Proposed amendment to Ontario Regulation 704/21 Exemption Orders Under Section 15.1 of the Act under the Insurance Act
Regulation Number(s):
Ontario Regulation 704/21 Exemption Orders Under Section 15.1 of the Act under The Insurance Act
Instrument Type:
Act
Bill or Act:
Insurance Act
Summary of Proposal:
In the 2024 Ontario Budget, the government announced its plan to expand FSRA's TLE to support the creation of more innovative automobile insurance products and services with the goal to improve customer experience and affordability.
To further this commitment, the Ministry of Finance is proposing to amend O. Reg 704/21. The amendment, if approved, will permit the CEO FSRA to exempt persons or entities from the requirement of section 231 of the Insurance Act to enable the sale of automobile insurance at motor vehicle dealerships under FSRA's TLE. Currently, section 231 of the Insurance Act restricts motor vehicle dealers from engaging in matters relating to the sale of automobile insurance.
The Ministry of Finance is now proposing to amend O. Reg 704/21 to widen the FSRA CEO's power to exempt the applicability of section 231. If approved, the amendment would empower the FSRA CEO to exempt the applicability of section 231 for the purpose of enabling the sale of automobile insurance at motor vehicle dealerships under FSRA's TLE.
Through this proposed initiative, FSRA could create a pilot project within the TLE to facilitate automobile insurance products to be sold at motor vehicle dealerships through several different delivery mechanisms. This may include sale by brokers, agents, or direct writers present at the dealership; or the implementation of an embedded insurance model where a consolidated price is offered for the vehicle and the insurance plan.
The government first enabled FSRA to run TLEs to allow insurers to pilot innovative, consumer-focused products in response to changing consumer needs. The proposal aims to expand the scope of initiatives that FSRA can pilot under the TLE.
A TLE provides a controlled environment where new products, services, or business models can be tested and validated before being fully introduced to the market.
FSRA is responsible to administer TLE initiatives including establishing terms and parameters; and prescribing necessary compliances, disclosures, and other guardrails.
If approved, this proposal expands FSRA's ability to piloting new initiatives that could:
• Increase consumer choice by introducing novel distribution channels
• Encourage the development of innovative, consumer-focused products in response to changing consumer needs.
• Promote competition in Ontario's automobile insurance sector.
Analysis of Regulatory Impact:
Given that the proposed amendment to O. Reg. 704/21 relates to FSRA's TLE and does not add any additional burden on regulated entities, it is not likely to have any adverse regulatory impact
Further Information:
Proposal Number:
24-MOF025
Posting Date:
November 22, 2024
Comments Due Date:
January 6, 2025
Contact Address:
Property & Casualty Policy Insurance Unit
Financial Institutions Policy Branch
Ministry of Finance
95 Grosvenor Street
Frost Building North, 4th Floor
Toronto, ON
M7A 1Z1