Alberta Record

· Order in Council / Adverse Contractual Action Amendment Regulation · in-force

Adverse contractual action amendment regulation 2023 147

Amends the Adverse Contractual Action Regulation, redefining grounds for insurers to take adverse action on automobile insurance policies, including new definitions for misrepresentation and fraudulent activity, and extending the regulatio…

Moderate impactCentralization of powerThe public, directly

What changed

  • Repeals and replaces clauses defining misrepresentation and failure to submit information for obtaining, updating, or renewing automobile insurance policies.
  • Introduces 'history of fraudulent activity' within the last 7 years as a ground for adverse contractual action by an insurer.
  • Adds a provision allowing adverse action if an insurer reasonably believes the policy or automobile will be used for fraudulent purposes.
  • Clarifies that bankruptcy or a consumer proposal alone is not sufficient evidence for an insurer's reasonable belief of fraudulent purpose.
  • Extends the expiry date of the Adverse Contractual Action Regulation from April 30, 2024, to April 30, 2029.

Why it matters

  • Expands the conditions under which automobile insurers can refuse, cancel, or decline to renew policies.
  • Increases the scope of what constitutes misrepresentation or fraudulent activity from the perspective of an insurer.
  • Grants insurers new discretion to take adverse action based on a 'reasonable belief' of future fraudulent use.
  • Provides a specific limitation, preventing bankruptcy alone from being used as a basis for an insurer's belief of fraudulent intent.
  • Extends the duration of these amended rules, impacting policyholders and insurer practices for an additional five years.

Other governance concerns

  • Expanded grounds for adverse contractual action by insurers
  • Increased insurer discretion in assessing fraud risk
  • Potential impact on access to and affordability of automobile insurance

Primary sources (1)

Secondary sources (2)