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Matters Considered in Automobile Insurance Rates and

Risk-Classification Systems Regulations

made under Section 159 of the

Insurance Act

R.S.N.S. 1989, c. 231

O.I.C. 2003-458 (October 31, 2003), N.S. Reg. 183/2003

as amended by O.I.C. 2011-432 (December 20, 2011, effective April 1, 2012), N.S. Reg. 327/2011


Citation

1     These regulations may be cited as the Matters Considered in Automobile Insurance Rates and Risk-Classification Systems Regulations.

Section 1 replaced: O.I.C. 2011-432, N.S. Reg. 327/2011.


Prohibited risk factors

2     An insurer is not permitted to include in a risk-classification system for automobile insurance any risk-classification factor that, in the opinion of the Board

 

                (a)    is subjective;

 

                (b)    is arbitrary;

 

                (c)    bears little or no relationship to the potential risk to be assumed by the insurer; or

 

                (d)    is contrary to public policy.

 

3     (1)    An insurer is not permitted to include any of the following factors as risk-classification factors in a risk-classification system for automobile insurance:

 

                (a)    any claim resulting from an incident for which the insured was not at fault;

 

                (b)    any claim that was made more than 6 years before the year for which the contract is to be issued;

 

                (c)    a lapse in coverage under a contract of automobile insurance for a period of less than 24 months, except as provided in Section 4;

 

                (d)    age;

 

                (e)    marital status;

 

                (f)    whether or not a person who would be an insured is covered by

 

                         (i)     a medical, surgical, dental or hospitalization plan, or

 

                         (ii)    an income continuation plan, a sick leave plan

 

or any other arrangement or plan providing coverage for benefits that, in the absence of the arrangement or plan, the insurer would be required to pay for under Schedule 2 of the Automobile Insurance Contract Mandatory Conditions Regulations;

 

                (g)    membership in an organized group, except as provided in Section 5;

 

                (h)    any of the following that do not result in a claim for payment or indemnification under a contract by an insured:

 

                         (i)     an inquiry made by an insured about coverage under a contract, or

 

                         (ii)    a notification made by an insured of an incident that involves the insured.

Clause 3(1)(h) added: O.I.C. 2011-432, N.S. Reg. 327/2011.

Subsection 3(1) amended: O.I.C. 2011-432, N.S. Reg. 327/2011.

 

       (2)    For greater certainty, the inclusion of risk-classification factors that reflect driving experience does not contravene clause (1)(d).

 

3A  (1)    An insurer that receives a claim from a person who is or alleges to be entitled to recover from an insured covered by a motor vehicle liability policy must inform the insured in writing of the receipt of the claim.

 

       (2)    An insurer that makes a payment on behalf of an insured under a contract evidenced by a motor vehicle liability policy to a person making a claim must inform the named insured in writing of the total amount paid with respect to the claim.

Section 3A added: O.I.C. 2008-472, N.S. Reg. 386/2008.


Lapse in coverage

4     An insurer is permitted to use a lapse in automobile insurance coverage for a period of less than 24 months as a risk-classification factor for automobile insurance if

 

                (a)    the insured is convicted of a contravention of Section 230 of the Motor Vehicle Act respecting driving without a motor vehicle liability policy; or

 

                (b)    the lapse in coverage resulted directly or indirectly from

 

                         (i)     the suspension of the insured’s driver’s licence as a result of a conviction for an offence related to the use or operation of an automobile, or

 

                         (ii)    an accident, or a conviction for an offence related to the use or operation of an automobile, if the insured did not inform the insurer of the accident or conviction and the accident or conviction would likely have led to the insured being charged a higher premium.


Membership in an organized group

5     (1)    An insurer is permitted to use membership in an organized group as a risk-classification factor for automobile insurance if the group is

 

                (a)    a group of employees, which may include retired employees, of the same employer; or

 

                (b)    a group of persons that is

 

                         (i)     a labour union,

 

                         (ii)    a professional or occupational association,

 

                         (iii)   an alumni association, or

 

                         (iv)   a non-profit organization that has been in existence for at least 2 years, except an organization that is formed primarily for the purpose of purchasing or providing goods or services.

