Why don’t Ontario auto insurance clients have more choice?

Ontario auto insurance consumers would love the option to purchase a scaled-down auto insurance policy tailored to their individual needs and budgets, a speaker said at an industry event last week hosted by the Financial Services Regulatory Authority of Ontario (FSRA).

“Insurers currently are not allowed to offer choice and optionality when it comes to the auto insurance product, as it is locked in legislation beyond FSRA’s purview,” says Stephen A. Fuller, head of international government affairs and senior vice president of TCI Global, with The Travelers Companies Inc. “I think Ontario consumers would love the ability to purchase a scaled-down, tailored-to-their-individual-needs auto insurance policy… budgeting for what you really need. I think that has a nice ring to it.”

Fuller’s comments came during a discussion about principles-based regulation (PBR) at FSRA’s first-ever 2022 FSRA Exchange Event, held Jan. 27. In 2020, the regulator launched its Innovation Office, which recently released an innovation framework along with a test-and-learn environment. One component of the test-and-learn environment is to examine new auto insurance models that don’t fit within existing regulatory parameters.

“What if FSRA’s innovation framework does not allow companies to touch the product? I’m afraid there will only be marginal gains when it comes to the innovation framework, at least for the auto insurance sector,” Fuller says.

Stephen A. Fuller, head of international government affairs and senior vice president, TCI Global, with The Travelers Companies Inc., speaking at the 2022 FSRA Exchange Event.

“Bottom line: In my mind, FSRA has very strong leadership, technical expertise, insights and proximity to the file, but needs to be further empowered to deal with the auto insurance product if Ontario is going to be viewed as an attractive market for new market entrants, for new insurance companies, and in order to keep the current carriers healthy, creative and innovative, so that they can provide the best possible service to Ontario consumers.”

Fuller was responding to a question from moderator Jordan Soloway, FSRA’s executive vice president of legal and enforcement, about whether PBR is sufficient and “the silver bullet for Ontario auto.” Soloway also asked if PBR was the right system to manage profound innovative changes.

“Innovation is not by definition beneficial across the board,” says Dr. Cristie Ford, a professor at the University of British Columbia’s Allard School of Law. “To assume that innovation is always going to sort of lift all boats, or is going to be congruent with the kinds of objectives that the regulator wants to see is, I think, not reasonable. Understanding who’s innovating, in what contexts and for what purposes, is essential.

“Innovation is always going to have enormous potential and enormous risks,” Cristie adds. “Innovation of any significant magnitude can bring improvements for individual industry actors and for the public.”

Feature image by iStock.com/Gina Staios