In response to feedback, the Financial Services Regulatory Authority of Ontario (FSRA) is backing away from plans to relax curbs on using incentives in the life insurance sector.
Following an initial round of consultations that concluded in mid-March, FSRA released proposed new rules on “unfair and deceptive practices” for a second consultation period on Wednesday.
A key change in the new proposals will leave in place existing restrictions on the use of incentives such as rebates and rewards in the life and health insurance sector.
An earlier proposal from FSRA to allow insurers to offer incentives was originally pitched as a way to enable innovation, competition and choice.
However, the regulator is now scrapping that idea following feedback that “raised concerns about unsuitable sales, unfair sales practices, rate instability, creating an unlevel playing field and taxation issues,” FSRA said.
FSRA received 27 submissions on its first set of proposals and held a series of follow-up meetings with industry associations, insurers, consumer advocacy groups and others. Based on that input, the regulator concluded that “further stakeholder input and discussion are required in order to fully assess and address potential consumer risks.”
FSRA said it “may explore a framework for removing these restrictions in future reviews of the proposed rule,” but for now, it would leave the current limitations in place.
The consultation period on the revised rule closes on Aug. 11.