Annual Report 2014-2015

Table of contents

 

The Regulated Sectors in Profile

 

Pension Plans

Insurance

Auto Insurance

Regulated Financial Services

 

Together, the Financial Services sectors regulated by FSCO represent a large, dynamic industry that underpins Ontario’s economy and quality of life. The industry delivers products and services that support the financial security of individuals and families and the financial stability of businesses and other organizations.

Pension Plans

FSCO regulates the following types of pension plans registered in Ontario:

 

  • Defined benefit plans, which provide a pre-determined level of benefits during retirement;
  • Defined contribution plans, which provide benefit payments based on the amount of pension that can be purchased with the accumulated contributions, plus investment returns;
  • Multi-employer pension plans (MEPPs), which allow two or more unrelated employers to contribute to a single pension fund and recognize a member’s service with all participating employers when determining benefits. MEPPs have usually been established in industries or trades where workers change employers frequently but have a common union affiliation (for example, carpenters or painters). The benefits provided under a MEPP can be either defined benefit or defined contribution. While most MEPPs have been created through collective agreements, some have been established by statute or municipal by-law. In MEPPs created through collective agreements that provide defined benefits, the defined benefits may be reduced if there are funding shortfalls.
  • Jointly sponsored pension plans (JSPPs) are pension plans where the employer (or employers) and the members jointly share responsibility for the plan, including plan governance and the funding of any deficits as they arise. JSPPs can be either single employer or multi-employer plans. Currently, most JSPPs are very large public sector plans, such as those for teachers or municipal workers.

Some defined benefit plans are hybrid plans combining defined benefit and defined contribution provisions, or providing the greater of a defined benefit or defined contribution provision.

 

Employment pension plans registered in Ontario must meet minimum standards for administration and funding under the Pension Benefits Act and regulations. FSCO monitors and enforces compliance with the legislation and regulations and advises the government on pension issues. As well, FSCO administers the Pension Benefits Guarantee Fund that protects a minimum level of benefits in most private single employer defined benefit plans if the employer is insolvent.

 

Ontario-Registered Active Pension Plans and Membership
Pension Plan TypeAs of March 31, 2015As of March 31, 2014
NumberPercentage
of Total
NumberPercentage
of Total
Single Employer Plans*7,060987,18898
Defined Benefit Plans*4,012564,09756
Members**1,325,373331,344,00034
– Active Members***656,19430676,00031
– Retired Members, Deferred Members and Other Beneficiaries****669,17937668,00038
Defined Contribution Plans*3,048423,09142
Members**424,75011435,00011
– Active Members***358,46016368,00016
– Retired Members, Deferred Members and Other Beneficiaries****66,290467,0004
Multi-Employer Plans*11921182
Defined Benefit Plans*771781
Members**873,73222860,00022
– Active Members***373,21017382,00017
– Retired Members, Deferred Members and Other Beneficiaries****500,52228478,00027
Defined Contribution Plans*421401
Members**126,459380,0002
– Active Members***83,399453,0002
– Retired Members, Deferred Members and Other Beneficiaries****43,060227,0002
Jointly Sponsored Plans*100100
Defined Benefit Plans*100100
Members**1,250,869311,223,00031
– Active Members***717,73633706,00032
– Retired Members, Deferred Members and Other Beneficiaries****533,13329517,00029
Total Pension Plans*7,1891007,316100
Total Members**4,001,1831003,942,000100
– Active Members***2,188,9991002,185,000100
– Retired Members, Deferred Members and Other Beneficiaries****1,812,1841001,757,000100

* Percentages are expressed as a percentage of the total number of Plans.

** Percentages are expressed as a percentage of the total number of Members in all Plans.

*** Percentages are expressed as a percentage of the total number of Active Members in all Plans.

**** Percentages are expressed as a percentage of the total number of Retired Members, Deferred Members and Other Beneficiaries in all Plans.

 

Notes:

  1. 2014 Membership numbers rounded to the nearest thousand.
  2. Percentages may not add up due to rounding.
  3. Data on defined benefit plans includes hybrid/combination plans with both defined benefit and defined contribution components.
  4. Percentages for JSPPs are reported as zero as they represent less than 0.1%.

