Property & Casualty and Auto Insurance consultation summary report

• Desjardins

• CADRI

• OMIA

One stakeholder expressed support for the harmonization of federal and provincial regulatory frameworks. 

One stakeholder encouraged FSRA to engage at the national level to overcome the fragmented approach to insurance regulation across the country. Harmonized principles and best practices will benefit insurers so that they can streamline training and enable agents and adjusters to enhance the consumer focus.

One stakeholder noted that FSRA should play a role in ensuring federal-level innovation trends and development are understood, as regulatory missteps related to open banking etc. could lead to an imbalance in favour of larger financial institutions that would result in loss of competition.

FSRA thanked stakeholders for their feedback. FSRA will continue to work with the Canadian Council of Insurance Regulators (“CCIR”) and the Canadian Insurance Services Regulatory Organizations (“CISRO”) to lead and support harmonization initiatives where possible. 

FSRA is monitoring the federal government’s work to develop the open banking framework. FSRA continues to be engaged with the federal government as the open banking framework rolls out and considers implications for the sectors it regulates.

• CADRI

The stakeholder expressed support for FSRA’s approach to addressing adjuster mobility during a catastrophic event by implementing an “undertaking”. One stakeholder noted advocacy that jurisdictions outside of Ontario adopt FSRA’s approach.

FSRA thanked the stakeholder for its submission. FSRA will work with industry and other Canadian jurisdictions to formalize an adjuster mobility approach for catastrophic events. FSRA’s approach will seek to mitigate regulatory burden for licensed individuals and support the efficient and timely handling of consumer claims.

• CADRI

• OMIA

One stakeholder agreed with FSRA’s assessment of the financial forces affecting Ontario’s insurance system and noted that streamlined and efficient regulatory processes are needed. 

One stakeholder noted that proportionality is critical to creating an effective and efficient oversight regime. This included timeliness and ensuring that the complexity of requests for data in the risk profile assessment process are focused and efficient for all parties. 

The stakeholder noted that, with respect to Priority 4.4, the cost of supervision has increased and will presumably continue to do so. These costs were borne directly by policyholders, and included regulatory fees, staffing costs, and costs of other resources supporting the introduction of frameworks, Guidance, and approaches.
 

Enhancing its supervisory methodology is critical to FSRA’s ability to regulate and oversee the sector in a manner consistent with its statutory objects. 

Although proportionality is crucial to supervisory engagement, there must be a baseline level of resources to effectively undertake assessments in the dynamic environment in which Ontario incorporated insurers operate. This is reflected in the initial growth in the team that supervises the sector. FSRA remained very cost conscious to the sector and is committed to ensuring that this team will operate efficiently. 

• CADRI

• Desjardins

• IBC

• OMIA

• OTLA

Several stakeholders expressed support for FSRA's overall Auto Rates and Underwriting Regulation Reform Strategy (ARURR Strategy), including increased fairness and transparency for consumers and efficiency for both the regulator and industry. One stakeholder urged FSRA to prioritize consumer protection and transparency in all aspects of regulation.

Some stakeholders noted issues with FSRA’s ARURR Strategy, including the time it is taking to complete FSRA's review of auto rate regulation and the implied increase in administrative burden. Some encouraged FSRA to accelerate its ARURR Strategy timelines and provide further details on specifics.

One stakeholder emphasized the need for transparency and consumer education in the auto insurance system, as well as addressing issues such as potential bias at the License Appeal Tribunal (LAT) and insurers' conduct regarding attendant care. This stakeholder also requested reducing excessive insurer profits and improving the regulation of auto insurance rates and underwriting. 

FSRA appreciated stakeholder support for improving fairness and transparency in rates and underwriting.

FSRA’s Auto Rates and Underwriting Regulation Reform Strategy (ARURR Strategy) will make oversight more dynamic, flexible, and transparent for Ontario’s consumers and improve fairness in rates and underwriting.

As part of the broader ARURR Strategy, FSRA plans to consult (in Q2 in FY 2024-25) on new Guidance on Fairness and Supervision to enhance consumer protection. The ARURR Strategy also includes several initiatives aimed at enhancing transparency and supporting informed decision-making, such as ongoing work on modernizing insurance documents and consumer experience benchmarking.

FSRA was consistently transparent with all stakeholders regarding the ARURR Strategy execution, including planned Guidance. Recent sector engagements included the Strategy Roadshow Kick-off Meeting in Fall 2022 and bilateral meetings in Winter 2023. FSRA will continue to engage with the sector on the ARURR Strategy, including through the ARURR Technical Advisory Committee and FSRA’s upcoming consultation on the new Guidance framework in Q2 FY 2024-2025. 

FSRA streamlined its ARURR Strategy timelines to enable a coordinated rollout and consultation. This will allow FSRA’s risk-based Supervisory Framework and new Rate Filing Guidance to be released in Q4 FY 2024-2025, 6 months earlier than previously planned. FSRA plans to have all three pieces of Guidance effective by Q3 FY 2025-2026, to allow insurers the opportunity to prepare for regulatory changes.

• CADRI

The stakeholder seeks clarification about expectations of insurers for the fair treatment of the vulnerable consumer in the context of auto insurance. 

