The New Year in 2013 is bringing along with it a tough new regime for allowing administrative monetary penalties (AMPs) to be levied against insurers in Ontario.
The Financial Services Commission of Ontario (FSCO) announced just prior to Christmas that insurance brokers in Ontario would be granted one big item on their holiday wish lists – a regime that would allow the regulator to fine insurance companies for breaching the province’s insurance rules.
Effective January 1, 2013, FSCO can now fine companies up to $200,000 and individuals up to $100,000 for failing to comply with the Insurance Act.
“AMPs will allow FSCO to better enforce violations of the Insurance Act by allowing the regulator to levy appropriate penalties proportional to an offence. This will allow FSCO to enforce the entire spectrum of transgressions of the act in a more timely and effective manner.”
The Government of Ontario had made a commitment to exploring AMPs in its 2011 budget. Consultations on the new regulations were held in the fall and the new regulations were filed on Dec. 14.
Previously, FSCO had to pursue quasi-criminal proceedings against companies in breach of the Insurance Act.
Brokers noted the burden of proof in these quasi-criminal proceedings opened up the possibility that the regulator would not pursue an action against insurance companies in breach of the act because the effort required did not always fit the crime.
Insurers, meanwhile, expressed concern that the quasi-criminal approach to regulation carried the potential of punishments that were out of proportion to the legislative breaches. For this reason, insurance company CEOs have joined brokers in a call for administrative penalties.
“This represents one of the most significant advances in consumer protection in many years,” said Carroll. “I want to personally thank [Ontario Finance] Minister [Dwight] Duncan and his staff for keeping his promise and getting this done. This is a great Christmas present for Ontarians.”
