What regulator says Ontario auto insurers need to improve

Ontario auto insurers largely met regulatory requirements this year, but can improve in certain areas of underwriting, disclosure to consumers, policy servicing, and claims, the Financial Services Regulatory Authority of Ontario (FSRA) says in its 2025 Auto Supervision Interim Report.

Through on-site reviews of five insurers between January 2024 and March 2025, FSRA observed two broad areas for improvement across multiple insurers:

• Monitoring controls — Limited oversight of the quality of information provided to customers during sales through brokers; gaps in data, analysis, and exception reporting to support underwriting interventions; and inconsistent collection and review of data on insurer-initiated cancellations and non-renewals.
• Documentation — Incomplete records supporting changes to underwriting rules; insufficient evidence of required disclosures and written consent when referring claimants to preferred provider networks; and failure to issue final position letters for certain complaints referred to the ombudsperson.

“These findings highlight the need for stronger controls, enhanced documentation, and improved oversight to ensure fair consumer outcomes and compliance with regulatory requirements,” FSRA says in the report, released Oct. 28. “FSRA will conduct additional insurer examinations and take action, as needed.

“Insurers are expected to review these observations and update business practices to ensure they meet both regulatory obligations and the expectations for fair treatment of Ontario auto insurance consumers.”

Each insurer has committed to making the required improvements, FSRA reports.

Processing delays?

When it comes to underwriting, FSRA found insurers followed approved rules and there was no evidence of unfair denials. “However, additional underwriting verification may be causing processing delays,” the regulator says in a press release. “FSRA expects insurers to strengthen monitoring of this practice to support fair consumer outcomes.”

All five insurers have automated underwriting processes embedded in proprietary and third-party quoting and underwriting systems, and FSRA found underwriters with designated authority could override automated decisions.

“Although individual overrides were logged, there were no systems in place to consolidate or analyze trends such as the reasons or frequency which could inform process improvements or future rules changes,” the report says.

It also found certain risks were flagged for manual review before binding despite meeting eligibility criteria. “While these referrals did not result in automatic declines, they introduced processing delays that could affect the consumer experience,” FSRA says. “There was insufficient data to evaluate referral volume, abandonment rates post-referral or associated time delays and the potential consumer impacts.”

Broker oversight

The regulator found insurers distributing auto insurance through direct channels and agents had procedures in place to evaluate the quality of information exchanged with applicants. But they had limited visibility into the information shared during the quoting and binding process for policyholders working with brokers. “Without proper oversight, insurers cannot confirm whether customers were sufficiently informed about their products.”

When servicing policies, insurers aren’t collecting enough data to analyze when and why they cancel or choose not to renew a customer’s policy, FSRA found. Although insurers met legislative requirements by issuing notices with appropriate reasons for cancellations and non-renewals, “they did not consistently track the volume of such insurer-initiated actions, limiting their ability to analyze trends or detect anomalies,” the report says.

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As well, insurers that referred auto claimants to preferred provider networks lacked documentation demonstrating required disclosures and written consent from claimants were received as required by regulation.

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In a Dentons Canada Insurance Law Review article earlier this month, the law firm recommended insurers writing auto in Ontario consider the following practices as part of their compliance programs:

• Establish controls and systems within the underwriting environment that require proper documentation and disclosure before moving to binding risks or closing underwriting files
• Review algorithms and underwriting rules to ensure compliance with the Unfair or Deceptive Acts or Practices Rule and Take-All-Comers Rule, in particular
• Update forms, applications, and webpages to ensure proper disclosures are provided to customers
• Conduct regular and ongoing training of brokers and agents
• Conduct and document the results of proper audits and oversight of channel partners, as well as any remediation actions required to address compliance issues
• Perform regular desk audits to ensure compliance.

FSRA’s report and associated reviews were part of its Auto Insurance Supervision Plan. To broaden its understanding of industry practices, FSRA has extended its work on the plan until Mar. 31, 2026. A final report will be released once all additional examinations are completed.

Jason Contant

Jason has been an award-winning journalist with Canadian Underwriter for more than a decade, including the past three years as associate editor and, before that, as digital editor for seven years.