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Insurance regulators seek to help the industry maintain the public's confidence

By Hubert Roy | July 06 2011 07:35PM

Canadian provincial insurance regulators are revising their strategic plan. Gathered together as the Canadian Council of Insurance Regulators (CCIR), they have identified two key goals. First of all, CCIR members want to get closer to governments in order to harmonize insurance laws across Canada. Secondly, they want to prevent the public from losing confidence in the insurance market.Danielle Boulet is the superintendent of solvency at Quebec’s financial services regulator, the Autorité des marchés financiers, and she is also chair of the CCIR. On May 5 she spoke to the Canadian Life and Health Insurance Association’s (CLHIA) Compliance and Consumer Complaints Forum in St. John’s Newfoundland.

“When we asked the industry what the CCIR could do better, one of the major themes of the replies was that we were not delivering harmonized laws across the country. And it is true that we do not do that, because we cannot do that. It is beyond the mandate of most of our members to decide policy for their jurisdictions,” she said. However, in response to the industry’s concerns, the CCIR will keep it in mind when revising its strategic plan. While it has not been released, Ms. Boulet gave an idea of what the plan would contain.

The organization's mandate will change. Its role used to be to promote effective insurance regulation. The CCIR has decided to simplify this, and its new mandate will be “to collaborate among themselves and with others to improve insurance regulation to serve the public interest.”

The mission has also been revised. The CCIR will no longer just  “address” common regulatory issues, but will work to find solutions to them. And it is in this area that the Council wants to work more closely with governments in order to harmonize laws.

“As much as some of us might like it, insurance regulators do not have the rule making authority that securities regulators enjoy. So we have to focus on educating, building understanding and getting the best information we can into the hands of the decision makers. As well, it is the regulator’s responsibility to actively bridge the gap between policy makers and the industry as regulators have a unique window on the industry,” commented Ms. Boulet.

Consumer protection

The Council also wants to focus on consumer protection and consumer confidence in the insurance marketplace. “We are distressed watching the increasing disregard the public has for the insurance industry. It seems to us that there is an erosion of the credibility of the insurance promise that is not based on any rational thinking, but which has gained credence throughout our society,” she said, and added that the Council plans “to make improvements that will be halt that erosion and return the insurance industry to the trusted position it once held.”

Ms. Boulet also discussed the various projects that the CCIR will be overseeing in the next few months, including the role of third party administrators (TPAs).

Having studied the role that managing general agents play in the life insurance industry (See the May edition of The Insurance and Investment Journal), the CCIR is now focusing on TPAs.

When the CCIR announced two years ago that it planned to study the role of insurance intermediaries, it indicated that it would probably deal with third party administrators. Given the success it had with the consultation on managing general agents, the Council decided to proceed as soon as the work on insurance wholesalers had been concluded.

“Not unlike MGAs, the use of TPAs has grown over the years and several regulators have received complaints from consumers about the claims handling practices of some TPAs. For instance, some TPAs appear to be reluctant to inform policyholders that they have a right to access the insurer’s complaint handling processes if their claim is denied. There are even rumors that some TPAs receive bonuses for keeping claims ratios low. Whatever the truth of this may be, CCIR has decided we need to know more about TPAs, how they work, who they work for, what their contracts look like, and so forth, to determine if there are risks to consumers or regulatory gaps that need to be corrected,” said Ms. Boulet.

The CCIR also wants to know more about electronic communication. This fall, the CCIR hopes to publish an issues paper dealing with electronic commerce and the use of the telephone, fax, and internet in insurance transactions. It intends to deal with how a transaction that does not involve a face-to-face meeting with a licensed representative is conducted, whether it be for a sale, a change to the contract, for a claim, or for something else. The Council is particularly concerned with one subject, namely how a beneficiary designation is made electronically.

This announcement was made by Ms. Boulet in her speech to the CLHIA. She said that she believes her organization could discover as much with this consultation as it has with the review currently underway that deals with the role of managing general agents in the life insurance industry. She added that it will become more interesting, since the lawyers will certainly get involved in the debate.

Disciplinary information

The CCIR also wants to create a disciplinary information committee. The purpose of the committee will be to make disciplinary information available to regulators, the industry, and to the public at one central source.

“Although many provinces already publish some disciplinary information in one way or another, we do not have a central source for this information like the system the securities regulators – Canadian Securities Administrators (CSA) – just instituted,” noted Ms. Boulet.

However, Ms. Boulet added that the project is far from being finalized. The CCIR must seek the support of the Canadian Insurance Services Regulatory Organizations (CISRO), which compiles this information for the western provinces. The CCIR is still conducting a survey of its regulatory members to determine the principles that should guide the project. After this, the legal and technical aspects will have to be studied before it can be put into place. Ms. Boulet says the CCIR is also considering whether or not its data should be combined with that of the securities regulators.


