discrimination, Bias, and Transparency. They also highlighted the roles of various industry stakeholders and regulators in minimizing consumer harm, enhancing transparency, advocating fairness, and protecting vulnerable consumers.

Supervision scenarios and discussion summary

Proxy discrimination

Question: How would an insurer indicate that rating and underwriting decisions are not based on prohibited or protected grounds or proxies for prohibited or protected grounds?

Discussion: TAC members and FSRA discussed measures against proxy discrimination, a topic of universal concern among the members. There was unanimous agreement to collaborate and develop effective solutions. The dialogue involved clarifying definitions, with a majority favoring a more detailed explanation of proxy discrimination to guarantee uniform understanding and implementation. Members also discussed optimal ways to quantify Proxy Discrimination and identify best practices. Finally, FSRA provided insight into its proposed strategies, elaborating on how it anticipates utilizing the forthcoming supervisory framework.

Bias

Question: How would an insurer indicate that their rating and underwriting systems mitigate against unintentional bias?

Discussion: Members discussed striking a balance between prescriptive approaches, such as providing clear definitions for bias and vulnerable persons to ensure a level playing field, and principles-based strategies for implementation and mitigation. The TAC further expressed a preference for flexibility in implementation to assist companies with varying capabilities. The committee explored the challenge of balancing rate adequacy and accuracy with discussions revolving around safeguarding vulnerable groups without compromising rate adequacy. Finally, members discussed protecting vulnerable persons and best practices to include transient factors as well as economic.

Transparency

Question: How would an insurer indicate that decisions are communicated to consumers in a timely and transparent way?

Discussion: Members of the TAC discussed the evidence, processes, and definitions that could be used to verify that consumers are receiving decisions in a timely and transparent manner. The dialogue also explored the need to strike a balance between providing in-depth and surface-level explanations for rate changes, as well as the methods used to offer discounts. Subsequently, the TAC shifted its focus to service standards, examining whether they should be measured in aggregate or individually. Lastly, members deliberated on the best approaches to explain complex insurance documents to consumers, advocating for sharing best practices and further discussions.