Canadian insurers ponder “open insurance” based on banking model

With consumer-driven banking, also known as open banking, having been given the green light to proceed in Canada in the 2025 federal budget, the insurance industry is turning its attention to whether a similar concept might also have merit for its consumers and insurers.

“Open and consumer-driven banking is an important topic which the AIC is monitoring as the concept evolves," says Monica Elford, communications manager with the Alberta Insurance Council (AIC) in Calgary.

A report entitled Your Data, Your Control issued by the Competition Bureau (Canada) in January 2026 said that “in the insurance market alone, introducing data portability could save Canadians between $1.10 and $3.83 billion in both time and money on their annual costs.”

Jordan Solway, executive vice-president for property & casualty insurance with the Financial Services Regulatory Authority of Ontario (FSRA) in Toronto, believes the concept of open banking could also apply to insurance company clients.

“My understanding is that some jurisdictions outside of North America are looking at data portability in the context of insurance,” says Solway, who notes that the industry’s examination of consumer access to their insurance data is in very early stages.

Auto insurance

“We've also started to look at it and consider whether it would have application, which I think it would in the area of auto insurance, particularly as more auto insurance moves to data or usage based insurance,” says Solway.

For example, some insurers provide an application that can be put on a phone to monitor driving behaviour, and that data can be used to assess a premium for the consumer based on their driving habits, he elaborates.

Right now, he notes, the consumer’s data and habits collected by the technology belongs to the insurers in terms of how they use the information. But that could also result in a lack of privacy and a potential discriminatory use of the information when used to make rating or pricing decisions.

”Insurance companies hold vast amounts of consumer data that currently exists in silos,” says Michelle Beyo, president of the Open Finance Network Canada (OFNC), a not-for-profit organization based in Toronto dedicated to advocating for consumer data rights and educating Canadians and small and medium enterprises (SME) on the benefits of Open Finance.

“Opening this data allows for hyper-personalized pricing based on actual behaviour and real-time habits, rather than broad demographic estimates,” Beyo elaborates.

Harnessing technology’s power

“Open banking is a way to give access to banking data in a seamless way,” says Claire Celerier, an associate professor of finance and Canada Research Chair in Household Finance at the University of Toronto’s Rotman School of Management.

“The objective is that customers will be able to share their transaction data much more easily with other financial institutions. It’s also a way to transfer information across financial institutions,” she adds, noting that in some countries, like India, it has been a way to develop a publicly-based instant payment system that is independent from credit cards.

Greater use of instant payment using a pay-by-bank payment system instead of using the credit card network, which tends to be very concentrated to Visa and MasterCard, resulting in high fees, could also increase competition in the payment systems industry, and potentially also reduce excessive fees and interest rate payments, notes Celerier.

Open banking provides several potential benefits, says Celerier. Better access to banking information may allow financial services companies, or fintechs to get a better sense of their clients’ credit score to be able to offer credit better matched to their profile, she explains.

Open banking provides financial institutions with a modernized path to revenue, says Beyo.

“Beyond just updating legacy systems, it allows banks to monetize their infrastructure by acting as a platform,” Beyo explains, adding that a primary benefit is the ability to offer advanced treasury and cash management application programming interfaces (APIs) for corporate clients, embedding services directly into a client’s software to create closer relationships.

“This shift significantly reduces the security and operational risks currently tied to fragmented data-sharing methods,” she adds.

Beyo notes that open banking is fundamentally about empowering consumers and businesses with a "remote control to their own financial information.”

Speedier access to capital

Open finance insights also allow small and medium-sized enterprises (SME) to access capital with greater velocity, says Beyo.

OFNC research shows that many SMEs “are held back by traditional lending timelines that don't match the speed of modern business. By providing lenders with real-time, permissioned reporting, SMEs reduce the perceived risk for the financial institution,” she explains

This will also exponentially speed up the approval process from weeks to minutes, leading to more competitive interest rates, and helping to spark innovation and broader economic productivity, Beyo predicts.

Competition will be enhanced by attracting capital and ensuring that new entrants can come in and compete on a level playing field, says Solway. “Empowering the consumer to control their data is a way that could facilitate that, in my view,” he adds.

A healthy competitive market will consist of both incumbent firms and new companies, with new business models that might be able to deliver consumer services more effectively, says Solway.

Consumer cautions

The promise of both open banking and open insurance is that this gives consumers more control of their data, and the potential to shop around more readily by being able to unplug their data from one provider, and plug in to another to obtain pricing, says Solway.

But this also presents challenges in terms of privacy because data storage, collection and safeguarding then becomes very critical. “If there's a breach, it could have a deleterious consumer impact,” he warns.

Managing that type of data, as with any technological innovation, involves new risks, which regulators need to manage carefully in a delicate balancing act. It is important for regulators to make sure the market evolves and becomes more competitive with proper innovation. But they also have to balance that with making sure consumers are properly protected, Solway elaborates.

While open banking could benefit Canadian banks by allowing them to match the same type of services being offered by other international banks, including having convenient access to data gathered in one spot, there are potential risks involving consumer protection, data privacy and data safety, says Celerier.

In India for example, open banking is public and is free for everyone, which is a benefit, but that data is also accessible by the government, which the client might not wish to make available to, she adds.

That risk could be magnified if an open insurance concept became a reality in Canada, says Celerier. She explains that while insurance companies might be able to use that data to better measure risk and therefore provide better priced insurance for their clients, consumers could either benefit or suffer negative consequences, given the sensitivity of the underlying information.

For example, a client might not want to share instant information about the medicine they are taking because of a health risk, because knowledge of that could immediately increase their insurance premium, says Celerier.

Insurance companies might also discover some health-related risks that the client would rather keep private, she notes.

From a property and casualty standpoint, sharing more information would be better for insurance clients considered to be good risk – for example, somebody who had never had a car accident and can show that their premium has decreased over the years, compared to another person who has had their share of car accidents. For them, sharing that information under an open insurance concept could be detrimental, says Celerier.

Another important question that needs to be asked by those who advocate for a fair insurance system for consumers is whether it really would be beneficial for the industry to be able to share information about all clients instantaneously, if the end result is “a part of the population paying premiums they just cannot afford,” she adds.

Practical barriers to implementation

While open banking in Canada has been approved as an objective, there is no firm date for when this will become common practice.

The Bank of Canada has supervisory responsibility for a national consumer-driven banking regime, with powers delegated from the federal government.

The Fall 2025 Budget mandated the Bank with responsibility to implement a secure framework and to establish a path to entry for financial services providers through an accreditation regime, said Ron Morrow, executive director of payments, supervision and oversight at the Bank of Canada, speaking at the recent Open Banking Expo held in Toronto in early March.

Morrow added that the Bank is “in the process of figuring out our critical path to go live.”