The Facility Association makes legally required automobile insurance available through the Residual Market Mechanism and through the Risk Sharing Pools as well. The Facility Association also administers the Uninsured Automobile Funds where required by legislation and authorized by the Board.
The Residual Market Mechanism:
The Facility Association contracts with a few member automobile insurance companies to act as "Servicing Carriers". Servicing Carriers issue and endorse policies, receive premiums and adjust claims on behalf of the Facility Association. They are reimbursed from the Residual Market pool for losses paid, an allowance for adjusting claims and a fee for policy handling. All policies written through the Facility Association by the Servicing Carriers are subject to the rules, rates and classification of the Facility Association. All Rules and Rates require regulatory approval for all jurisdictions the Residual Market serves.
Risk Sharing Pools: There are Risk Sharing Pools in Ontario, Alberta, New Brunswick and Nova Scotia, and they apply only to private passenger vehicles. The Risk Sharing Pools are administered by the Facility Association.
Risks are underwritten by members at their normal premium levels or at a regulated maximum level; they have the option of keeping such business for their own account or transferring it to the Risk Sharing Pool. Each Risk Sharing Pool has its own unique eligibility guidelines for risk submission.
The Uninsured Automobile Funds: The Facility Association is required under the respective provincial insurance Acts to administer the Uninsured Automobile Funds in the four Atlantic Provinces: New Brunswick, Newfoundland and Labrador, Prince Edward Island and Nova Scotia.
Persons who may claim from the Fund include those who cannot obtain satisfaction for damages under a contract of automobile insurance; those who do not have other insurance; and those who do have other insurance, but it is inadequate. The respective provincial Insurance Acts govern payment of these claims.
The Facility Association monitors the investigation, defense and final settlement of these claims through the assistance of designated law firms and an insurance company.