Ontario regulator proposes mandatory automobile fraud reporting by insurers

The Financial Services Regulatory Authority of Ontario (FSRA) is proposing a new rule requiring insurers to report auto insurance fraud instances, along with other required information, within 30 days of the end of each quarter.

The regulator is seeking feedback on the proposed rule and related guidance which defines what constitutes a fraud event, when insurers are required to report, how often they will need to report fraud event information to FSRA and the approach the regulator intends to take when administering the new rule. 

A deceptive act or omission 

The FSRA proposed rule 2024-003 Automobile Insurance Fraud Reporting Service states that a fraud event is a deceptive act or omission, or series of deceptive acts or omissions, intentionally committed by a person or persons to obtain advantage, financial gain, or benefits beyond that to which one is entitled to. The regulator in its interpretation of the rule says FSRA will interpret the phrase broadly to empower insurers to identify activities which meet the definition.

Prescribed information, the rule states, includes all information, including personal information in the insurers’ possession. Later, however, it goes on to say that insurers must de-identify the information before reporting it. “Every insurer shall submit the prescribed information through the authority’s electronic or computer-based system for the filing, delivery or reporting of the prescribed information,” the rule states.

The regulator’s guidance on the matter, meanwhile, provides FSRA’s interpretation about the scope of prescribed information insurers are required to provide, information about thresholds and actions which would trigger an insurer’s requirement to report. “This guidance affects all insurers that are licensed to carry on automobile insurance business in Ontario,” it states.

Collection and consolidation of information 

“FSRA’s collection and consolidation of the information about automobile insurance fraud that insurers are required to report under the (Insurance) Act will help create a baseline of data that can serve the purpose of assessing the amount of fraud in the automobile insurance system in Ontario.” 

The regulator concludes by encouraging insurers to design and implement policies and procedures, monitoring and reporting systems, internal audits and reviews and governance to comply with the new requirements.

Comments on the proposed rule and guidance are being accepted until October 14, 2024.