Danielle Boulet is the superintendent of solvency at Quebec’s financial services regulator, the Autorité des marchés financiers, and she is also chair of the CCIR. On May 5 she spoke to the Canadian Life and Health Insurance Association’s (CLHIA) Compliance and Consumer Complaints Forum in St. John’s Newfoundland.
“When we asked the industry what the CCIR could do better, one of the major themes of the replies was that we were not delivering harmonized laws across the country. And it is true that we do not do that, because we cannot do that. It is beyond the mandate of most of our members to decide policy for their jurisdictions,” she said. However, in response to the industry’s concerns, the CCIR will keep it in mind when revising its strategic plan. While it has not been released, Ms. Boulet gave an idea of what the plan would contain.
The organization's mandate will change. Its role used to be to promote effective insurance regulation. The CCIR has decided to simplify this, and its new mandate will be “to collaborate among themselves and with others to improve insurance regulation to serve the public interest.”
The mission has also been revised. The CCIR will no longer just  “address” common regulatory issues, but will work to find solutions to them. And it is in this area that the Council wants to work more closely with governments in order to harmonize laws.
“As much as some of us might like it, insurance regulators do not have the rule making authority that securities regulators enjoy. So we have to focus on educating, building understanding and getting the best information we can into the hands of the decision makers. As well, it is the regulator’s responsibility to actively bridge the gap between policy makers and the industry as regulators have a unique window on the industry,” commented Ms. Boulet.
Consumer protection
The Council also wants to focus on consumer protection and consumer confidence in the insurance marketplace. “We are distressed watching the increasing disregard the public has for the insurance industry. It seems to us that there is an erosion of the credibility of the insurance promise that is not based on any rational thinking, but which has gained credence throughout our society,” she said, and added that the Council plans “to make improvements that will be halt that erosion and return the insurance industry to the trusted position it once held.”
Ms. Boulet also discussed the various projects that the CCIR will be overseeing in the next few months, including the role of third party administrators (TPAs).
Having studied the role that managing general agents play in the life insurance industry (See the May edition of The Insurance and Investment Journal), the CCIR is now focusing on TPAs.
When the CCIR announced two years ago that it planned to study the role of insurance intermediaries, it indicated that it would probably deal with third party administrators. Given the success it had with the consultation on managing general agents, the Council decided to proceed as soon as the work on insurance wholesalers had been concluded.
“Not unlike MGAs, the use of TPAs has grown over the years and several regulators have received complaints from consumers about the claims handling practices of some TPAs. For instance, some TPAs appear to be reluctant to inform policyholders that they have a right to access the insurer’s complaint handling processes if their claim is denied. There are even rumors that some TPAs receive bonuses for keeping claims ratios low. Whatever the truth of this may be, CCIR has decided we need to know more about TPAs, how they work, who they work for, what their contracts look like, and so forth, to determine if there are risks to consumers or regulatory gaps that need to be corrected,” said Ms. Boulet.
The CCIR also wants to know more about electronic communication. This fall, the CCIR hopes to publish an issues paper dealing with electronic commerce and the use of the telephone, fax, and internet in insurance transactions. It intends to deal with how a transaction that does not involve a face-to-face meeting with a licensed representative is conducted, whether it be for a sale, a change to the contract, for a claim, or for something else. The Council is particularly concerned with one subject, namely how a beneficiary designation is made electronically.
This announcement was made by Ms. Boulet in her speech to the CLHIA. She said that she believes her organization could discover as much with this consultation as it has with the review currently underway that deals with the role of managing general agents in the life insurance industry. She added that it will become more interesting, since the lawyers will certainly get involved in the debate.
Disciplinary information
The CCIR also wants to create a disciplinary information committee. The purpose of the committee will be to make disciplinary information available to regulators, the industry, and to the public at one central source.
“Although many provinces already publish some disciplinary information in one way or another, we do not have a central source for this information like the system the securities regulators – Canadian Securities Administrators (CSA) – just instituted,” noted Ms. Boulet.
However, Ms. Boulet added that the project is far from being finalized. The CCIR must seek the support of the Canadian Insurance Services Regulatory Organizations (CISRO), which compiles this information for the western provinces. The CCIR is still conducting a survey of its regulatory members to determine the principles that should guide the project. After this, the legal and technical aspects will have to be studied before it can be put into place. Ms. Boulet says the CCIR is also considering whether or not its data should be combined with that of the securities regulators.

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