The Canadian Council of Insurance Regulators will be ramping up its focus on the fair treatment of clients who buy insurance products, part of its response to the recent turbulence surrounding the financial stability of insurers.
The comments were made by Danielle Boulet, chairwoman of the CCIR, at the LIMRA and LOMA Canada annual conference held in Toronto in mid-May. “We see this [focus] as a formalization of the concern that most insurers and intermediaries have always shown their clients and a reminder not to abandon that concern in stressful times,” said Boulet, who is also superintendent, solvency, for Autorité des marchés financiers.
“We expect that insurers will be fair to [clients], not only at the manufacturing stage of a product but through its whole life,” added Boulet, especially when handling client claims or complaints.
The CCIR’s statement of the principle, “Fair Treatment of Customers,” is adapted from the International Association of Insurance Supervisors, Core Principle 19 (Conduct of Business).
In addition to the fair treatment of clients, Boulet outlined the following expectations that the CCIR has for the insurance industry: disclosure of the information that clients need to make informed decisions; and: focus on good corporate governance and risk management.
In the context of client protection, Boulet also discussed the recent release of the CCIR’s position paper on the review of the independent insurance channel entitled: “The Managing General Agencies Distribution Channel in the Life Insurance Industry.”
“Insurers are accountable to provincial regulators for their relationships with MGAs,” Boulet said. She also stressed the most important recommendation in the report: that “insurers must have in place effective systems and controls whenever they use the services of an MGA.”
Boulet added that this type of oversight of MGAs by insurers helps the industry to manage its risks, as well as to protect clients. “Senior management oversight of MGAs helps protect policyholders,” she said.
Recognizing the considerable burden that rising capital requirements and low interest rates have had on the insurance industry in recent years, Boulet stressed that the CCIR intends to resist “knee jerk reactions” to market events, such as those the industry witnessed from regulators in the crisis of 2008.
With a nod to the future, Boulet said: “We will be working with [the industry] to assess…trends, risks and issues to come to some conclusions and recommendations on our stated regulatory goal: consumer protection and confidence.”