The Financial Services Regulatory Authority of Ontario (FSRA) announced June 17 that its new Fraud Reporting Service (FRS) rule and guidance, requiring insurers to provide specific auto insurance fraud information to FSRA quarterly, have been approved by the province’s Minister of Finance.
The rule, Rule 2024-003 Automobile Insurance – Fraud Reporting Service, strictly limited to the governance of automobile insurance carriers, requires insurers to provide the prescribed information within 45 days after the close of each quarter of the calendar year.
“Prescribed information includes all relevant information, including personal information, in the insurer’s possession, control or power related to any policy claim, provision of goods or services or any other occurrence or event where the information provides reasonable grounds for the insurer to believe that a fraud event has occurred,” the rule states. It also stipulates that the information provided must be de-identified unless there is a reason to include personal information.
Accompanying guidance
In the accompanying guidance, Automobile Insurance Fraud Reporting, the regulator elaborates saying insurers are not required to report information if they only have a suspicion that a fraud event has occurred. It also discusses the reasonable grounds to believe (RGB) threshold and provides examples.
A non-exhaustive list of insurers’ actions which would trigger the requirement to report include escalating a file for further investigation, denying a claim or voiding or otherwise terminating an insurance policy.
The guidance also discusses and defines what constitutes a fraud event. They also interpret “all relevant information” to mean information that provides reasonable grounds for the insurer to believe that a fraud event has occurred.
Notably, the reporting is an ongoing affair, as the rule requires insurers to keep any reported information complete and up to date by providing updates in their quarterly reporting.
FSRA adds that this rule and guidance are the first phase of developing the FRS. In the second phase, they say the regulator anticipates that information collected in phase one will be available for insurers to access going forward.
“FSRA will evaluate insurers’ processes, controls and governance during supervisory reviews. This includes verifying the presence of adequate controls and ensuring that reporting meets the requirements as outlined,” the guidance states. To comply with the FRS requirements, the regulator concludes by suggesting companies develop and implement “a robust framework” which includes policies and procedures, monitoring and reporting systems, internal audits and reviews and governance and oversight.
The rule and guidance come into effect once certain changes to the province’s Insurance Act are proclaimed into force.
Related:
Ontario regulator proposes mandatory automobile fraud reporting by insurers
