RIBO supports risk-based approach to regulation (March 03, 2008)

The Registered Insurance Brokers of Ontario (RIBO) supports the plan to move forward with a risk-based approach to regulation, as outlined in the Canadian Council of Insurance Regulators’ (CCIR) paper, An Approach to Risk-Based Market Conduct Regulation.
The CCIR released the paper in January 2008 with the intent of fostering dialogue between regulators and stakeholders on the basic approaches to risk-based market conduct regulation (RbMCR) in Canada.
In a letter to the CCIR, RIBO noted it shares the same concerns as the CCIR, which led to the establishment of the RbMCR Committee. The concerns include:
the need for more efficient use of finite regulatory resources;
the need to focus on pro-active solutions rather than being totally reactive to market problems; and
the cost of regulation for market participants.
“RIBO completely agrees that regulators need the flexibility to adapt swiftly to changing marketplace conditions in order to address market problems effectively,” Jeffrey A. Bear, CEO of RIBO, said in the letter. “Indeed, RIBO completely agrees with the conceptual aspects of the proposed risk-based approach to market conduct regulation.”
The idea behind risk-based regulation is to move away from prescriptive rules towards a much higher level of reliance on standards, corporate governance and controls.
A better understanding of the regulatory process, achieved through ongoing dialogue with all system participants, over time leads to better management of risk and better governance within each firm, Bear noted.
“Clearly there are different challenges applying RbMC regulatory principles to the different number of intermediaries operating through different distribution systems, but RIBO is prepared to assist in whatever way we may be able to move this process further,” Bear wrote.