Facility Association has announced a reduction in deductibles for the trucking industry.
In her remarks at Facility Association’s recent annual general meeting, FA’s president and CEO Saskia Matheson said the 25% deductible rule for high-valued commercial vehicles will be dropped to 5%.
“This will go in as absolutely soon as it is possible, and we’ll be issuing a communication to brokers to that effect,” she said.
The change in deductibles comes as FA acknowledged that stricter commercial rules implemented in 2020 had some negative ripple effects despite helping in other areas of concern.
“We implemented significantly stricter rules in commercial in 2020 across the country, and these measures are helping,” Matheson said. “However, there were some unintended consequences with some of the rules — deductibles particularly — that has had a punitive impact on hard-working and honest operators.”
The rules implemented were targeted towards those who were attempting to “game the system,” she explained.
Increasing commercial business
FA became aware of an issue where they saw an increase in commercial and inter-urban volume of business. This increased volume of business shifted from Ontario and Alberta in 2019 over to the eastern provinces in 2020, particularly in Nova Scotia.
Heat maps show a significant growth of volume in Alberta during the early part of the year, and then a decline. In Ontario, there was a sizeable decrease of volume. Whereas in Atlantic Canada, most notably in Nova Scotia, business was strong throughout the year.
Basically, truck operators were registering their business in Atlantic Canada while maintaining their operations elsewhere.
“We believe that this was driven in large part by operators looking to game the system by registering their business in jurisdictions with lower rates, such as Nova Scotia, while still operating primarily out of Ontario,” Matheson said.
The issue first came on their radar screen in Alberta in 2019 when this sort of thing started happening.
“As a result, we worked with the trucking associations, as well as with commercial writers and brokers, to identify a series of measures and rules that was meant to curb this behaviour,” Matheson said. The intent was also to “stunt the growth that FA was experiencing in this class of business,” she added.
The change in deductibles is to help offset any financial burden shouldered by those businesses that are playing by the rules.
Matheson also noted that FA didn’t go ahead with scheduled rate increases for much of 2020 as part of its way to support the industry in providing consumer relief. In all, more than $90 million in premium relief was provided, she said.
However, going forward, “we will be turning our attention for rate need in 2021,” Matheson said.