Future Regulations May Bypass Legislation: Panelists

The insurance industry could see more regulatory changes come about without legislation in the future, according to legal experts.

Insurers and other industry members have already seen at least one amendment come down through non-legal means recently, according to Paul Belanger, a partner at Blake, Cassels & Graydon in Toronto. The Office of the Superintendent of Financial Institutions (OSFI)’s bulletin on credit scoring earlier this year “was essentially a policy change,” Belanger told attendees at the Insurance Bureau of Canada’s (IBC) Regulatory Affairs Symposium October 30.

“Changes to rules are being implemented via means that aren’t legislation,” he noted during a panel on emerging regulatory trends, adding that a similar bulletin went out in Alberta on the use of credit rating.

Most of the changes made this way are “process-oriented,” he noted, and while they are valuable for consumer protection issues, “qualitative policy changes belong in legislation and regulations,” he said. “In the future [we] hope that [the non-legal approach] is used to a limited degree.”

Belanger and fellow panelist Eleni Maroudas, corporate counsel for Chubb Insurance Company of Canada, also highlighted Canadian regulators current focus on risk management, noting that policy reviews, market issues and proactive initiatives are guiding emerging regulations.

“There will be a continuous ratcheting up of emphasis on risk management until everyone is operating at an acceptable level,” Belanger said.

The panelists also pointed out ongoing regulatory changes still require a certain degree of clarification, such as aspects of Part XIII changes—those involving statements that the document was issued or made in the course of a company’s business in Canada was issued; and the 25% rule on unregistered reinsurers– that may conflict with the laws of foreign jurisdictions. “There’s no guidance on that,” Maroudas noted.

This story was originally published by Canadian Insurance Top Broker.