The Canadian Council of Insurance Regulators (CCIR) published its annual statement on market conduct for 2020 to provide a macro-level overview of the insurance industry in Canada and to provide a way for insurers to compare their policies, procedures and performance against industry averages. The report is also used as a reference tool by regulators during on-site examinations.
The report, 2020 Annual Statement on Market Conduct – Public Report, examines in some detail, the number of claims, reasons for denial, cancellations, complaints made by clients, sales incentives, premiums, commissions, policies related to the fair treatment of customers (FTC), and other governance issues. First introduced in 2017, “the annual statement was developed by the CCIR as a harmonized approach to better understand and assess the insurance marketplace and insurer conduct,” they write.
Data quality issues
“Data quality continues to be an issue for CCIR members. Insurers should closely study this report, as well as the annual statement’s definitions and instructions to ensure they are providing accurate data which conforms to the CCIR’s expectations,” they add.
When asked if they have a standalone documented policy that specifically addresses FTC, for example, 56.9 per cent of property and casualty (P&C) companies answered in the affirmative, up from 52.8 per cent in 2019. Life and health (L&H) responses were more stagnant, with 56.6 per cent of insurers saying they have a standalone policy, down from 57.3 per cent in 2019.
“CCIR is still looking for improvement in insurers being able to demonstrate that they have incorporated FTC principles within their organizations,” they write. “Some insurers still have not yet promoted FTC principles or implemented a reporting mechanism to measure FTC performance. Furthermore, there are still many insurers who do not have a standalone documented policy specifically addressing FTC.” The report also examines how many insurers conduct customer satisfaction surveys and when.
Sales of insurance via the internet
In looking at the sale of insurance through the internet meanwhile, they found that only 12.2 per cent of P&C insurers and 46 per cent of L&H insurers indicated that they sold products through the internet without the intervention of an intermediary. In 2020, that number rose to 18.4 per cent of P&C insurers saying they sold products through the internet, while uptake in L&H sales declined to 43.1 per cent. The CCIR says it intends to closely monitor these results in future iterations of its annual statement to track the development of internet sales and their effect on FTC outcomes.
The report also examines the average number of days insurers take to issue payment to their claimants. They say the P&C sector is having some difficulty paying out claims in a timely manner. “The COVID-19 pandemic could be part of this reason. Aside from automobile, which had a sizable reduction in the number of days to final payment, most of the major classes of insurance saw their average day to final payment grow significantly.
“The L&H sector, by contrast, did not witness significant changes to its average number of days to final payments. Although individual annuities saw moderate growth in the amount of time to final payment (a 23.5 per cent increase, year-over-year), and group annuities saw higher growth on a year-over-year basis (increasing 62.5 per cent), these classes still had shorter payment times than other L&H classes.”
Overall, the CCIR says some areas of the report, including the data on internet sales, is expected to develop as innovation accelerated by the pandemic matures. “Other key data points may just represent temporary aberrations in the data due to unique circumstances and challenges posed by the pandemic. Data collected next year will determine if this was the case.”