Ontario’s insurance regulator says it intends to carry out suitability reviews of life insurance products in the coming year.
The Financial Services Commission of Ontario says that it plans to undertake a market conduct review, “to determine how the life insurance industry is ensuring that consumers get appropriate information to make informed decisions when purchasing life insurance products”.
FSCO indicates that the review will focus on understanding and assessing the processes life insurance agents use in making recommendations to consumers, and the processes in place at life insurance companies when developing and distributing products. It will also consider the actions life insurance agents and companies are taking to support the financial literacy of their clients.
The plan to carry out the review is revealed in a newly-published draft of FSCO’s annual statement of priorities. The final version, setting out its priorities for the coming year, is to be delivered to the finance minister by June 30.
In addition to the planned product suitability review, FSCO also indicates that it will study recommendations from the Canadian Council of Insurance Regulators regarding insurance distribution issues and managing general agencies. The CCIR published an issues paper on MGAs last year, and recommendations for MGA regulation are expected this year.
The draft indicates that CCIR’s Agencies Regulation Committee plans to release a position paper on the role of MGAs, looking at outsourcing agreements, agent supervision, product suitability, the information needs of regulators, and ways to enhance and harmonize best practices in the MGA distribution channel.
FSCO is also participating in a CCIR working group dealing with the use of credit information by insurers; and it’s participating in the creation of a new strategic plan for 2012-2015 for the Canadian Association of Pension Supervisory Authorities, which will include a review of the current regulatory environment and trends, setting CAPSA’s strategic priorities over the next three years, and specific initiatives to address these priorities.
The regulator says it will be also working with the Finance department to implement the ability to levy administrative monetary penalties, as the government promised in its latest budget.
Other initiatives highlighted in the draft include: harmonizing life and accident and sickness insurance; undertaking long-term auto insurance reform initiatives; implementing social media initiatives; enhancing regulatory oversight of compliance with auto insurance requirements; reducing the mediation backlog; increasing mortgage brokerage compliance; and, working on five-year statutory reviews of the mortgage brokerage and credit union legislation.
Comments on the regulator’s proposed initiatives are due by June 6.