FSRA: Annual Business Plan 2019–2022

The 2019-2022 Business Plan outlines FSRA’s transformation to a forward-looking, flexible, self-funded, principles-based regulator capable of responding to the dynamic pace of change in marketplace, industry and consumer expectations.

FSRA operates within a clear legislative framework. We will have powers and accountabilities under the regulated sector statutes and the Financial Services Regulatory Authority of Ontario Act, 2016 (FSRA Act), including the authority to make rules governing fees, assessments and other matters; to issue guidance; and to supervise the regulated sectors. We will use our expertise and authorities to respond to market and product changes and to serve the public interest.

FSRA continues to work with the MOF, FSCO and DICO to ensure a smooth transition of regulatory authorities to FSRA, as well as to initiate transformation.

Key achievements

Over the last year, FSRA has successfully recruited a new leadership team with deep sector and regulatory experience; implemented an organizational design focused on integration, expertise, accountability and collaboration; started to put in place necessary systems, processes and oversight for well-governed, effective and efficient operations; extensively consulted with internal and external stakeholders; and laid the foundations for regulatory transformation.

Plan highlights

This plan demonstrates FSRA’s intent to regulate differently by using broader expertise, rule-making and other regulatory tools and improved processes to reduce burden and increase regulatory effectiveness while keeping costs as low as reasonably possible.

In our first year as regulator, in addition to ensuring continued effective ongoing supervision of the regulated sectors, we have two priorities across all sectors: burden reduction and regulatory effectiveness. 

• To reduce burden FSRA will conduct, in conjunction with our stakeholders, a thorough examination of existing guidance documents, data and filing requirements, and service standards to ensure that they are relevant, provide value, and support our

• Regulatory effectiveness is about ensuring that we achieve our legislative objectives and protect the public interest through industry and regulatory expertise, enhanced collaboration and transparency, efficient processes, and use of technology and enabling

In addition to cross-sector priorities, in each sector we have, based on discussions with stakeholders, identified sector-specific opportunities for FSRA to reduce burden and improve regulatory effectiveness. These priorities will be achieved by working with industry, consumer representatives and other stakeholders.

Sector-Specific Priorities

The cross-sector priorities described above outline FSRA’s plan to reduce burden and increase the effectiveness of regulation. In addition, FSRA has identified a number of opportunities within each sector that support these overarching priorities and will create a dedicated focus within FSRA and accountability to specific stakeholders. These sector-specific priorities are described in the following section (listed in alphabetical order by sector).

1.  Auto Insurance sector

Auto insurance is mandatory in Ontario and represents over $12B in direct written premiums. It represents protection for individuals in the event of an accident, a cost of owning a vehicle for the province’s ten million licensed drivers, and a major source of premiums and claims costs for the

insurance industry. The auto insurance system is highly regulated, and FSRA will work closely with the MOF; other regulators and agencies; the public (including consumer and claimant representatives); the insurance industry (including companies and intermediaries); and service providers to claimants (including health care practitioners and legal representatives); on improving the system with a focus on the following four key auto sector priorities:

1. Streamline Rate Regulation
2. Support Auto Reform Strategy
3. Review Health Service Provider Regulation
4. Develop Fraud Reduction Strategy

1.1  Auto Insurance: Streamline Rate Regulation Process

Insurance companies see the existing processes for reviewing and approving auto insurance rate filings, particularly processes related to rates for personal vehicles, as inflexible, lengthy and overly complex. These issues create barriers to innovation and prevent insurance companies from responding quickly to changes. FSRA will improve the rate regulation process to reduce regulatory costs and burden on auto insurance companies, and to create better outcomes for consumers, through timelier rate approvals.

Approach

• Pre-launch
  • Review existing processes to identify early opportunities to reduce burden and shorten timelines;
  • Establish rate approval process improvement target; and
  • Consult with industry on proposed
• Year 1
  • Complete consultation with stakeholders on rate regulation process improvements
  • Implement process improvements, including revised guidance

Dependencies

Process improvements may need to be adjusted/changed to support Priority 1.2.

