The Financial Services Regulatory Authority of Ontario (FSRA) published for comment its new Insurance Prudential Supervisory Framework Guidance describing how the regulator will assess the risk profiles of provincially incorporated insurance companies. The framework, they say, will help FSRA “identify areas of concern and determine what level of FSRA supervision and intervention is needed.”
FSRA adds in a statement accompanying the guidance that “individuals and families can continue to have confidence that Ontario incorporated insurance companies will act in their best interest and treat them fairly.”
Aligned with national and international practices
The regulator says the approach is aligned with national and international practices. “Its primary focus is to determine the impacts of current and potential future events, both internal and external, on the risk profile of each insurer and drive FSRA’s allocation of supervisory resources,” they add in the approach document.
In addition to articulating its supervisory approach, practices and processes for determining an insurer’s overall risk rating, intervention levels and the level of FSRA’s involvement, the document includes a risk matrix and a five-level scale to measure each of the elements being assessed. The risk matrix considers inherent risks including credit, market, insurance, operational, compliance, strategic and market conduct risks, along with the controls and oversight of each company’s board, senior management, auditing, risk management, compliance, actuarial and operational management.
The document also discusses overall risk level descriptions, FSRA’s intervention guide and market conduct assessments. “FSRA will apply this framework to subsidiaries, joint ventures or any other entities connected to the insurer,” they state.
The regulator says it will invite feedback from stakeholders until September 6, 2022.