May 8, 2018 by David Gambrill
Prompted by a growing focus on fair treatment of consumers by international regulators, the Canadian Council of Insurance Regulators (CCIR) and the Canadian Insurance Services Regulatory Organizations (CISRO) have invited Canada’s property and casualty insurance industry to comment on a new draft paper, Guidance Conduct of Insurance Business and Fair Treatment of Customers.
The 22-page public consultation document outlines how Canada’s insurance regulators expect insurers and intermediaries to conduct insurance business and ensure the fair treatment of customers.
“Regulation of insurance and the FTC [fair treatment of consumers] have gained prominence internationally,” Malon Edwards, senior communications officer for the Financial Services Commission of Ontario, told Canadian Underwriter when asked what prompted the guidance paper. “Regulation of market conduct is becoming increasingly important. In the insurance world, it is now seen as being as important as prudential supervision.”
As insurance products have become more innovative and complex, customer expectations of the insurance industry have increased, Edwards added. As a result, the International Association of Insurance Supervisors (IAIS) has amended one of its insurance core principles, ICP 19, which governs market conduct and includes a list of requirements that insurance supervisors should put in place for insurers and intermediaries regarding FTC.
“One of the top priorities of the CCIR 2017-2020 Strategic Plan is to build upon cooperative supervision in aligning with best international practices to enhance consumer protection,” Edwards said.
The CCIR-CISRO guidance paper expresses the regulators’ common expectations concerning the fair treatment of consumers. Among the many objectives of the paper, one is to clarify the roles and responsibilities of insurers, distribution firms, agents and representatives, recognizing that the insurer ultimately bears the responsibility for its product until the contract is fulfilled.
Sample guidance for treating customers fairly includes, among other things:
“CCIR and CISRO expect that the insurance industry is already practicing many of the principles identified in the proposed guidance, whether it is established through the various regulatory regimes, industry’s code of conduct or an individual company’s business practice,” Edwards said.
Still, he added: “Consumers merit getting clarity on who to turn to and what to expect from the insurance industry. Developing guidance at this point in time will help industry participants align in responding to these expectations.”
Contacted by Canadian Underwriter, Insurance Bureau of Canada indicated it would be reviewing the document with its members. “We haven’t filed a submission yet,” said Steve Kee, IBC’s director of media and digital communications, noting that the deadline for submissions isn’t until June 18, 2018.