Facility Association to update insurance rules, OTA says

by John G. Smith

truck insurance claim
Higher-than-expected insurance claims within Facility Association can create pressures that affect other insurance premiums.

TORONTO, Ont. – Facility Association – an insurer of last resort for trucking operations that can’t secure coverage elsewhere – has revamped its ratings and commercial underwriting rules to better align with the regular insurance market.

Most of the changes are to come into force Aug. 1, subject to regulatory approval, the Ontario Trucking Association (OTA) announced today.

The association had joined with several industry insurers in 2018 to review what’s known as the Commercial Residual Market insurance. And many of the latest changes reflect recommendations that emerged during a May 2019 meeting between OTA, insurers, and Facility Association executives, the OTA adds.

Concerns had been raised about operations that misrepresent their businesses to secure favorable insurance premiums. For example, a fleet that does most of its business in Ontario might have told Facility Association that it’s based in New Brunswick, where the exposure to lower traffic volumes might lead to a lower risk for some types of collisions.

If the high-risk fleets file more claims than expected, however, those costs have to be absorbed by the rest of the insurance industry. That can introduce broader pressures on insurance premiums overall.

“The changes announced by the Facility Association will go a long way to benefiting compliant carriers who manage their risk and safety performance — ensuring the Facility Association (FA) is available to those who truly need and deserve this type of coverage and flush out those carriers and brokers who have been manipulating the system to eliminate accurate insurance costs,” said Geoff Wood, OTA senior vice-president – policy.

“From an insurance carrier’s perspective, applying consistent underwriting rules to our commercial book of business is essential,” added Angelique Magi, Intact Insurance’s vice-president of specialty solutions transportation. “These changes will ensure we can remain competitive in the regular market and that the focus on the residual markets are being used for legitimate purposes.”

Robert Potts of NFP/Dalton Timmins Insurance Brokers, said the moves will eliminate unfair competition and restore faith in the residual market.

“Brokers and trucking fleets who have been manipulating the system will now be forced to make drastic changes which will have a positive impact in both the trucking and insurance industries,” he said.

Facility Association emerged in the 1970s, when governments began mandating automotive insurance. It’s available in provinces and territories other than British Columbia, Manitoba and Saskatchewan.

 

 

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  • This is hilarious. OTA was suppose to work for the truckers not against them. Facility has saved thousands of jobs while regular insurance companies non renew policies by the bunch. Instead of fixing regular insurance company rules you want to force the transportation companies hanging by a thread to close down. I hope your big corporate donors are happy OTA. You will not stop till you ruin all the small businesses. insuring with facility in ontario for long haul costs over $6000/month. Why don’t you start by fixing that geniuses.

  • Jeff is right. OTA is never work for small trucking companies. They never raise their voice for Small trucking companies. Insurance companies are not renewing the policies because their is one accident in first year. This is their (insurance) company policy. OTA represent trucking companies or Insurance, I do not know?. My friend’s company have only one inspection of less air flat tire/ air leakage from tire in US. This is OOS inspection. Intact insurance decline because they have one inspection and that is OOS and their Vehicle score is 100% and national average is 20.5%. They have 7 Ontario Inspection all good.My friend company is now Out of Business.
    Where is OTA ????

    • All the small owner operators and small trucking fleets should come together and boycott OTA and similar organizations. They are encouraging Facility to increase rates even more from 6000/month. This is bonkers. I remember a time not so long ago when facility gave that insurance for a reasonable 2500/month. It was a good slap on the wrist and reminder to get back on track. But $6000… jesus christ!!

  • My take on that is the big transport companies would have a rebate on insurance as long they would provide a safety program and showing less claims. On the other hand, an owner-operator will be paying through the nose, and can’t afford to stay in business even if he/she is providing a safety program as well. Insurers are there to take and not to give.

  • Jeff, the Facility Association is there as a last resort. I don’t disagree that the regular insurance companies need to make changes, but this is due to the shady practices of some brokers, manipulating the system to get more favorable rates for trucking companies. Lying about where a company is operated out of so that you get a cheaper per truck cost, or not disclosing accurate radius of operation all reflects on the rest of the industry when claims happen.

    • If the last resort insurance company in Ontario is charging 6000/month to go cross border or even long haul Canada. Tell me why a Transport company cant open else where. Some of the biggest fleets are located out of the province but have the most terminals and exposure in Ontario. I should have listened to some of my friends that moved to Manitoba and opened companies there. Honestly, OTA and there big Transport groupies will run us small companies out fast. They are looking for fast consolidation of the market.

  • Dave, please look at facility loss ratios. My broker friends over in sudbury sat me down and showed me the results. Facility is making money on the trucking business. I have trusted those Brokers with my business for the last 30 years. They are about to go out of business because the main chunk of clients were all cancelled. If anything the rates should have gone down. Iftas, cvors and inspection records dont lie. Any smart insurance company can pick the actual exposure. Dave, I have been in the industry for over 30 years. I have seen hard times in this industry, but what OTA is blaming is a way to scapegoat the problem at hand. I see the big fleets creating a monopoly of the market.