May 7, 2002 by Canadian Underwriter
With the recent release of a discussion paper on its 2002 priorities, the Financial Services Commission of Ontario (FSCO) has put auto insurance on the agenda. But what exactly that auto reform will look like is still unclear.
Although auto insurance is listed among the top five of FSCO’s priorities (along with harmonized national regulations, risk-based pension supervision, market conduct and e-business development), no indication is given as to what specific changes the provincial regulator will make to address the financial woes of the Ontario auto market.
Last year FSCO introduced a new rate filing system that has not been well received by many insurers. In the August 2001 edition of Canadian Underwriter, Kingsway Financial Services CEO Bill Star writes, “the rate filing process has not been made easier. It has become an even more cumbersome and expensive system that Ontario insurers must deal with”.
Nonetheless, FSCO says that reducing regulatory inefficiency will be among its goals for the year ahead. Other changes in this direction are already underway, including amendments to the Insurance Act which will establish the role of the appointed actuary and the development of new investment portfolio guidelines for insurers.
Another plan impacting p&c insurers is the development of a “market conduct self-assessment” questionnaire for use in future audits.
FSCO also intends to set up an electronic filing system for auto rate applications, underwriting rules, rate manuals and forms.
Of interest, FSCO expects an increase in activity for its “dispute resolution group” in the year ahead, with revenue to support this coming from insurers, as well as life agent licence fees.
Life insurers will also face the introduction of viatical settlements, whereby life insurance policies are sold by the terminally to another party who then cashes in the policy upon the insured’s death. The viatical industry in the U.S., and its proposed introduction in Ontario, have drawn heavy fire from the media and those involved in law enforcement and fraud control. Nonetheless, FSCO intends to implement a regulatory regime for viaticals when the Tory government proclaims legislation to lift the long-time ban on such settlements.
There is little mention in FSCO’s priorities of the impeding merger with the Ontario Securities Commission (OSC) and what impact the merger will have on FSCO’s goals or operations.
The draft statement of priorities is open for commentary until May 27, and a final version will be delivered to the Minister of Finance by June 30, notes FSCO superintendent Philip Howell in an accompanying letter to the draft.