FSCO touches on claims costs, usage-based insurance in draft of 2013 priorities

The Financial Services Commission of Ontario (FSCO) has released a draft of its priorities for the year and unsurprisingly, taking on problems with the province’s auto insurance system factor heavily into the document.

FSCO’s Draft 2013 Statement of Priorities sets out what the commission plans to address during the year and seeks feedback from stakeholder by June 2. The final statement must be completed and delivered to the Minister of Finance by June 30.

In this year’s draft, FSCO it will continue to implement some recommendations set out by the final report from the Auto Insurance Anti-Fraud Task Force.

“Working with the government, FSCO will implement changes in the areas of fraud prevention, detection and enforcement,” the statement says.

This year, FSCO said it also plans to address recommendations set out in the 2011 Annual Report of the Auditor General of Ontario, which included a “value for money audit” of FSCO’s regulation of auto insurance.

According to the document, some of the main priorities to address both the Task Force recommendations and the Auditor General’s report include:

• The development of a new Minor Injury Treatment Protocol (and possible changes to the catastrophic impairment definition)
• The examination of cost-containment strategies for Ontario’s auto accident claims costs
• The continued reduction of the dispute resolution backlog. FSCO aims to assign all files and eliminate the dispute resolution backlog in 2013.

Part of the cost control changes includes the next five-year review of the auto insurance system, FSCO’s statement says. FSCO will also be reassessing the benchmark for return on equity (ROE) used in auto insurance rate proposals from insurers, which is currently set at 12%, but has not been changed since 1996. That review is expect by mid-2013, the statement says.

Along with that, FSCO also plans to conduct a closed claims study on third-party liability bodily injury claims in Ontario and to review and analyze financial information from the General Insurance Statistical Agency (GISA).

The priorities statement also highlights usage-based auto insurance and says that FSCO will be examining the regulatory issues around using it for insurance rating.

The statement also does point out steps taken in 2012, such as implementing administrative monetary penalties for the insurance sector and making a “substantial reduction” in its mediation backlog. FSCO also highlighted its social media presence during 2012, including its fraud awareness chats on Twitter.

Stay informed! Join #fraudchat tonight at 9pm ET for our weekly discussion about emerging scams.^MF

— FSCOTweets (@FSCOTweets) April 4, 2013

In 2013, FSCO will be also focusing on Ontario’s alignment with international standards for market conduct regulation, as “the International Monetary Fund will be assessing Canada’s capacity to adhere to the International Association of Insurance Supervisors’ Insurance Core Principles” this year.

Last May, FSCO released a consultation paper called Improving Solvency Supervision of Insurance in Ontario, which addresses solvency regulation.

The draft statement of priorities and information on providing feedback is available on FSCO’s website.