 

       (2)    A group referred to in subsection (1) may also include

 

                (a)    spouses and common-law partners of members of the group; and

 

                (b)    any child of members of the group or of their spouses or common-law partners, if the child is under 25 years of age and who

 

                         (i)     resides in the same dwelling as a member of the group or the spouse or common-law partner of a member of the groups, or

 

                         (ii)    attends an educational institution on a full-time basis.

 

       (3)    An insurer is not permitted to use a risk-classification factor for automobile insurance that results in the exclusion from coverage of a member of an organized group referred to in clause (1)(a) if

 

                (a)    the insurance is sold under a group marketing plan, as defined in Section 6; and

 

                (b)    coverage is for a personal use private passenger vehicle, as defined in the plan of operation established by the facility association.

 

       (4)    An insurer is not permitted to use a risk-classification factor for automobile insurance that results in the exclusion from coverage of a member or associate member of an organized group referred to in subsection (1) if

 

                (a)    the insurance is sold under a group marketing plan, as defined in Section 6; and

 

                (b)    coverage is for a private passenger vehicle, as defined in the plan of operation established by the facility association.

 

       (5)    An insurer is not permitted to use either of the following circumstances as a risk-classification factor for automobile insurance if it would result in a change in the classification of an insured before the next renewal date of the insured’s policy:

 

                (a)    termination of a group marketing plan as defined in Section 6; or

 

                (b)    the insured ceasing to be a member or an associate member of an organized group referred to in subsection (1).

 

       (6)    Except as provided in subsection (5), no element of a risk-classification system that uses membership in an organized group referred to in subsection (1) may be applied to an insured who ceases to be a member or associate member of the group.


Group marketing plan

6     (1)    In this Section, “group marketing plan” means

 

                (a)    an arrangement between an insurer and a group of employees of the same employer to market automobile insurance to members of the group;

 

                (b)    an arrangement between an insurer and an employer to market automobile insurance to a group of employees of the employer; or

 

                (c)    an arrangement between an insurer and a group referred to in clause 5(1)(b) to market automobile insurance to members of the group.

 

       (2)    An insurer is not permitted to sell automobile insurance under a group marketing plan if any person is required to purchase insurance under the plan or is subject to a penalty for failing to purchase insurance under the plan.

 

       (3)    An insurer, agent or broker selling automobile insurance under a group marketing plan must not accept an application for insurance coverage from a person unless the insurer, agent or broker has made full and fair disclosure to the person of all features of the group marketing plan and the insurance coverage, including

 

                (a)    the group marketing plan’s provisions relating to group discounts, policyholder services, termination of the plan and termination of eligibility; and

 

                (b)    the financial interests in the group marketing plan of the person or body that entered into the plan with the insurer.

 

       (4)    A person who collects premiums under a group marketing plan, other than an agent or broker, must provide adequate administrative facilities for the collection of premiums and is deemed to be the agent of the insurer for the purposes of collecting premiums.

 

       (5)    All premium funds received or receivable by a person under a group marketing plan, other than by an agent or broker, are deemed to be trust funds held for the benefit of the insurer.

 

       (6)    A person who receives or is entitled to receive premium funds under a group marketing plan must not assign, pledge, mortgage or in any way charge the funds.

 

       (7)    An assignment, pledge, mortgage or other charge of premium funds contrary to subsection (6) is void.


April 1, 2012, increases to mandatory accident benefits

7     (1)    In this Section, “an increase in the mandatory accident benefits” means an increase to those benefits made by way of an amendment to Schedule 2 of the Automobile Insurance Contract Mandatory Conditions Regulations made under the Act, effective April 1, 2012.

 

       (2)    Except as provided in subsection (2), an insurer is not permitted to consider an increase in the mandatory accident benefits to apply to the Board to increase rates or adjust its risk-classification system unless the increase in rates or adjustment in its risk-classification system is to take effect on or after April 1, 2013.

 

       (3)    The Board may permit an insurer to consider an increase in the mandatory accident benefits to apply to the Board to increase rates or adjust its risk-classification system to take effect before April 1, 2013, if

 

                (a)    the insurer demonstrates, to the satisfaction of the Board, that exceptional circumstances exist that would result in undue hardship for the insurer; and

 

                (b)    the Board is satisfied that it would not be contrary to the public interest.

Section 7 replaced: O.I.C. 2011-432, N.S. Reg. 327/2011.