Year 1 Target

• Complete consultation with stakeholders on auto rate regulation process improvements; and
• Implement process improvements, including revised

1.2  Auto Insurance: Support Auto Reform Strategy

Upward pressure on auto insurance rates continues, reflecting underlying cost increases. Consumers are interested in getting the best possible policy for the lowest price while auto insurers indicate they do not earn a profit sufficient to sustain widespread industry viability and product availability. The combination of increasing rates, consumer expectations and concerns that the current auto insurance regulatory system creates barriers to effective pricing, cost control, good underwriting and innovation could make the market less attractive and result in less choice, competition and product availability for consumers. In the 2018 Fall Economic Statement the government made a number of commitments aimed at improving the auto insurance system, and FSRA will support the MOF in delivering on those commitments.

Approach

• Pre-launch
  • Collaborate with the MOF and FSCO on work related to the government’s auto insurance commitments, such as a joint review of auto insurance rate
• Year 1
  • Support the government’s review of auto insurance, including providing leadership as requested; and
  • Participate in stakeholder consultation and review of auto insurance as required by the MOF, and develop an implementation plan for FSRA to support any reforms identified in Year 1
• Year 2 and ongoing
  • Continue implementation of changes at FSRA that support

Dependencies

• Significant reforms may require legislative changes for

Year 1 Target

• Participate in stakeholder consultation and review of auto insurance as required by MOF; and
• Develop implementation plan for FSRA to support any reforms identified in Year

1.3. Auto Insurance: Review Health Service Provider Regulation

The current licensing regime for health service providers in Ontario’s auto insurance system is seen by some as ineffective in achieving the intended objectives of controlling costs and ensuring effective provision of benefits by reducing fraud. We will review how health service providers are regulated by FSRA with an emphasis on burden reduction and on access to treatment for claimants. The review will consider the objectives and outcomes of the current framework, with a particular emphasis on:

• how such health service providers should be regulated by FSRA or another entity and how those regulatory activities benefit our auto insurance system;
• streamlining the licensing process and revising the approach to supervision of health service providers, including examinations, to achieve the desired regulatory objectives;
• identifying the appropriate role for auto insurers in fraud cost control and health service provision, and what FSRA and other regulators can do to support insurers (e.g., provision of data); and
• reviewing the role of information and technology in fraud reduction.

Approach

• Pre-launch
  • Work with the MOF and industry to define the specific terms of and process for the
• Year 1
  • Initiate and complete the review;
  • Ensure alignment with actions supporting the government’s auto insurance rate reform initiative and FSRA’s Fraud and Abuse Reduction priority 4; and
• Year 2+
  • Initiate implementation of any regulatory process improvements identified through the

Dependencies

• Collaboration and cooperation with stakeholders and other regulatory and government bodies, such as colleges and IM/IT technological

Year 1 Target

Complete review in consultation with stakeholders, including identifying core goals and developing an implementation plan for recommended changes.

1.4 Auto Insurance: Develop Fraud and Abuse Reduction Strategy

Stakeholders in Ontario’s auto insurance system are looking to FSRA to enhance public confidence and contain costs by taking an active role in reducing fraud and abuse, both in health and vehicle repair claims. Many different parties have roles to play in controlling and deterring auto insurance fraud and abuse, and consensus on the appropriate approach is required. FSRA will take a leadership role in bringing together government, regulators and stakeholders to drive the development of an improved strategy related to auto insurance that focuses on:

• clarifying the appropriate roles and expectations of the various parties;
• working with stakeholders to review and improve the effectiveness of information and technology systems and tools to control and deter auto insurance fraud and abuse;
• identifying opportunities for improved use of data and analytics; and

considering the need for improved public communications about the costs of fraud and abuse for Ontario consumers, and the potential benefits of increased public awareness in reducing fraud and abuse.

Approach

• Pre-launch
  • Identify parties and define mechanisms for collaboration and
• Year 1
  • Consultation on, and establishment of, forum/process for government, regulators and other stakeholders to evaluate and improve control of fraud and abuse
  • Report to the MOF on recommendations to reduce fraud and abuse
• Year 2 and ongoing
  • Work with stakeholders to complete implementation of agreed

Dependencies

• Collaboration and cooperation with many different parties that are accountable for controlling fraud and abuse; may require legislative change or technology

Year 1 Target

• Consult on, and establish, forum/process for government, regulators and other stakeholders to evaluate and improve control of fraud and claims abuse; and
• Report to MOF on recommendations to reduce fraud and claims

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Financial Services Regulatory Authority of Ontario – 2019-02-26.