In 2025, the Ontario provincial government, in its provincial budget, announced plans to move forward with regulatory amendments that would allow the sale of automobile insurance at motor vehicle dealerships. The practice is currently prohibited under the province’s Insurance Act.

The Financial Services Regulatory Authority of Ontario (FSRA) was noted as the entity that would be responsible for developing consumer protection safeguards and oversee the testing period. Under the test-and-learn (TLE) project, FSRA will grant exemptions from the prohibition against the sale of automobile insurance at an automobile dealership for a two-year period, which could in turn be extended by another two years.

“Our exemptive authority allows for a test duration of two years, plus a possibility of renewal for an additional two years,” Scott Boutilier, FSRA’s senior policy and technical lead clarifies.

Once the TLE period expires, all participants must go back to their original business practices if the Insurance Act is not amended.

About the TLE 

FSRA’s TLE program is described as a regulatory sandbox, a dedicated space to support the testing of new products, services and business models in the real market. “Insights from the testing period help inform future refinements to regulatory approaches,” says Stephanie Appave, director of FSRA’s innovation office. “The government’s goal for this pilot is to enable the testing of new distribution models to improve consumer convenience when purchasing auto insurance. Products will continue to be distributed through licensed agents or brokers when sold within OMVIC (Ontario Motor Vehicle Industry Council) regulated dealerships.” 

FSRA notes that test participants will also be required to undergo mandatory reviews of their legal and regulatory obligations to ensure they have a clear understanding of activities that are allowed and not allowed within the context of the test.

OMVIC representatives refused to comment on the TLE announcement, only saying that the organization is aware of FSRA’s pilot program on the potential sale of insurance through motor vehicle dealerships. 

“OMVIC remains focused on its mandate of protecting Ontario’s car buyers and ensuring professionalism, in addition to supporting a fair, transparent, and competitive marketplace. Any initiatives undertaken by other regulatory authorities are separate from our operations, regulatory framework, and oversight responsibilities,” they write in a statement to the Insurance Portal. “We have no further comment regarding this matter at this time.” 

FSRA will begin accepting applications for the TLE in March 2026; projects must have an effective date on or after July 1, 2026. The TLE will apply to private passenger, non-private passenger and fleet sales.

Application requirements  

FSRA says the models proposed for this point-of-sale TLE could involve a number of different players. “We do, in fact, expect to see applications that involve multiple parties submitting a joint application,” Boutilier says.

The regulator’s requirements (not an exhaustive list) include the following considerations: 

  • All parties involved in the application must be licensed and in good standing with their applicable regulators. Participants should also be able to demonstrate sufficient expertise to execute on whatever is being proposed in the application.
  • The sale of insurance must be conducted by a licensed distributor.
  • Aside from the prohibition exemption that is being granted, all legal and regulatory requirements must be adhered to.
  • All parties involved in a proposed model should also be involved in the application and agree to the details that are in that application. (FSRA will not be facilitating arrangements between different groups to support proposals.)
  • Proposals should demonstrate clear accountability for managing conflicts of interest and ensuring professional conduct.

Risk management, data reporting, participants, the consumer journey and compensation are also requirements to be discussed in point-of-sale TLE applications.

  • Risk management: What are the anticipated risks associated with the proposal? What strategies will be put in place to mitigate them if the proposal is approved?
  • Data and reporting: “There will be data collection and reporting requirements for test participants as part of the testing process for this TLE,” Boutilier says. “What structures will be put in place by participants or applicants to monitor the activities of the model and effectively report back to FSRA?” They add that applicants should describe their capacity to effectively meet the defined reporting requirements. (Note: Although the regulator assures would-be participants that these will be finalized before tests commence, at the time of FSRA’s announcement regarding the TLE, reporting requirements were not yet finalized.)
  • Participants: Who is going to be involved in delivering the proposed model? What is their specific role going to be? What is their current licensing status?
  • Consumer journey: What is occurring at different stages of the consumer journey? Who are consumers interacting with and how is the insurance sales process occurring within that process? “Here, we’ll be paying close attention to make sure that the relevant legal and regulatory requirements are being adhered to,” Boutilier adds.
  • Compensation: How will participants or parties to the proposal be compensated under the model? Notable here: Where things get murkier are regulations outside of FSRA’s control which govern dual licensing (automobile dealership representatives are reportedly licensed. OMVIC would not comment to confirm, deny or discuss), shared spaces and compensation (insurers can only pay compensation to licensed entities). “Under RIBO (Registered Insurance Brokers of Ontario) rules there’s going to be challenges with that type of mixing,” director of legal policy and rule making, Jay Harris says. “RIBO has a process where there’s a committee that oversees providing exemptions that would need to be worked through.”
  • Post purchase interactions: What do ongoing interactions with consumers look like after they’ve purchased insurance at the point of sale? Renewals and claims also fall into this category. 

Other requirements for test participants will include the need to provide consumers with point-of-sale information about the test, including information about dealership and distributor financial arrangements (although FSRA maintains that rules governing agent compensation remain unchanged – compensation must be provided to a licensed distributor only), and reminders that consumer have the right to shop around for insurance.

FSRA’s advice and some template language regarding transparency measures for consumers will also be determined and finalized as projects commence.

If a test is found to have adverse or unintended consequences to consumers, FSRA has the ability to pivot or halt tests, if necessary.

“We really encourage you to connect with us in advance of submitting a formal application to discuss your proposed model. We’re really committed to working with applicants to support your application, within a reasonable effort, to get them closer to a stage of readiness for a formal submission,” Boutilier adds.

FSRA’s objectives  

In conducting the TLE project, FSRA’s representatives say the regulator has several objectives: 

  • Consumer protection: FSRA applications should focus on consumer protection measures, risk mitigation and responses to any unintended consequences that may arise.
  • Transparency: FSRA says it wants to foster transparency between the regulator and test participants, including a shared understanding of how the tests are progressing. The regulator also requires transparency for consumers, who will be informed that they are part of a test and provided with information on where to seek out more information or help, if needed.
  • Collaboration: “We’re really focused on working together with test participants to understand whether their tests are performing as expected,” says Boutilier. 

He adds that the two main areas the regulator intends to monitor are consumer convenience and consumer protection. “Nothing else is changing regarding the sale of auto insurance,” he adds. “We are still expecting auto insurance to be distributed by licensed individuals in the TLE.”