Annual Report 2015-2016

​Table of contents

 

The Regulated Sectors in Profile

 

Pension Plans

Insurance

Auto Insurance

Credit Unions and Caisses Populaires

Loan and Trust Companies

Mortgage Brokering

Co-operative Corporations

 

The financial services sectors FSCO regulates represent a large, dynamic industry that underpins our provincial economy and Ontarians’ quality of life. The industry delivers products and services that help individuals and families build financial security while also supporting financial stability for businesses and other organizations.

Pension Plans

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

 

    • Defined benefit plans, which provide a predetermined 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 are usually 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 are created through collective agreements, some are established by statute or municipal by-law. In MEPPs created through collective agreements that provide defined benefits, those benefits may be reduced if there are funding shortfalls.
    • Jointly sponsored pension plans (JSPPs) are pension plans where the employer (or employers) and members jointly share responsibility for the plan, including plan governance and the funding of any deficits as they arise. Currently, most JSPPs are very large public sector plans, such as those for teachers or municipal workers.

 

Some defined benefit plans are hybrid plans that combine defined benefit and defined contribution provisions, provide 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 supports the government on pension issues. FSCO also administers the Pension Benefits Guarantee Fund that protects a minimum level of benefits in most single employer defined benefit plans if the employer is insolvent.

 

Ontario-Registered Active Pension Plans and Membership
Pension Plan TypeAs of March 31, 2016As of March 31, 2015
NumberPercentage
of Total*
NumberPercentage
of Total*
Single Employer Plans6,865 987,060 98
Defined Benefit Plans3,859 554,012 56
Members1,291,730 321,325,373 33
– Active Members634,989 29656,194 30
– Retired Members, Deferred Members and Other Beneficiaries656,741 36669,179 37
Defined Contribution Plans3,006 433,048 42
Members420,052 10424,750 11
– Active Members352,456 16358,460 16
– Retired Members, Deferred Members and Other Beneficiaries67,596 466,290 4
Multi-Employer Plans1212119 2
Defined Benefit Plans76177 1
Members906,723 22873,732 22
– Active Members387,414 18373,210 17
– Retired Members, Deferred Members and Other Beneficiaries519,309 28500,522 28
Defined Contribution Plans451421
Members150,806 4126,459 3
– Active Members96,994 483,399 4
– Retired Members, Deferred Members and Other Beneficiaries53,812 343,060 2
Jointly Sponsored Plans100100
Defined Benefit Plans100100
Members1,282,277 321,250,869 31
– Active Members734,051 33717,736 33
– Retired Members, Deferred Members and Other Beneficiaries548,226 30533,133 29
Total Pension Plans6,996 1007,189 100
Total Members4,051,588 1004,001,183 100
– Active Members2,205,904 1002,188,999 100
– Retired Members, Deferred Members and Other Beneficiaries1,845,684 1001,812,184 100

* Percentages are expressed as a percentage of the total number of plans, or as a percentage of the total number of members, active members or retired members, deferred members and other beneficiaries in all plans.

 

Notes:

  1. Percentages may not add up due to rounding.
  2. Data on defined benefit plans includes hybrid/combination plans with both defined benefit and defined contribution components.
  3. Percentages for jointly sponsored plans are reported as zero as they represent less than 0.14%.

 

Total Number of Ontario Pension Plans, 2007–2016

Total Number of Ontario Pension Plans, 2007-2016  

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

 

 

Ontario Pension Plan Membership, 2007–2016

Ontario Pension Plan Membership, 2007-2016 

Description of Ontario Plan Membership image [New Window]

 

Ontario-Registered Active Pension Plan Assets

Plan Type

Market Value
of Assets at
March 31, 2016

         $ Billion                 %

Market Value
of Assets at
March 31, 2015

     $ Billion              %

Single-Employer Plans
Defined Benefit206.0035.8%191.8436.7%
Defined Contribution18.313.2%17.353.3%
Jointly Sponsored Plans
Defined Benefit318.7155.6%285.7754.7%
Multi-Employer Plans
Defined Benefit28.735.0%25.194.8%
Defined Contribution2.310.4%1.990.5%
Total574.09100%522.15100%

* Total dollar figures may not add up due to rounding.

