On December 20, 2021, the Financial Services Regulatory Authority Ontario (FSRA) submitted its proposed Unfair or Deceptive Acts or Practices (UDAP) rule (Rule) to the Ontario Minister of Finance for final approval. The Rule will replace the UDAP Regulation under the Insurance Act (Ontario) (Act) and will take effect once consequential amendments are proclaimed into force.

The Act and, more specifically, Regulation 7/00 (the UDAP Regulation) prescribe certain activities as unfair or deceptive acts or practices (an Unfair Practice), including, but not limited to: (i) any unfair discrimination between individuals of the same class and same expectation of life in respect of premiums, rates or dividends under life insurance or annuity contracts; (ii) any unfair discrimination in rates between risks in Ontario of the same physical hazards in the same territorial classification; (iii) misrepresentations of the terms, benefits or advantages of any insurance policy; (iv) payments, allowances or gifts or any offer to pay, allow or give, directly or indirectly, any money or thing of value as an inducement to any prospective insured to insure; or (v) making the issuance or variation of a policy of automobile insurance conditional on the purchase of another policy.

Reasons insurers, brokers and agents in the province of Ontario should review the Rule in its entirety

  1. The Rule broadens the scope of the types of actions or inactions that may constitute an Unfair Practice. It provides that conduct, including inaction or omission, which results in, or could reasonably be expected to result in the outcomes, events or circumstances set out in s. 3 through s. 10 of the Rule constitutes an Unfair Practice.
  2. Authorized representatives: The Rule creates potential liability for directors, officers, employees or other representatives. If a person has committed an Unfair Practice, then every director, officer, employee or authorized representative of that person is deemed to have committed an Unfair Practice if such representative caused, authorized, permitted the Unfair Practice or failed to take all reasonable care in the circumstances to prevent the person from committing the Unfair Practice.
  3. Discrimination: Any unlawful or unfair discrimination in the provision or administration of insurance including in respect of life insurance contracts or in any rate between risks of essentially the same physical hazards in the same territorial classification is an Unfair Practice.
  4. Inducements: It is an Unfair Practice for a payment, rebate, consideration, allowance, gift or thing of value to be offered or provided, directly or indirectly, to an insured or person applying for insurance, as an incentive or inducement for a person to take an action or make a decision relating to an insurance product that would not be recommended as a suitable action by a reasonable person licensed to sell such an insurance product or in a manner which a reasonable person licensed to sell such a product would not consider to be clearly and transparently communicated to intended recipients. However, a gift or thing of value will not be considered an incentive or inducement if it is a good or service reasonably related to reducing the risk insured by the contract of insurance to which it is related. This appears to acknowledge that the responsible use of marketing incentives may not be prohibited.
  5. Automobile Insurance: The Rule also prescribes certain forms of unfair treatment in respect of automobile insurance, including:
    1. Variance of formal or informal processes and procedures which make it more difficult for certain persons to interact with an insurer, broker or agent for the purpose of discouraging or delaying such persons from applying for, renewing or obtaining automobile insurance;
    1. Using credit information or a prohibited factor;
    1. Asking or requiring a person to provide consent to the collection, use or disclosure of any credit information, other than for the sole purpose of considering whether to provide premium financing;
    1. Applying any other information in a manner that is subjective or arbitrary or that bears little or no relationship to the risk assumed or to be assumed by the insurer;
    1. Misclassifying a person or vehicle under the risk classification system used by an insurer or that an insurer is required by law to use; and
    1. Making the issuance or variation of a policy of automobile insurance conditional on an insured having or purchasing another insurance policy, among others.
  6. Unfair Claims practices: The Rule specifically addresses Unfair Claims practices. These may include: treating a claimant in an arbitrary or malicious manner; seeking a result which is inequitable or inconsistent with a claimant's rights under the insurance contract; imposing unreasonable costs or expenses; or failing to follow fair, simple and accessible claims handling procedures.
  7. Lowest rates – automobile insurance: An agent, broker or insurer providing a quote or renewal for automobile insurance from an insurer, and not offering the lowest rate available from amongst that insurer and its affiliated insurers is an Unfair Practice. The Rule includes additional guidance on how to interpret the "lowest rate available".


The Rule should be read in conjunction with the Canadian Council of Insurance Regulators Guidance on the Conduct of Insurance Business and Fair Treatment of Customers, which has been adopted by all provincial insurance regulators in Canada. The specific guidance in the Rule is consistent with the enhanced vigilance by other provincial insurance regulators to ensure rate transparency and fairness for customers in all interactions with prospective and existing insureds. This aligns with the expectation that insurance industry participants should be held to an elevated standard of care.

We strongly recommend that insurers and intermediaries operating in Ontario review the Rule and determine whether any current or proposed practices (or lack thereof) may contravene the Rule. Specifically, we recommend that insurers and intermediaries review their compliance systems, policies and training manuals to ensure compliance with the Rule.

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