On November 22, 2024, the Ontario Ministry of Finance (the “MOF“) proposed an amendment to O. Reg 704/21, Exemption Orders Under Section 15.1 of the Act, (the “Exemption Regulation“) that, if approved as proposed, would permit the Financial Services Regulatory Authority of Ontario (“FSRA“) to exempt selected entities or persons from the prohibition under section 231 of the Insurance Act (Ontario) (the “Act“) as part of FSRA’s Test and Learn Environment (“TLE“). A link to the proposal is here. The proposal is open for comment until January 6, 2025.
Section 231 of the Act currently prohibits motor vehicle dealers from engaging in activities relating to the sale of automobile insurance. If approved, the proposed amendment would allow automobile insurance products to be sold at motor vehicle dealerships through several different delivery mechanisms, including by brokers, agents, or direct writers present at the dealership. The proposed amendments may also allow for the implementation of an embedded insurance model where a consolidated price is offered for the vehicle and the insurance.
FSRA would oversee the implementation and administration of this regulatory change under FSRA’s TLE, in a relatively low-risk environment that would allow FSRA to gauge consumers’ and the market’s response to the change.
The proposal is open for comment and consultation until January 6, 2025. As part of the consultation process, the MOF and FSRA are asking for comments on the following questions:
- Would it add convenience and value for customers if motor vehicle manufacturers, dealers, or financing companies offer automobile insurance at the time of purchasing vehicles?
- How would the proposal to sell automobile insurance through motor vehicle manufacturers, financing companies, dealerships impact the automobile insurance and/or motor vehicle manufacturer/financing/dealerships market and consumers in Ontario?
- The government is seeking input on the following potential delivery methods that could be available to FSRA in the creation of this pilot project: (a) broker/agent led insurance, and (b) embedded insurance.
- Are there any other distribution models that MOF and FSRA should consider in the pilot?
- Are there any other general concerns about allowing motor vehicle manufacturers, financing companies, or dealerships to sell automobile insurance policies?
- Would you be supportive of the piloting of such initiatives?
- Any other additional comments that would help MOF and FSRA pilot such initiatives?
The MOF has stated that the proposed amendments are not likely to have any adverse regulatory impact. Comments and answers to the questions above may be submitted via email directly through the Ontario Regulatory Registry portal. See the link to the email portal for Proposal number 24-MOF025 here.
If you have questions regarding the proposed amendment and its application to your business practices, or if you would like assistance in preparing comments, please do not hesitate to reach out to a member of our team.
