Ontario insurance regulator to review compliance with auto reforms, suitability of product recommendations

Ontario’s insurance regulator, the Financial Services Commission of Ontario (FSCO), is planning to conduct a number of market conduct reviews in 2011 – one to assess compliance with the province’s auto insurance reforms, and another one concerning the suitability of product recommendations.
FSCO listed these reviews among its top priorities for 2011.
Outlining the rationale for the auto insurance reform audit, FSCO noted automobile insurance represents about 56% of all general insurance premiums paid by Ontario residents.
“The auto insurance product and system changed in 2010 and this also increases risk of non compliance with the law,” FSCO says in its April 2011 draft of its Statement of Priorities & Strategic Directions.
“FSCO will be assessing how well insurance companies have implemented the changes to ensure that consumers are being treated fairly and in accordance with the law. A high compliance rate supports achieving those outcomes.
“FSCO intends to conduct compliance audits, with a special emphasis on governance and controls in place at insurance companies.”
FSCO will also be looking at what insurance companies and agents are doing to improve the financial literacy of their clients.
FSCO notes insurance agents and companies have an important role to ensure these consumers are empowered to make informed decisions and are presented with suitable product recommendations.
“Insurance agents and companies have an important role to ensure these consumers are empowered to make informed decisions and are presented with suitable product recommendations,” FSCO says in its draft priorities.
“The focus of the review will be to understand and assess the processes agents use in making recommendations to consumers and the processes in place at insurance companies when developing and distributing products.
“The review will also consider the actions agents and insurance companies are taking to support the financial literacy of their clients.”