When the Ministry of Finance (MOF) first contacted the UCDA about this idea back in the summer, we were excited at the potential, but we also had concerns.

As you can see here: https://tinyurl.com/38mwsubx

the MOF is moving forward on a plan to allow motor vehicle dealers in Ontario to sell automobile insurance to drivers!

In the 2024 Ontario Budget, the Ontario government asked the Financial Services Regulatory Authority of Ontario (FSRA) to expand FSRA’s Test and Learn Environment (“TLE”)

https://tinyurl.com/mc6x6j4e

to support the creation of more innovative automobile insurance products and services with the goal to improve customer experience and affordability.

FSRA and the MOF responded by proposing to amend regulations under the Insurance Act to enable the sale of automobile insurance at motor vehicle dealerships.

This may include sale by brokers, agents, or direct writers present at the dealership; or the implementation of an embedded insurance model where a consolidated price is offered for the vehicle and the insurance plan.

Through this proposed initiative, FSRA could create a pilot project within the TLE to facilitate automobile insurance products to be sold at motor vehicle dealerships through several different delivery mechanisms. A TLE provides a controlled environment where new products, services, or business models can be tested and validated before being fully introduced to the market.

If approved, this proposal expands FSRA’s ability to pilot new initiatives that could:

• Increase consumer choice by introducing novel distribution channels
• Encourage the development of innovative, consumer-focused products in response to changing consumer needs.
• Promote competition in Ontario’s automobile insurance sector.

Among the concerns the UCDA expressed, these include:

• In cases where there is little complexity, it may be possible for dealership staff to assist consumers in finding and obtaining the right insurance package for their needs without need of a broker. Where there is more complexity, however, as where the buyer is a business or some form of commercial insurance is called for, this may require an insurance broker or agent to guide the process.
• In the case of finance and insurance generally (what the industry refers to as F&I), the Ontario Motor Vehicle Industry Council, the motor vehicle dealer regulator, already requires any person dealing with consumers on the purchase of extended warranty, GAP/loan insurance, rust proofing or other aftermarket add-ons as part of the sale of a vehicle, to be registered under the Motor Vehicle Dealers Act as a salesperson for that dealership.
• Does this model contemplate application to leasing or is it just for automotive sales?
• Presumably, this model would need to be adjusted, if brokers are required, as one would not expect insurance brokers to register as salespeople to large numbers of dealerships.
• Training and support? Who will provide this?
• Will this apply to new and used vehicles?

Having said this, the UCDA is supportive of this new initiative as it promises to make life easier for consumers and it fits nicely within efforts by the Ministry of Public, Business Service Delivery and Procurement who have already begun the process of offering on-site motor vehicle and plate registration to dealers.

We work closely with both Ministries in what they call digital dealer registration (DDR) and conduct inspections of dealerships for them to determine suitability for the project. This enables dealers to register, plate and deliver vehicles at the dealership, without need to visit ServiceOntario outlets, increasing efficiency and convenience for consumers, and frankly, for dealers too.

The addition of insurance capacity would further enhance this effort.

We will keep Members advised as this proceeds and meanwhile, please consider sharing your thoughts with FSRA by January 6, 2025 here: https://tinyurl.com/4nmxnzbr