FSRA will engage with stakeholders as work on protecting vulnerable consumers continues.

• CADRI

• Desjardins

• John Hamilton

• IBC

• OMIA

Some stakeholders expressed concerns about the proposed budget increase, particularly relating to supervisory and regulatory enhancements, including P&C oversight. Concerns were also expressed about potential year-over-year increases going into the future.

Stakeholders acknowledged cost increases were impacted by inflation but encouraged FSRA to keep costs low. One stakeholder advised that it is incumbent on FSRA to consider the financial impact on consumers. 

One stakeholder requested more detail on the activities where these costs will be incurred and noted industry concern about the future scope of insurance regulation. 

FSRA reevaluates its budgetary needs each year to effectively meet obligations and carry out its mandate. Changes to FSRA’s supervisory approach are required to help ensure there is adequate protection for P&C customers.

FSRA will continue to use the Statement of Priorities and Annual Business Plan processes to be transparent to its regulated sectors and to satisfy its commitment to fiscal responsibility and accountability. 
 

• Innovative Case Management

Health Services Providers (“HSP”) are concerned with the rising health care costs to treat motor vehicle accident victims. The rates established for HSPs should be reviewed and updated to reflect the current inflationary pressures in the economic climate. Furthermore, HSPs have also expressed challenges with talent acquisition and retention in the sector.

FSRA was aware of stakeholder concerns respecting HSP fees. The Professional Services Guideline (PSG) established the maximum amounts that automobile insurers are liable to pay to HSPs. 

An adequate review of the PSG would require review of the Minor Injury Guideline (“MIG”) as well as the Insurance Act, Statutory Accident Benefit Schedule (“SABS”), and other associated regulations, which are not under FSRA’s purview.

FSRA works closely with the Ministry of Finance and will continue to support the government’s priorities in the auto insurance sector.

• OTLA

• FAIR Association of Victims for Accident Insurance Reform

One stakeholder emphasized the need for transparency and consumer education in the auto insurance system, as well as addressing issues such as potential bias at the License Appeal Tribunal (“LAT”) and insurers' conduct regarding attendant care.
One stakeholder expressed concerns about LAT complaints process and enhanced protection for injured claimants.

FSRA appreciated the stakeholder’s concerns regarding the Licence Appeal Tribunal (“LAT”), however, FSRA lacked jurisdiction over the LAT. Disputes between the insurers and the insured are outside of FSRA’s purview unless they raise conduct or other regulatory issues.

FSRA understood the stakeholder’s concerns regarding FSRA’s complaints handling process. FSRA released Complaints Resolution: Policy Framework and Best Practices Information Guidance, which assessed whether the licensee (insurer) violated the Insurance Act and/or its Regulations, including but not limited to the Statutory Accident Benefits Schedule (“SABS”).

Where a contravention is determined, FSRA will take the required appropriate regulatory action. When a consumer submits a complaint, it will enable FSRA to identify trends and share them with other departments within the organization. Complaint trends inform FSRA’s business planning and priorities, and may also trigger regulatory activity, including disciplinary action or proactive reviews of licensees, legislative changes, public awareness, and educational campaigns.

• Desjardins

• IBC

One stakeholder provided comments and suggestions regarding property & casualty and auto insurance priorities, particularly in combating fraud. 

One stakeholder highlighted the importance of addressing auto insurance fraud and offered to discuss its recommendations or any other detail the industry can assist in. 

FSRA continued to work with the government on initiatives to detect and prevent automobile insurance fraud and abuse, including a Fraud Reporting Service (“FRS”). It will also continue to work with the Ministry of Finance and stakeholders on the broader Fraud and Abuse Strategy.

• Ryan Guthrie – Guthrie Insurance

The stakeholder believed that the Ontario auto insurance system is broken and recommended some solutions to address issues with premiums and availability/ accessibility of coverage (when consumers are non-renewed or not provided with a quote by direct writing auto insurers, because the consumer no longer qualifies as the best driver, and/or the insurer only wanted to insure those who are the lowest risk). 

Consumers were forced to search for another insurer, often through a broker, which resulted in hassle for consumers and financial loss to brokers who received the lower rate Facility Association (“FA”) commission. 

The stakeholder also noted that direct writers refuse to provide Facility/FARM rates or coverage to certain customers, such as couriers and driving schools, which is unfair to other auto insurance providers. 

To remediate this issue, the stakeholder suggested that all direct writing insurers and agents should be required to provide Facility/FARM rates. They proposed that all auto insurers, agents, and brokers should be required to provide an alternative FA quote at the time of non-renewal, even if the consumer did not meet their preferred rates. 

Finally, the stakeholder suggested another remedial approach (to fix the imbalance) by increasing FA/Facility commission and fees to match the standard in the auto insurance market.

FSRA appreciated the stakeholder submission in response to FSRA’s 2024-2025 Statement of Priorities. 

The outcomes of FSRA’s Auto Rates and Underwriting Regulation Reform Strategy aim at ensuring consumers have fair access to auto insurance.

FSRA appreciated the stakeholder’s support for improving fairness and transparency in rates and underwriting.