The Financial Services Regulatory Authority of Ontario (FSRA) on Feb. 22 published its first ever supervision plan for the fair treatment of property insurance customers. The plan details the regulator’s upcoming review of property and casualty (P&C) insurers and the outsourcing arrangements they enter into with managing general agencies (MGAs).
“We want to ensure that property and casualty insurance companies and their business partners are performing in a manner that complies with our rules, guidance and all relevant legislation,” the regulator stated in its announcement about the supervision plan’s publication. “FSRA is seeking to understand what functions insurers are outsourcing to P&C managing general agencies and the practices involved in the arrangements.”
Directly addressing potential issues
Beata Morris, director of P&C market conduct at FSRA adds: “Our proactive approach to supervise property and casualty insurers will allow us to target and directly address potential issues that could lead to consumer harm.”
The upcoming review will focus on distribution though MGAs, including the size and scope of the market as the entities are unregulated – FSRA’s supervision plan states that the exact number of P&C MGAs operating in Ontario is currently unknown.
Insurer oversight practices
Other practices under scrutiny include insurer oversight practices for the functions they outsource and MGA practices such as non-disclosure of conflicts of interest and reduced consumer options, that may create a higher risk for consumer harm. “FSRA expects insurers to review the supervision plan to ensure they are complying with all regulatory expectations.”
Since its launch, FSRA says it has continued to build its supervision capacity in the market. “FSRA is working with the P&C insurance sector to develop a deeper understanding of the entities involved in product manufacturing, distribution, claims management and service to ensure fair outcomes for consumers,” the supervision plan states. “FSRA expects consumers to be treated fairly throughout the lifecycle of insurance contracts, regardless of whether the insurer deals directly with its customers or outsources activities to a third party."
