How Alberta superintendent’s bulletin affects auto cancellations

A recent bulletin from Alberta’s insurance superintendent does not prevent insurers from refusing to renew a customer’s policy, provided it’s done “in accordance with the terms of the policy and applicable laws and a high degree of caution is exercised by the insurer when undertaking such an action,” says a lawyer specializing in insurance regulation.

“Provided the terms of the policy do not change, we are not aware of restrictions that would prevent the insurer from refusing the renewal,” says Jesse Collins-Swartz, a senior associate in Dentons’ Toronto-based corporate and regulatory insurance group.

“However, such a refusal would require the insurer to maintain written documentation to [show] that no unfair or deceptive act or practice was being undertaken by the insurer.”

He adds any cancellations would have to comply with Alberta’s provincial Insurance Act and any Unfair or Deceptive Acts or Practices (UDAP) regulations. 

Simply put, the bulletin’s intent is to protect customers in situations where the commercial arrangement between an insured’s broker and the automobile insurer terminates.

“This relationship could be terminated for a variety of reasons, and such reasons would not be limited to an insurer terminating the relationship for a breach of the commercial relationship by the broker,” he tells Canadian Underwriter.  

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Related: Alberta weighs in on insurer renewal responsibilities

The Jun. 30 bulletin from Alberta’s Superintendent of Insurance indicates insurers that terminate contracts with brokers — and then refuse to renew private passenger vehicle (PPV) insurance policies for existing Alberta customers who switch brokers to maintain their coverage — may be in violation of sections of the province’s Insurance Act.

Specifically, it says ‘adverse contractual action provisions’ under the Act apply when a contract is terminated between an insurer and a broker. So, if an insurer refuses to renew a customer’s PPV insurance because it no longer does business with that customer’s broker, “this constitutes an adverse contractual action under section 555(1)(d) of the Act and is therefore contrary to section 555(3) of the Act,” the bulletin states.

It adds, if an insured wants to “renew their policy with their existing insurer through a different broker, the insurer must treat the policy as a renewal, and not as a new policy.” The requirement applies to all PPV policies in Alberta, whether or not the insured meets the province’s threshold of qualifying as ‘good driver’ under Ministerial Order 24/2024.

Related: Alberta brokers sound the alarm on auto insurance availability

Collins-Swartz notes the bulletin from Alberta’s regulator intends to protect all customers, not just those defined as ‘good customers’ by the province, “if such customers need to change brokers in order to continue purchasing automobile cover from a particular insurer.”

Asked if the bulletin could represent an expansion of ‘take all comers’ regulation, Collins-Swartz says that doesn’t appear to be the spirit of the action but that it “could be a corollary result.”  He adds, “It was intended as a protection for insureds who could face higher premiums/changes to their policies due to factors outside of their control (i.e., their broker no longer having authority to represent a particular insurer).”

Phil Porado

Phil, an award-winning journalist with over 30 years of experience in financial topics, has been managing editor of Canadian Underwriter for more than three years.