In its most recent budget tabled on May 15, Ontario’s Minister of Finance, Peter Bethlenfalvy, confirmed the launch of a pilot project aimed at regulating the sale of insurance products through automobile dealerships. 

To enable the project, the Financial Services Regulatory Authority of Ontario (FSRA) will expand its “test and learn” (TLE) environment and make regulatory adjustments to facilitate the initiative. “This initiative would offer consumers more options and convenience by enabling insurance purchases at the point of sale, and foster more competition within the industry,” the budget document states. 

FSRA will be tasked with developing and overseeing the scope of the pilot, “including all necessary safeguards to protect consumers,” according to Ontario’s Ministry of Finance. 

Contacted by Insurance Portal, Ministry spokesperson Scott Blodgett confirmed that the pilot project is part of the government’s broader plan to modernize the auto insurance system in Ontario. 

The 2025–2026 budget also notes that the government has completed regulatory changes to allow consumers to opt out of statutory accident benefits other than medical, rehabilitation, and attendant care benefits. It also ensures that auto insurance will provide coverage for injuries sustained in motor vehicle accidents before extended health care plans do. 

The Ontario government is working with FSRA and industry stakeholders to implement these changes by July 1, 2026. 

Brokers react 

Colin Simpson, CEO of the Insurance Brokers Association of Ontario (IBAO), says a key issue to monitor is whether insurance products are being sold at the dealership, rather than by the dealership. “These products must be sold by licensed representatives,” he says. 

Speaking to Insurance Portal, Simpson adds that FSRA’s operational guidelines for the pilot remain unclear. “My understanding is that any project within the test and learn environment is not a certain outcome. Therefore, no one is likely to find out what the proposal is until approved or launched.” 

The only people privy to the pilot’s details will be FSRA and the companies that have submitted a proposal or are participating in the test and learn environment. “At this point, IBAO has no further information on what is or is likely to be proposed or tested within the TLE,” Simpson adds. 

FSRA has clarified how its test and learn environments operate. Who can apply to participate? “Market participants that plan on launching a product, service, or business model that is novel in nature and/or may contain elements that the current regulatory framework does not explicitly support should apply to FSRA as a potential ‘innovation opportunity’ for assessment,” the regulator explains. 

In evaluating proposals, FSRA will focus on the potential impacts and risks to consumers posed by the proposed product, service, or business model. “We will place importance on the applicant showing that they have fully outlined these impacts and risks, have incorporated safeguards, oversight, and mitigation plans around identified risks and that the innovation opportunity will ultimately have net positive consumer impacts,” FSRA says. The scope of what can be tested is outlined in Regulation 704/21 under Ontario’s Insurance Act. 

Elsewhere in Canada 

Currently, no other province allows dealerships to distribute auto insurance. In several provinces, however, dealerships are permitted to offer insurance products related to vehicle replacement costs or loan protection tied to vehicle financing. 

In Quebec, dealership distribution of these products will be prohibited as of July 1, 2026. Bill 30, introduced in 2023 and adopted in May 2024, eliminates the practice of unlicensed representatives selling such insurance products.