 

 

Total Number of Ontario Pension Plans, 2006–2015

Total Number of Ontario Pension Plans, 2006-2015

Description of total number of Ontario Pension Plans image [New Window]

 

 

 

Ontario Pension Plan Membership, 2006–2015

Ontario Pension Plan Membership, 2006-2015 

Description of Ontario Plan Membership image [New Window]

 

Ontario-Registered Active Pension Plan Assets

Plan Type

Market Value
of Assets at
March 31, 2015

$ Billion %

Market Value
of Assets at
March 31, 2014

$ Billion %

Single Employer Plans  
Defined Benefit191.8436.7%172.5936.4%
Defined Contribution17.353.3%14.973.1%
Jointly Sponsored Plans  
Defined Benefit285.7754.7%261.2355.5%
Multi-Employer Plans  
Defined Benefit25.194.8%21.764.6%
Defined Contribution1.990.5%1.670.4%
Total522.15100%474.22100%

 

Pension Plan Transactions Processed by FSCO

Under the Pension Benefits Act, the Superintendent of Financial Services makes regulatory decisions on various pension plan transactions, from initial registration to full wind-up. The following table lists key plan transactions dealt with by FSCO.

 

Transaction Type2014–152013–14
New Plans Registered
Single Employer Plans  
Defined Benefit7993
Defined Contribution7341
Multi-Employer Plans  
Defined Benefit01
Defined Contribution32
Total155137
Plan Amendments Registered2,3242,928
Full Wind-Ups Processed
Single Employer Plans  
Defined Benefit202218
Defined Contribution104101
Multi-Employer Plans  
Defined Contribution
Total306319
Partial Wind-Ups Processed
Single Employer Plans  
Defined Benefit127
Defined Contribution02
Multi-Employer Plans  
Defined Benefit1
Defined Contribution
Total139
Plan Mergers/Asset Transfers Processed
Single Employer Plans  
Defined Benefit915
Defined Contribution1831
Multi-Employer Plans  
Defined Benefit1
Defined Contribution26
Jointly Sponsored Plans  
Defined Benefit
Defined Contribution
Total3052
Surplus Refunds to Employers on Full Wind-Up Applications Processed
Single Employer Plans  
Defined Benefit55
Defined Contribution
Total55
Surplus Refunds to Employers on Partial Wind-Up Applications Processed
Single Employer Plans  
Defined Benefit87
Total87

 

On-site Examination Program

FSCO performs on-site examinations of pension plans which are selected through the risk-based funding and investment monitoring programs, as well as on the basis of risk profiles in FSCO’s pension plans database.

 

In addition to identifying areas of non-compliance, FSCO commonly issues recommendations at the conclusion of an examination to strengthen the alignment of plans’ administrative and governance practices with generally accepted industry best practices. This year, FSCO undertook examinations of 50 plans. The results are summarized in the tables below.

 

Pension Plans Examined2014–152013–14
Single Employer Plans  
Defined Benefit2325
Defined Contribution53
Defined Benefit/Defined Contribution Hybrid2020
Multi-Employer Plans  
Defined Benefit22
Defined Contribution
Total5050

 

 

 2014–152013–14
Common Examination Compliance FindingsNumber of Plans% of Plans ExaminedNumber of Plans% of Plans Examined
Disclosure on member benefit statements deficient32643060
Member benefit statements issued late2040816
Plan member information booklet out of date2040510
Statement of Investment Policies & Procedures out of date18362346
Regulatory filing deadlines not met13261632
Incorrect information reported in statutory filings11221224
Plan amendment not registered with FSCO81636
Contributions remitted late/incorrectly51048
Current trust agreement not registered with FSCO48612
Statement of Investment Policies & Procedures not compliant361020

 

Pension Benefits Guarantee Fund

The Pension Benefits Guarantee Fund (PBGF) protects a minimum level of benefits for Ontario members and beneficiaries of most single employer defined benefit pension plans, should the plan sponsor become insolvent. The Superintendent of Financial Services is responsible for the administration of the PBGF, which is established under the Pension Benefits Act.

 

Pension plans with guaranteed benefits pay an assessment into the PBGF. The total liability of the PBGF is limited to the assets of the fund, including any loans or grants received from the province. The Office of the Auditor General of Ontario audits the PBGF's annual financial statements.

 

Pension Benefits Guarantee Fund Claims Paid by FSCO
 2014–152013–14
Number of Pension Plan Claims149
Total Amount Paid$21,036,758$46,354,529

 

Return to top

Insurance

Most insurance business in Ontario is conducted by federally incorporated companies that are subject to prudential regulation by the federal Office of the Superintendent of Financial Institutions (OSFI) [New Window].

 

Prudential regulation of provincially-incorporated insurance companies licensed to conduct business in Ontario is overseen by the regulators for the provinces in which they are incorporated. The number of Ontario-incorporated insurance companies has been steadily declining. Over the past few years, a number of Ontario-incorporated insurers have ceased operations or continued under federal or other provincial laws for operational or strategic reasons. FSCO’s focus in regulating insurance companies is on market conduct reviews.

