CCIR recommends privilege for insurers’ self-assessment documents

The Canadian Council of Insurance Regulators (CCIR) is recommending insurers’ self-audits be considered privileged information that can’t be used against the insurance company in a civil or administrative proceeding (except if that proceeding is against a regulator).
The recommendations are contained in the CCIR’s Final Report on Privilege Model and Whistle Blower Protection, now posted on the CCIR Web site.
An insurers’ self-audit is defined in the report as “an evaluation, review, assessment, audit, inspection or investigation conducted by or on behalf of an insurance company either voluntarily or at the request of a regulatory authority for the purpose of identifying or preventing non-compliance with, or promoting compliance with or adherence to laws, regulations, guidelines, or industry, company or professional standards.”
Protecting these documents through privilege is part of the regulators’ move towards risk-based regulation.
The insurers’ self-audits are to help regulators sort companies into high- and low-risk categories, the CCIR final report notes. But insurers can’t be expected to do the self-audits if these documents might ultimately be used against them in litigation. Hence, new privilege protection should be extended to such documents, the CCIR recommends.
The CCIR has decided the privilege regime is not intended to apply, at least in the early stages of its regulatory implementation, to insurance intermediaries such as brokers.
“It was concluded that in the event an intermediary is carrying out a self-assessment for an insurer, the privilege protection should be extended to them as if they were acting on behalf of the insurer with respect to [an insurer self-assessment audit],” the CCIR states in its report. “However, expanding this project to intermediaries at this stage would not be feasible prior to establishing it at the insurer level.
“Broadening the scope of the model to intermediaries at this point is a complex task, however, it may be considered in the future due to the legal relationship between insurers and their agents.”
The CCIR report also recommends that whistle-blower protections be adopted in jurisdictions in which it is not already present. The insurance regulator said it would be left to the discretion of regulators how to deal with whistle-blowers acting in bad faith.