The Financial Services Regulatory Authority of Ontario (FSRA) is accepting applications from those interested in selling automobile insurance at point of sale in that province. The practice is currently prohibited under section 231of Ontario’s Insurance Act.
“The project will assess whether the change expands consumer choice and convenience when they buy auto insurance in the province, while ensuring strong safeguards are in place to keep consumers informed and protected,” the regulator states in its announcement encouraging would-be participants to apply. “Applicants are encouraged to contact FSRA before completing the forms to determine if their proposal is eligible.”
The test and learn environment (TLE) will give approved participants a two-year exemption from the current prohibition on selling auto insurance at dealerships, with the possibility of a one-time, two-year renewal.
“Aside from the section 231 prohibition, all applicable aspects of the Insurance Act, its regulations and FSRA rules would continue to apply,” they add, noting that auto insurance products must be sold by a licensed agent or broker.
“FSRA will monitor approved TLE projects to assess whether they improve consumer convenience, whether the project introduces any additional risks and how those risks can be effectively mitigated. Participants will be required to implement enhanced consumer safeguards, including clear disclosure that consumers are not required to purchase auto insurance at the dealership,” they add.
The application guidance published by FSRA includes the elements the regulator is looking for in a complete application, including risk management plans, data and reporting and consumer disclosure.
“Applicants should demonstrate sufficient expertise to implement the proposed model, including relevant experience and the capacity to deliver on the proposal,” they write.
The regulator says it will accept proposals from different business types, including insurance agencies, brokerages, insurers, car dealerships and original equipment manufacturers.
Notably, they say “FSRA recommends that interested parties contact OMVIC (Ontario Motor Vehicle Industry Council) and/or RIBO (Registered Insurance Brokers of Ontario) to understand and ensure compliance with any related requirements.” Although the Insurance Portal contacted OMVIC when the TLE project was first announced in January, it refused to comment saying that any initiatives undertaken by other regulatory authorities are separate from its own.