 

Insurance Companies in Ontario, 2006–2015
Number as of March 31

Insurance Companies in Ontario, 2006–2015

Description of Insurance Companies in Ontario image [New Window]

 

Note: includes reciprocal insurance exchanges.

 

 

Insurance Companies Incorporated or Formed under Ontario Law 2006–2015
Number as of March 31

Insurers Incorporated or Formed under Ontario Law 2006–2015

Description of Insurance Companies Incorporated or Formed under Ontario Law image [New Window]

 

 

Direct Written Insurance Premiums in Ontario 2005–2014 ($ billions)

Direct Written Insurance Premiums in Ontario 2005–2014

Description of Direct Written Insurance Premiums in Ontario image [New Window]

 

 

Insurers Incorporated or Formed under Ontario Law Direct Written Insurance Premiums, 2005–2014

Insurers Incorporated or Formed under Ontario Law Direct Written Insurance Premiums, 2005–2014 

Description of Insurers Incorporated or Formed in Ontario Law Direct Written Insurance Premiums image [New Window]

 

* Financial information for one of the two fraternals incorporated/formed under Ontario law is not included.
See Financial Summary Note 22 in Superintendent’s Report on Insurance 2014 later in this report.

The Registered Insurance Brokers of Ontario

The Registered Insurance Brokers of Ontario (RIBO) is a self-governing, self-supporting organization of general insurance brokers in Ontario that administers the Registered Insurance Brokers Act. It regulates the licensing, professional competence, ethical conduct and insurance related financial obligations of all general insurance brokers in the province of Ontario. In Ontario, FSCO licenses general insurance agents while RIBO licenses persons employed by general insurance brokers. The Superintendent has the responsibility to ensure that RIBO is fulfilling its regulatory responsibilities, and conducts an annual examination of its affairs and reports the results to the minister. For more information, visit RIBO’s website [New Window].

 

Return to top

Auto Insurance

 

Automobile insurance is compulsory for drivers in Ontario. FSCO reviews and approves automobile insurance rates, risk classification systems and underwriting rules, as well as policy endorsements, forms and rate manuals. FSCO also advises the government on the need for changes to auto insurance legislation and regulations, and works with stakeholders to improve the system’s operation.

 

 

Automobile Insurance Filings Processed
Type2014–152013–14
Private Passenger Auto Rate Filings  
Major3157
Simplified*154
CLEAR**3355
Fees***010
Total79126
Non-Private Passenger Auto Rate Filings****7161
Underwriting Rule Filings5630
Endorsement Filings4439
Form Filings6751
Rate Manual Filings103129

* Insurers may submit a simplified filing where certain criteria, including a rate reduction proposal, are met. Only summary information is required in a simplified filing, whereas a major filing requires detailed actuarial information.

** The Canadian Loss Experience Automobile Rating (CLEAR) system groups vehicles according to their actual claims experience.

*** Fee Filings are submitted when the company is proposing to make changes to fees or add new ones.

**** Includes 13 fees filings for 2013-14 and 6 fee filings for 2014-15..

Dispute Resolution Services Activities

FSCO’s dispute resolution services are an integral part of Ontario’s no-fault automobile insurance system. Mediation is compulsory when a claimant and insurer disagree about entitlement to statutory accident benefits or the amount of benefits. If mediation fails, the claimant can apply for arbitration at FSCO or take the matter to court.

 

In addition to mediation and arbitration services, FSCO also offers neutral evaluation, appeal of arbitration orders on a point of law, and variation or revocation of an arbitration order under a defined set of circumstances.

 

Dispute Resolution Services Activity2014–152013–14
Mediation
New Applications Received25,58323,366
Cases Closed26,00439,980
Settlement Rate – Full31%41%
Settlement Rate – Partial11%8%
Arbitration
New Applications Received9,80014,472
Cases Closed11,6848,976
Settled10,8518,469
Decisions Issued356225
Appeals
New Applications Received6441
Cases Closed4431
Settled1212
Decisions Issued2937

 

Mediation – Intake, Closed and Pending, last 7 years

Mediation – Intake, Closed and Pending, last 7 years

Description of Mediation - Intake, Closed and Pending image [New Window]

 

 

Arbitration – Intake, Closed and Pending, last 7 years

Arbitration – Intake, Closed and Pending, last 7 years

Description of Arbitration - Intake, closed and Pending image [New Window]

 

 

Compared to the previous year, new applications for arbitration decreased markedly in 2014-15. This can largely be attributed to the fact that by April 2014, FSCO had received the vast majority of arbitration files flowing from the clearing of the mediation backlog in 2013.

