Ontario’s insurance regulator needs to get tougher on market misconduct issues: CEOs

Ontario’s insurance regulator needs to get tougher on market misconduct, insurance company CEOs told brokers at the Insurance Brokers Association of Ontario (IBAO)’s 90th Annual Convention in Niagara Falls.
Suggestions at the IBAO’s CEO panel discussion included:
• a more transparent method to make brokers and the public aware of which companies are not in compliance with Ontario’s Unfair and Deceptive Acts or Practices (UDAP) regulations;
• a new regime for imposing administrative penalties (fines) without going through complicated, quasi-criminal proceedings; and
• a system for imposing sanctions against insurer CEOs personally (in addition to steeper corporate fines) in situations in which market misconduct has been found.
Without naming names, the CEOs alleged not all companies were playing on a “level playing field” in terms of compliance with UDAP regulations.
Recent changes to UDAP regulations included, among other things, clarifying the ban against the use of credit scoring for underwriting auto insurance lines and requiring group insurers to provide similar rates between each of their companies (affiliates and otherwise).
Panel moderator and CBC journalist Evan Solomon asked CEOs on the panel if they thought the UDAP changes had gone far enough.
George Cooke, president and CEO of the Dominion of Canada General Insurance Company, noted compliance to UDAP was inconsistent between companies.
“There are a number of companies that are adhering to the new rules,” he observed. “There are a number of companies that are not adhering to the new rules. The regulator, for whatever reason, is choosing to keep those private and confidential, so those of us in the marketplace don’t know who is supposedly to be onside, who isn’t, who’s got permission to be offside, and who’s in transition.
“What we do know is that some are taking some level of glee that they’re not in compliance when the rest of us are.”
Kevin McNeil, president and CEO of Gore Mutual, said the Financial Services Commission of Ontario (FSCO) needed to be more transparent with the industry and the public about who was in compliance with UDAP and who was not.
“The core issue here is that you get a lot of he said/she said,” said McNeil. “On such issues as transparency, let’s…provide clarity to the issue so that we don’t have some who are fined, some are not fined, but some kind of transparency as to who is complying and who is not complying, so that it’s there for the public [to see].”
When companies are not compliant, CEOs agreed FSCO was labouring under 80-year-old legislation that made it hard for the regulator to respond without going through a cumbersome quasi-criminal process. It was suggested years ago that FSCO have a system of administrative penalties that was more nimble.
“Absolutely nothing has happened with it,” Cooke said of the suggestion.
Certainly the penalties imposed could be steeper, said Maurice Tulloch, president and CEO of Aviva Canada.
“I really want to see some teeth for non-compliance,” he said, adding that he thought the sanctions “should be painful.”
“Quite frankly, right now, the penalties for non-compliance aren’t steep enough,” Tulloch said. “I think first and foremost, you should make them personal. I’d certainly be happy to be personally responsible, and I am for the activities at the Aviva insurance company, and they should be painful. $100,000. Let’s get away from these penalties that are a slap on the wrist and let people go about their behaviours. Make them personal to the CEO.”
The trick is not to have regulatory officials “over-respond” to market misconduct. “We should be careful what we wish for,” said Louis Gagnon, president of Intact Insurance.