The Facility Association (FA) has met with the Ontario Trucking Association (OTA) as part of the FA’s national strategy to review the underwriting characteristics of Commercial Residual Market insurance.
In the 1970s governments across Canada made it mandatory for drivers to carry auto insurance. However, upon creating this requirement, they realized that clients who were rejected by the traditional market would need another avenue for insurance. Consequently, the Facility Association (FA) was also created through legislation. The FA operates in nine jurisdictions: Alberta, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Islands, and Yukon.
FA’s mandate is to ensure that anyone who is required by law to have auto insurance and can’t find it in the ‘regular’ market can get it from the FAs – but at a price that makes sure FA remains the last choice.
In 2018, the OTA joined forces with the insurance industry to review the problem of the growing number of commercial trucking fleets being insured with the FA. 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. As a result of this involvement, OTA recently learned that the Facility Association will be forming a national working group to examine Commercial Residual Market insurance.
“When applied for and issued properly, insurance with Facility Association has a legitimate and important role in supporting the trucking industry,” said Stephen Laskowski, president of OTA. “Our goal in partnering with the Facility Association is not to eliminate these legitimate uses, but rather to review with insurance regulators the existing Commercial Residual Market insurance policy framework and ensure the proper rating of carriers that reflects road safety and fleet responsibility in this market. We are grateful for the opportunity to work with Facility Association and insurance regulators to address such matters.”
During its work with members in the insurance industry and brokerage sector, OTA learned of potential concerns with the policies being submitted to the Facility Association – notably, the misrepresentation of fleet information by some fleet managers and brokers to receive coverage not matching their actual fleet performance or operating practices. This behaviour not only gives the industry a poor image, but it means other fleet owners end up paying higher insurance prices to cover the shortfall.
The Facility Association has expressed shared interest and support for OTA’s goals.
“The trucking industry looks forward to working with the Facility Association Insurance Working Group to ensure all fleets are properly assessed and rated from a road safety perspective and that a level playing field is maintained in the commercial insurance industry,” said OTA Chair David Carruth.