The Financial Services Regulatory Authority of Ontario (FSRA) CEO could be getting new authority to exempt persons or entities from section 231 of the province’s Insurance Act which specifically prohibits car dealerships and those affiliated with them from selling insurance to purchasers.
Announced in the 2024 Ontario Budget, the plan to expand FSRA’s test-and-learn environment (TLE) is intended to support the creation of more innovative automobile insurance products and services, “with the goal to improve customer experience and affordability.”
The proposal to amend Ontario Regulation 704/21 will permit the CEO to exempt the applicability of section 231 for the purpose of enabling the sale of automobile insurance at motor vehicle dealerships who have applied to pilot such sales in the regulator’s TLE.
Two delivery mechanisms being considered
The two delivery mechanisms considered in the consultation include sale by brokers, agents or direct writers present at the dealership or the implementation of an embedded insurance model. The consultation documents also ask if there are any other delivery models the Ministry of Finance or FSRA should consider.
“The proposal aims to expand the scope of initiatives that FSRA can pilot,” the consultation announcement states. “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.”
The TLE, as stated in FSRA’s guidance document discussing the regulator’s approach, is open to all market participants that are in good standing with FSRA and other regulators, including incumbents and new entrants that plan to conduct regulated financial services activities.
“Market participants that plan on launching a new product, service, or business model should apply to FSRA as a potential ‘innovation opportunity’ for assessment based on TLE principles and criteria for intake and prioritization,” they state in that document.
As for the current consultation, comments to the Ministry of Finance and answers to the consultation’s questions about expanding FSRA’s ability to pilot new dealership initiatives are due January 6, 2025.
