Most insurers have sufficient SABS-related policies, controls: FSCO review

Most Ontario auto insurance companies have sufficient SABS-related governance and internal controls, the provinces financial regulator reported in its Statutory Accident Benefits Schedule (SABS) Risk-Based Market Conduct Assessment Report.
The Financial Services Commission of Ontario (FSCO) recently posted the aggregate results of its September 2007 market conduct assessment questionnaire to 175 auto insurers.
Overall, it found most companies have documented their claims-handling policies and procedures in some way.
Most had established performance benchmarks to evaluate claims-handling performance, as well as having some form of independent review (either by internal auditors or external consultants) of claims-handling processes.
In addition, a majority of companies retained full claims file responsibility but outsourced some functions to third parties, FSCO found. Most of the companies who outsource have contracts and monitoring procedures of some form to ensure adequate compliance with SABS claims-handling by third parties.
Some individual insurers displayed the following internal weaknesses, FSCO found:
– company policies covered general claims-handling procedures, but the policies were not specific to SABS;
– some policies did not require claims staff to be formally trained in SABS;
– in monitoring compliance with internal controls, some companies were not using benchmarks or stats specific to SABS requirements; and
– some companies did not have computerized periodic payments systems or a process in place to review closed claims files.