Regulator warns home insurers to improve their claims handling processes

The Financial Services Regulatory Authority of Ontario (FSRA) has completed a thematic review of 20 property and casualty (P&C) insurers in the province, one promised in the regulator’s 2023-2026 Statement of Priorities. In it, they say insurers can improve their claims handling processes to better support the fair treatment of consumers.

“This was the conclusion of FSRA’s first home insurance thematic review,” they state. “Market intelligence suggests that consumers have been experiencing service delays in the adjustment and settlement of home insurance claims. At the same time, there has been increased pressure on P&C insurers due to rising claim costs, inflation, and supply chain issues. For these reasons, FSRA initiated the thematic review with a focus on home insurance claims to better understand the customer claim journey.” 

They add that catastrophic events are on the rise, making fair and timely home insurance claims handling more important than ever.

The report found that among the insurers surveyed – the top 20 insurance companies writing personal property insurance in Ontario represent about 97 per cent of the market – the average number of days to settle a home insurance claim was 127 days, with some claims being taken care of in as few as 47 days while others took as long as 180 days to settle. Longer durations to resolve claims, they state, can put financial strain on consumers.

“We urge insurers to review and continue to improve their claims handling practices,” adds Beata Morris, director, P&C insurance market conduct at FSRA.

Other risks to consumers, they say, include the inconsistent use of proof of loss forms, a lack of tracking why claims are denied, insufficient communication with some customers and the fact that some insurers cannot demonstrate that they are property overseeing their adjusters.

“FSRA urges insurers to use this report as a point of reverence to improve their claims practices and align their policies and procedures with industry standards and FSRA’s documented expectations.”

The regulator concludes, saying the report will also be used to inform FSRA’s market conduct supervision framework for P&C insurance, announced in June 2023. “P&C insurers will be subject to proactive supervision under the framework,” they warn.