Oversight of the insurance industry’s complaint-handling system needs an overhaul, according to an independent review.
In a report issued today, Sept. 12, the Canadian Council of Insurance Regulators (CCIR) detailed a review of its oversight of the dispute-resolution providers in the insurance industry — the OmbudService for Life & Health Insurance (OLHI) and the General Insurance OmbudService (GIO) — and pledged to reform those oversight arrangements.
Last year, the CCIR launched an external review of the oversight framework, which is represented by a memorandum of understanding adopted in 2007 across the CCIR, the OLHI and the GIO.
“Since its inception, the oversight framework has provided substantial guidance with respect to the mandate, governance and the operations of GIO and OLHI. However, GIO, OLHI and the oversight framework were created before the current international standards around market conduct and need to evolve to align with international expectations,” the paper said.
The review was initiated amid concerns about the efficacy of the existing arrangements, particularly given the evolution in best practices “in areas such as data analytics and information sharing for effective cooperation between regulators and ombudservices and approaches to identifying and addressing consumer gaps (including systemic issues),” the report noted.
“The review found certain misalignments in the relationship between CCIR and the ombudservices which are limiting the effectiveness of the oversight framework.”
The review attributed these issues to gaps in the existing oversight framework, a lack of defined effectiveness criteria, and shortcomings in the implementation of certain guidelines under the current oversight framework.
“The key recommendation was for the parties to work cooperatively to address the misalignments and update the oversight framework,” the paper noted.
The regulators responded that they will work in the months ahead to update the oversight framework to enhance accountability, to define measures of efficacy for the ombudservices, to improve information sharing (to help both regulators and the industry identify potential systemic issues earlier), and to ensure they have confidence in the dispute-resolution mechanism.
The CCIR said it is committed to carrying out these reforms by the end of 2025.
“CCIR continues to support the current [dispute-resolution] model in Canada and believes an updated oversight framework will provide regulators, industry, ombudservices, and most importantly consumers, with confidence that GIO and OLHI are effective in their [dispute-resolution] role,” the report said.