An insurance company is proposing to adopt a new way to distribute commercial insurance products to improve market access and convenience for consumers
TORONTO, Aug. 30, 2023 /CNW/ - The Financial Services Regulatory Authority of Ontario (FSRA) has established an Innovation Office to help identify, support and enable opportunities to facilitate and foster innovation across the financial services sector.
"The goal of the Innovation Office is to help emerging and existing innovators develop their ideas while maintaining consumer confidence in financial services," said Glen Padassery, FSRA Executive Vice President. "We are committed to responsible innovation which simply means that FSRA will support Ontario's financial services sectors to grow and thrive by helping them introduce innovative products, services, and business models in a manner that manages risk to consumers and stakeholders."
To help guide the pursuit of responsible innovation, the Innovation Office released a framework to standardize the way it reviews new ideas, products and services. At the same time, it established a test and learn environment to validate and assess potential ground-breaking advancements before they are introduced into the Ontario market.
Recently, the Innovation Office approved its first test and learn application. An insurance company is proposing to test a novel way to distribute commercial insurance products across Ontario called the Direct Access Model.
The Direct Access Model is an arrangement between insurers and other entities through which one insurer's agents, acting under the supervision of a common managing general agent, would provide their clients access to a suite of niche commercial insurance products from different insurers. The Insurance Act currently limits licensed general insurance agents to act for a single insurer unless insurers are carrying on business in a common undertaking.
The proposed innovation is to allow the insurance company's agents to offer commercial insurance products on the basis that the various entities supporting the Direct Access Model are in an "affiliated group of insurers" that are carrying on a common undertaking. Through FSRA's test and learn environment the insurance company hopes to demonstrate that the Direct Access Model will improve market access and convenience for consumers.
"It is FSRA's view that in this case, this novel distribution model has the potential to provide significant benefits to consumers and the possibly facilitate the modernization of insurance distribution in Ontario," said Padassery. "However, we will work closely with the applicant to ensure that undesirable consumer outcomes are avoided, and appropriate safeguards are developed to protect individuals and families across the province."
During this testing phase the insurance company would have to ensure the competence of their agents, that clients are being treated fairly, that there is proper governance and agent oversight, and there is a consumer complaint handling process in place.
The insurance company would also have to provide the tools and resources, including training, to assist agents with information about the new products and to ensure consumers' rights and interests are being protected.
For Media Inquiries Contact:
Russ Courtney
Sr. Media Relations and Digital Officer
Financial Services Regulatory Authority of Ontario
C: 437-225-8551
Email: [email protected]
SOURCE Financial Services Regulatory Authority of Ontario
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