How FSRA is changing consumer protection requirements
Whether or not Ontario’s property and casualty (P&C) insurance companies needed more incentive to ensure they’re taking customer needs into account, they are going to get it.
A P&C insurance market conduct supervision strategic plan (SSP), aimed at identifying and assessing risks to improve consumer protections and maintain the public’s confidence in the sector was released Jun. 16 by the Financial Services Regulatory Authority of Ontario (FSRA).
It notes the SSP is “grounded in existing regulatory requirements and expectations for the P&C insurance sector,” and that the regulator will apply the SSP to “protect Ontario consumers by proactively identifying and assessing risks of consumer harm within the business practices of individual entities that offer insurance products and services to consumers and at a broader, sector-wide level.”
Risk assessments will look at policies, procedures, risk management and related internal controls P&C industry entities use to make sure consumers are treated fairly “throughout the product life cycle and the interactions they have with consumers,” and that the “strength of controls and oversight will determine the intensity of FSRA’s supervision.”
Risk assessments will help FSRA set priorities for its supervision initiatives; and if an insurer’s risk assessment shows that controls and oversight need enhancement, the regulator will work with them to mitigate any issues.
Phased approach
But it won’t happen all at once. FSRA says development of risk assessments will be a multi-year, phased process. It adds the first phase “will rely on available information, such as the Annual Statement on Market Conduct (ASMC) or data from other supervision initiatives completed to date, rather than requesting new information from regulated entities.”
Further, FSRA says costs and regulatory burden will be considered when implementing the new oversight. The regulator will use multiple sources to update its insurance sector risk assessments, including but not limited to ASMC and complaints data trends, media scans and other inquiries. If those data reviews identify recurring risk, FSRA may communicate them to the industry alongside expectations for managing those risks.
“Once the SSP is fully operational, FSRA will consider whether further information is required for accurate market conduct risk assessments and may collect such information from regulated entities if and as needed based on selection criteria such as direct written premiums, size, complexity, types of products offered, and target consumer demographics,” the regulator adds.
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In some cases, issues requiring immediate attention may be uncovered by these supervisory initiatives.
“These ad hoc issues are typically situational and are not part of planned, supervisory work [and] may be given priority to address urgent concerns regarding potential consumer harm,” FSRA’s SSP reads.
“In some situations, ad hoc work may identify risks relating to a particular entity or [be] observable across the sector. The information learned from ad hoc tasks may be used to update FSRA’s risk assessments to inform future planned supervisory activities.”
