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A Proposed New Rule for Insurance and Incentives in Ontario

insurance Ontario

The Financial Services Regulatory Authority (FSRA) in Ontario is looking for public input on a proposed new rule around incentives and insurance. Read on to learn more about this change and what it could mean for your insurance coverage and rates.

How things currently stand

Currently, insurers across the board are not allowed to offer consumers any type of rebate, discount or incentive, no matter the situation or circumstance. This is called the Unfair or Deceptive Acts or Practices (UDAP) Rule. The prohibition of incentives is a blanket rule under Ontario insurance law. With this in place, an insurance provider cannot offer some sort of a free service, gift etc. to a client in exchange for the purchase of insurance coverage. The idea around this rule is to protect consumers from buying an insurance product that is not the right fit for their needs just to get the incentive. It was intended to insure that insurance providers were offering consumers and brokers unbiased, accurate and transparent information about different insurance options available based on their own inherent merits, not on the freebie.

The changes proposed

What the Ontario government is thinking of implementing revolves around the current laws on unfair and deceptive acts. Instead out of an outright ban on incentives and rebates, insurers would have the flexibility to use them in certain circumstances.

The government still wants to insure that any incentives offered are a logical fit for the circumstance and helpful to consumers. An example given by Colin Simpson, the CEO of the Insurance Brokers Association of Ontario, is that a free plumbing inspection incentive would make sense in the case of selling home insurance – this inspection should help to protect the client from potential water damage threats, which is directly linked to home insurance coverage (source: Canadian Underwriter). Another example given by the FSRA is a rebate on auto insurance for good drivers (an incentive like this would be in addition to those that are offered under usage-based auto insurance programs).

Another goal of the new rule is to offer more protection to consumers than previously, ensuring that outcomes that are unfair, unethical or otherwise detrimental to said consumers are clearly laid out. It will make it easier to identify and deal with misconduct, and protect consumers from being mislead or taken advantage of.

Give your input

The public consultation period wraps up on March 18, 2021. Learn more on the FSRA website and share your views here. The above page from the FSRA site also allows you to see some of the comments that have been made, as well as some of the questions posed. If you want even more details, click here for the full notice of the proposed rule.

Have any questions in regards to the proposed changes? Just want some help with getting affordable insurance coverage in Toronto and across Ontario? Get in touch with one of our insurance professionals today. Or click to access online quotes and information for business, home and auto insurance.

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Image source: | Stuart Miles


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