 

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 Type2015–162014–15
New Plans Registered
Single Employer Plans  
- Defined Benefit2879
- Defined Contribution3273
Multi-Employer Plans  
- Defined Benefit00
- Defined Contribution13
Total61155
Plan Amendments Registered2,3762,324
Full Wind-Ups Processed
Single Employer Plans  
- Defined Benefit241202
- Defined Contribution118104
Multi-Employer Plans  
- Defined Benefit1
- Defined Contribution1
Total361306
Partial Wind-Ups Processed
Single Employer Plans  
- Defined Benefit2612
- Defined Contribution
Multi-Employer Plans  
- Defined Benefit1
- Defined Contribution
Total2613
Plan Mergers/Asset Transfers Processed
Single Employer Plans  
- Defined Benefit759
- Defined Contribution3418
Multi-Employer Plans  
- Defined Benefit1
- Defined Contribution2
Jointly Sponsored Plans  
- Defined Benefit1
- Defined Contribution
Total11030
Surplus Refunds to Employers on Full Wind-Up Applications Processed
Single Employer Plans  
- Defined Benefit15
- Defined Contribution
Total15
Surplus Refunds to Employers on Partial Wind-Up Applications Processed
Single Employer Plans  
- Defined Benefit48
Total48

 

On-site Examination Program

FSCO performs on-site examinations of pension plans 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 55 examinations – the largest number since the program’s inception. The results are summarized in the tables below.

 

Pension Plans Examined2015–162014–15
Single Employer Plans  
Defined Benefit1223
Defined Contribution115
Defined Benefit/Defined Contribution Hybrid2220
Multi-Employer Plans  
Defined Benefit52
Defined Contribution4
Defined Benefit/Defined Contribution Hybrid1
Total5550

 

 2015–162014–15
Common Examination Compliance FindingsNumber of Plans% of Plans ExaminedNumber of Plans% of Plans Examined
Issues with disclosure on member benefit statements44803264
Member benefit statements issued late18332040
Plan member information booklet out of date10182040
Statement of Investment Policy and Procedures out of date16291836
Regulatory filing deadlines not met14251326
Incorrect information reported in statutory filings10181122
Plan amendment not registered with FSCO35816
Contributions remitted late/incorrectly713510
Current trust agreement not registered with FSCO*48
Statement of Investment Policy and Procedures not compliant71336

*Not reported; findings were no longer common across plans and did not meet the threshold for reporting purposes.

 

Pension Benefits Guarantee Fund

The Pension Benefits Guarantee Fund (PBGF) was established under the Pension Benefits Act. It 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.

 

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
 2015–162014–15
Number of Pension Plan Claims1714
Total Amount Paid$17,854,666$21,036,758

 

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Insurance

 

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

 

Prudential regulation of provincially-incorporated insurance companies licensed to conduct business in Ontario is overseen by FSCO. The number of insurance companies incorporated in Ontario has been steadily declining, in part due to market consolidation. Over the past few years, a number of Ontario-incorporated insurers have also ceased operations or continued under federal or Quebec law for operational or strategic reasons. FSCO’s focus in regulating insurance companies is on market conduct reviews.

 

Insurance Companies in Ontario, 2007–2016
as of March 31, 2016

Insurance Companies in Ontario, 2006–2015

Description of Insurance Companies in Ontario image [New Window]

 

Note: includes reciprocal insurance exchanges.

 

 

Direct Written Insurance Premiums in Ontario, 2006-2017

Insurers Incorporated or Formed under Ontario Law 2006–2015

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

 

Insurance companies incorporated or formed under Ontario law are subject to solvency regulation by FSCO. Those that incorporate federally are subject to solvency regulation by the Office of the Superintendent of Financial Institutions (OSFI). Most insurers incorporate federally. 

 

Insurers Incorporated or Formed under Ontario Law, 2007-2016
as of March 31, 2016

Direct Written Insurance Premiums in Ontario 2005–2014

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

 

 

Insurance Companies Incorporated or Formed under Ontario Law
Direct Written Insurance Premiums, 2006–2015

 

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

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

 

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 insurancerelated financial obligations of all general insurance brokers in the province of Ontario. In Ontario, FSCO licenses general insurance agents and corporate agencies, while RIBO licenses insurance brokers and brokerages. FSCO’s Superintendent is responsible to ensure RIBO is fulfilling its regulatory responsibilities. The Superintendant also conducts an annual examination of RIBO’s affairs and reports the results to the Minister of Finance.

 

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Auto Insurance

Automobile insurance is compulsory for Ontario drivers. FSCO reviews and the Superintendent 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 system operation.

 

Automobile Insurance Filings Processed

In order to implement auto insurance reforms announced by the Ontario government in the 2015 budget, insurers were required to submit filings for all types of auto insurance written. This resulted in a signficiant increase in filings between October 2015 and March 2016.

 

Type2015–162014–15
Private Passenger Auto Rate Filings  
Major3531
Simplified*4715
CLEAR**1833
Fees***00
Auto Reform56
Total15679
Non-Private Passenger Auto Rate Filings
(including reform) ****
37771
Underwriting Rule Filings4856
Endorsement Filings4444
Form Filings12767
Rate Manual Filings128103

* 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.

