Shop Insurance Canada: FSCO should be removed, but Only with Effective Replacement

July 13, 2016 - The creation of a new financial regulatory body to oversee the insurance industry in Ontario is a good idea, says Shop Insurance Canada. However, the auto insurance expert argues that the creation of a Financial Services Regulatory Authority (FSRA) is meaningless unless it can effect change in the province and help to lower insurance rates.

The Insurance Bureau of Canada (IBC) has backed the call from an expert advisory panel for a new organization to be formed that will take over the duties currently performed by the Financial Services Commission of Ontario (FSCO).

In a report released in June, the panel recommended that the Liberal government in the province establish the new organization. The group would be an independent regulatory agency that would replace the FSCO, which currently regulates auto insurance rates in Ontario.

"A new Financial Services Regulatory Authority (FSRA) should be established, and it should exercise both prudential and market conduct functions in a coordinated but distinct fashion," an Ontario government-appointed panel said in the Review of the Mandates of the Financial Services Commission of Ontario, Financial Services Tribunal, and the Deposit Insurance Corporation of Ontario.

Shop Insurance Canada supports the call for a body to replace the FSCO, but says any new association will still face similar problems.

"It is encouraging that the Ontarian government is being pressed to replace the FSCO. It could help shake up financial regulation in the province and provide a more complete authority on insurance rates and practices. However, the FSRA would face similar problems such as how to lower auto insurance rates and deal with fraud. A new body is only necessary if it is effective in working towards reducing fraud and premiums."

The IBC said that it agreed with the recommendation and urged the government to move quickly to implement the changes. The bureau advised that the FSRA should be developed before this fall's economic statement.

"Given the rapid pace of change in the financial world, we believe the new regulator needs to be nimble and foster a strong, vibrant and innovative financial services sector," said Kim Donaldson, IBC's vice president for Ontario.

"The regulator must be an effective model for excellence for financial sector regulation in Ontario, with a mission to protect and promote a broad range of consumer interests in a manner that is proactively responsive to changing consumer needs, as well as adaptive to new and sometimes disruptive future technology."

The expert panel also recommended that the FSRA should have an anti-fraud authority, to help with the problem of insurance fraud in Ontario.

"We do not intend to imply that FSRA should be the only responsible entity for fraud prevention, deterrence and detection," the panel added. "Each regulated sector and the businesses operating within them must also participate actively in fighting fraud. FSRA ought to have the authorities necessary to require and enable the sectors to do their part.

About Shop Insurance Canada
Shop Insurance Canada is a Toronto based company that specializes in delivering the best auto insurance products to customers around Ontario and Canada. The online insurance quoting tool uses an engine that is easy to use and accurate enough to deliver the best auto insurance quotes from over 25 of Canada's leading providers. Shop Insurance Canada also offers expert advice on the auto insurance industry, as well as guides and news to help customers find the best deal possible.

Shop Insurance Canada
1003-60 Bathrust St.
Toronto, Ontario
M5V 2P4
Canada
416-913-0151