 

The volume of open or pending arbitration files remained high at year end due to the length of time these cases typically remain open. However, FSCO’s continued use of a private dispute resolution service provider to help dispose of these files is proving successful. The number of files closed in 2014-15 increased by 2,739 over the previous year, resulting in a significant reduction in pending files.

Motor Vehicle Accident Claims Fund

FSCO administers the Motor Vehicle Accident Claims Fund for victims of accidents involving uninsured or unidentified vehicles.

 

Measure2014–152013–14
Number of New Claims Reported528515
Total Cash Payouts$17.1 million$22.3 million
Number of Total Statutory Accident Benefits Claims Paid463400
Total Statutory Accident Benefits Payments$13 million$17 million
Number of Total Third Party Liability Claims Paid7587
Total Third-Party Liability Payments for Bodily Injury and Property Damage$3.9 million$5.3 million
Collection of Repayments$1.2 million$1.1 million
Number of Suspended Driver’s Licences224252
Number of Reinstated Driver’s Licences203252
Number of Repayments Processed4,7435,614
Number of Debtors Making Payments556707
Number of Active Accounts Receivable8721,040

 

Return to top

Regulated Financial Services

Ontario Credit Unions and Caisses Populaires

As of March 2015, Ontario’s credit unions and caisses populaires held total assets of $43.5 billion. The sector continues to undergo significant consolidation and transformation. Amalgamations continued in 2014–15, with the number of credit unions and caisses populaires decreasing by almost seven percent to 114.

 

Ontario Credit Unions & Caisses Populaires, 2006–2015

Ontario Credit Unions & Caisses Populaires, 2006–2015

Description of Ontario Credit Unions & Caisses Populaires image [New Window]

 

 

Ontario Credit Unions & Caisses Populaires Total Assets, 2006–2015 As of March 31 ($ billions)

Ontario Credit Unions & Caisses Populaires Total Assets, 2006–2015

Description of Ontario Credit Unions & Caisses Populaires Total Assets image [New Window]

 

 

MeasureAs of March 31, 2015As of March 31, 2014
Institutions with Assets over $50 Million
Number7681
Assets$42.5 billion$38.4 billion
Membership1,473,3421,472,171
Institutions with Assets under $50 Million
Number3841
Assets$982 million$1 billion
Membership77,05590,753
All Institutions
Number114122
Assets$43.5 billion$39.4 billion
Membership1,550,3971,562,924

The Deposit Insurance Corporation of Ontario

The Deposit Insurance Corporation of Ontario (DICO) is a provincial government agency that protects depositors of Ontario credit unions and caisses populaires from loss of their deposits.

 

FSCO and DICO share responsibility for regulating credit unions and caisses populaires under the Credit Unions and Caisses Populaires Act, 1994, and ensuring their compliance with its provisions. The statute establishes solvency requirements including rules relating to capital, liquidity and exposure to interest rate risk, and assigns responsibility to DICO for enforcing those provisions.

 

FSCO is responsible for enforcing the market conduct provisions in the act, including those relating to consumer protection and governance.

 

For more information, visit DICO’s website [New Window].

 

Loan and Trust Companies

FSCO’s role in the regulation of loan and trust companies is limited to registration of companies operating in Ontario and taking action against unlicensed deposit takers. Fifty-one loan and trust companies were registered to operate in Ontario as of March 31, 2015. All were federally incorporated, which is a requirement for registration. FSCO is largely concerned with protecting the public from unlicensed businesses and individuals that purport to be legitimate loan or trust corporations.

 

Mortgage Brokering

All mortgage brokerages, administrators, brokers and agents conducting mortgage brokering business in Ontario are required to be licensed by FSCO. Mortgage broker and agent licences are issued for a two-year term.

 

Total Number of Ontario Mortgage Brokerages and Administrators, 2009–2015

Total Number of Ontario Mortgage Brokerages and Administrators, 2009–2015

Description of Total Number of Ontario Mortgage Brokerages and Administrators image [New Window]

 

 

Total Number of Ontario Mortgage Brokers and Agents, 2009–2015

Total Number of Ontario Mortgage Brokers and Agents, 2009–2015

Description of Total Number of Ontario Mortgage Brokers and Agents image [New Window]

 

Co-operative Corporations

FSCO registers organizations conducting business as co-operatives under the Co-operative Corporations Act. In 2014–15, there were 18 new co-operative incorporations.

 

Ontario Co-operatives – Number of New Incorporations, 2006–2015

Ontario Co-operatives – Number of New Incorporations, 2006–2015

Description of Ontario Co-operatives - Number of New Incorporations image [New Window]

 

Return to top