October 30, 2006 by Canadian Underwriter
The Canadian Council of Insurance Regulators (CCIR) has approved a work plan to review the implementation of three disclosure principles recommended by its Industry Practices Review Committee priority of the client’s interest, disclosure of potential conflicts of interest and product suitability across Canada.
“Various industry associations have suggested that the principles be implemented through voluntary guidelines,” the CCIR noted in an online posting outlining its short-term priorities and projects. “The IPRC will conduct an implementation review of insurers and intermediaries over this Winter.
“The aim is to confirm the extent to which the principles have been embraced by industry and to assess whether further regulatory action is required.”
The CCIR also announced it will be focus-testing a new point of sale document for Individual Variable Investment Contracts (Segregated Funds) “to provide a concise, plain-language summary to help advisors explain to consumers the nature of the insurance aspects of segregated funds.”
The initiative is the insurance industry-specific part of a joint initiative by CCIR and the Canadian Securities Administrators (CSA), under the auspices of the Joint Forum of Financial Market Regulators, to harmonize the point of sale documentation for mutual funds and segregated funds.
“The focus testing includes both consumers and advisors,” the CCIR notes. “Primarily the testing will examine the clarity, readability, organization, and usefulness of the document, whether or not there are any gaps in the information provided, and the appeal of the document.”
The CCIR said it would also be looking at ways to expand nationally an Internet-based Complaint Reporting System now operational in Quebec and Ontario.
Finally, the CCIR has established a working group to review the policies and procedures around the Power of Attorney and Undertaking (PAU) system “to ensure they are still relevant and appropriate.”
The Power of Attorney and Undertaking system was set up in the 1960s as a way to allow U.S. personal auto insureds to drive in Canada. The PAU that U.S. insurers file with the CCIR helps to ensure that the U.S. driver’s insurance meets the compulsory minimums of all Canadian jurisdictions.