Auto insurance rate regulation in Ontario is expected to switch hands next year, from the Financial Services Commission of Ontario (FSCO) to the Financial Services Regulatory Authority (FSRA).
In its fall economic statement released Thursday, the current Ontario PC government said it’s “committed to creating a regulatory framework that allows for a more modern auto insurance sector,” which includes the handover.
FSCO’s regulation includes approving how much auto insurers can increase or decrease their insurance rates in the province.
The baton-pass should be completed by April 2019, according to the former Liberal government’s 2018-19 budget document released in March of this year. The creation and implementation of FSRA was one part of the former government’s review on how auto insurance rates are regulated.
The document lays out a number of ways that auto insurance can be modernized in Ontario, including electronic proof of auto insurance (which has sparked privacy concerns among regulators), as well as usage-based insurance technology that charges drivers based on how often or how far a vehicle is driven. UBI is also referred to as “telematics,” which can monitor everything from how hard a vehicle brakes to how quickly it accelerates. FSCO allows insurers to use telematics to provide discounts for low-risk driving behaviour.
The current Ontario PC government said it’s “committed to creating a regulatory framework that allows for a more modern auto insurance sector
FSRA and the government will do a joint review of how auto rates are regulated in the province, according to its fall economic statement. This review, the statement says, “will examine practices in other jurisdictions and identify opportunities to achieve greater efficiencies and introduce more competition in the system.”
A media spokesperson from the Ministry of Finance confirmed to LowestRates.ca that FSRA will also regulate life and health insurance, mortgage brokers, and credit unions.
The FSRA was established under the Liberal government in 2017. Its creation was first recommended in a 2016 report called the “Review of the Mandates of the Financial Services Commission of Ontario (FSCO), Financial Services Tribunal and the Deposit Insurance Corporation of Ontario (DICO).” The report was released by a three-person panel that included George Cooke, the former CEO of The Dominion of Canada General Insurance Company.
In that report, the panel also recommended that the Motor Vehicle Accident Claims Fund (MVACF), which provides compensation to accident victims who either can’t get insurance or who are involved in accidents with uninsured or unidentified drivers, should not fall under the FSRA’s purview. Instead, the report suggested it be transferred to the Facility Association.
The Facility Association is a non-profit administrative body that provides what’s called facility insurance through RSA, belairdirect, and The Co-operators. The Facility Association is often referred to as the “insurer of last resort” for those who are deemed too high-risk to be covered by standard insurers.
In its fall economic statement, the government said it is introducing legislation that, if passed, would transfer the administrative responsibility of the MVACF to the Ministry of Government and Consumer Services.
Read more at https://www.lowestrates.ca/news/car-insurance-shift-fsco-to-fsra-ontario25373
