March 29, 2018 by Greg Meckbach
The Ontario government’s 2018-19 budget document provides some comfort for auto insurers because the province is committing to having the new regulator up and running by April 2019.
The Financial Services Regulatory Authority, which will effectively replace the Financial Services Commission of Ontario (FSCO) in regulating auto insurance, “is working towards becoming fully operational by April 2019,” Finance Minister Charles Sousa said in the budget document, tabled Wednesday in the legislature.
For insurers, it is “reassuring that the commitment is there and we have a target date when FSRA will be fully functional,” Pete Karageorgos director of consumer and industry relations for Ontario for the Insurance Bureau of Canada, said Thursday in an interview.
Insurers are hoping that when FSRA regulates property and casualty insurance, “there will be more flexibility” for the regulator to adjust auto insurance rates and adopt new technology applications such digital proof of insurance, Karageorgos said. “The reality is, FSRA will likely be the authority to make [electronic proof of auto insurance] happen, because we haven’t seen it yet through FSCO.”
In addition to regulating property and casualty insurance, FSRA will also oversee life and health insurance, mortgage brokers, pension plan administrators, credit unions, and caisses populaires. In creating the new regulator, the Ontario government implemented a recommendation by a panel appointed in 2015 to review the mandates of FSCO, the Financial Services Tribunal, and the Deposit Insurance Corporation of Ontario.
The government also promised in its budget document to change the Insurance Act to “clarify the use of electronic communication by insurers and consumers, including certain insurance applications, policies and forms.”
Depending on what these changes look like, they could benefit brokers, suggested Colin Simpson, CEO of the Insurance Brokers Association of Ontario.
Consumers want to communicate with their brokers and insurers using “modern methods,” Simpson said Thursday in an interview. Some brokers send forms to and receive forms from consumers using printed paper because currently, the regulations do not specifically say when electronic communication is allowed. If the province can change the Insurance Act to make “clearer” when electronic communication is acceptable, “then all the better,” said Simpson.
The government also announced that two organizations, the Ontario Neurotrauma Foundation and Spinal Cord Injury Ontario, will work with insurers, legal professionals and others on “standards of care” for people who are catastrophically injured in motor vehicle accidents.
“The hope is, we will be on the path to addressing care for individuals who need it as a result of a motor vehicle collision as opposed to just cash,” Karageorgos said.