 

Dispute Resolution Services Activities

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

 

Bill 15, the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, S.O. 2014, c. 9, amended the Insurance Act to provide for the transition of the Automobile Insurance Dispute Resolution system from FSCO to the Licence Appeal Tribunal (LAT). As a result, FSCO stopped accepting applications for mediation, neutral evaluation and arbitration as of March 31, 2016, but will continue to be responsible for all remaining open files as of that date. LAT will assume all new applications for dispute resolution services as of April 1, 2016.

 

With the impending deadline for arbitration applications at FSCO, March 2016 represented a record monthly intake of 3,275 files, up from only 818 applications in March 2015. In the last quarter of fiscal 2015, FSCO received 11,040 applications, up from 7,431 in the previous quarter. This increase drove up the open pending cases significantly. FSCO is addressing the increased workload through various approaches, including the continued use of a private dispute resolution service provider. Strategies are also in place to ensure mediations are concluded within 60 days of filing or within the time extended by agreement of the parties, as required by legislation.

 

Dispute Resolution Services Activity2015–162014–15
Mediation
New Applications Received34,54725,584
Cases Closed28,81126,001
Settlement Rate – Full26%31%
Settlement Rate – Partial9%11%
Arbitration
New Applications Received12,0539,818
Cases Closed11,81011,645
Settled10,89210,828
Decisions Issued448359
Appeals
New Applications Received7964
Cases Closed7045
Settled1312
Decisions Issued6129

 

Mediation – Intake, Closed and Pending 2009-2016

Mediation – Intake, Closed and Pending, 2009-2016

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

 

 

Arbitration – Intake, Closed and Pending, 2008/09–2015/16

Arbitration – Intake, Closed and Pending, 2008/09-2015/16

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

 

Motor Vehicle Accident Claims Fund

FSCO administers the Motor Vehicle Accident Claims Fund for victims of accidents involving uninsured or unidentified vehicles. Claims payouts typically flucturate from year to year, but have averaged approximately $24 million annually over the last five years. The majority of the 2015-16 increase in payouts from a year earlier was due to a larger volume of file settlements.

 

Measure2015–162014–15
New Claims Reported (#)554528
Total Cash Payouts$26.1 million$17.1 million
Total Statutory Accident Benefits Claims Paid (#)484463
Total Statutory Accident Benefits Payments$21.3 million$13 million
Total Third Party Liability Claims Paid (#)9675
Total Third-Party Liability Payments for Bodily Injury and Property Damage$4.8 million$3.9 million
Collection of Repayments$900,000$1.2 million
Suspended Driver’s Licences (#)215224
Reinstated Driver’s Licences (#)160203
Repayments Processed (#)4,3384,743
Debtors Making Payments (#)519556
Active Accounts Receivable (#)813872

 

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Credit Unions and Caisses Populaires

As of March 31, 2016, Ontario’s credit unions and caisses populaires held total assets of $47.6 billion. The sector continues to undergo significant consolidation and transformation. Amalgamations continued in 2015-16, with the number of credit unions and caisses populaires decreasing by almost seven percent.

 

MeasureAs of March 31, 2016As of March 31, 2015
Institutions with Assets over $50 Million
Number7276
Assets$46.8 billion$42.5 billion
Membership1,531,0451,473,342
Institutions with Assets under $50 Million
Number3438
Assets$853 million$982 million
Membership68,42777,055
All Institutions
Number106114
Assets$47.6 billion$43.5 billion
Membership1,599,4721,550,397

 

Ontario Credit Unions. 2007-2016, as of March 31, 2016

Ontario Credit Unions. 2007-2016

Description of Ontario Credit Unions image [New Window]

 

 

Ontario Credit Unions, Total Assets, 2007–2016,
as of March 31, 2016

Ontario Credit Unions, Total Assets, 2007–2016 

Total assets (billion $)

Description of Ontario Credit Unions, Total Assets image [New Window]

 

 

 

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 both regulating credit unions and caisses populaires under the Credit Unions and Caisses Populaires Act, 1994, and for ensuring compliance with its provisions. The statute establishes solvency requirements, including rules related to capital, liquidity and exposure to interest rate risk. DICO is also responsible for enforcing those provisions.

 

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

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, 2016. All were federally incorporated, a registration requirement.

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.

 

Mortgage Brokerages, Administrators, Brokers and Agents, 2009–2016
as of March 31, 2016

Mortgage Brokerages, Administrators, Brokers and Agents, 2009–2016

Description of Mortgage Brokerages, Administrators, Brokers and Agents image [New Window]

 

Co-operative Corporations

FSCO registers organizations conducting business as cooperatives under the Co-operative Corporations Act. As of March 31, 2016, there are 1,794 co-operatives incorporated in Ontario, including 23 new incorporations in 2015-16.

 

Ontario Co-operatives, Number of New Incorporations, 2007–2016

Ontario Co-operatives, Number of New Incorporations, 2007–2016

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

 

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