The Financial Services Regulatory Authority of Ontario (FSRA) has released its inaugural supervision plan to safeguard consumers in the property and casualty insurance market.
FSRA’s plan outlines the regulator’s intention to scrutinize P&C insurers and their arrangements with managing general agents to guarantee adherence to regulatory standards and the protection of consumer rights.
In the plan, the watchdog said: “FSRA expects customers to be treated fairly throughout the life cycle of insurance contracts, regardless of whether the insurer deals directly with its customers or outsources activities to a third party. Given the risks and oversight concerns, insurer outsourcing to P&C MGAs is a priority supervision area for FSRA.
“To validate and support our preliminary work, FSRA is reviewing P&C insurers’ MGA oversight practices. The review will help ensure outsourced functions are carried out fairly to customers and complies with the Insurance Act, regulations under the Insurance Act, and FSRA’s Unfair and Deceptive Acts and Practices rule.”
The focus of the upcoming review will be on understanding the functions that are being outsourced to managing general agents and the involved practices.
Key areas to be examined include the due diligence processes insurers employ when selecting their partner managing general agencies, the methods insurers use to oversee the functions they outsource, and the agencies’ business practices that might increase the risk of harm to consumers.
FSRA’s market conduct director for P&C insurance, Beata Morris, emphasized the importance of the plan, saying: “The actions we are taking today will help ensure that individuals and families purchasing property and casualty insurance are treated fairly and insurance companies are compliant with all regulatory obligations and expectations.
“Our proactive approach to supervise property and casualty insurers will allow us to target and directly address potential issues that could lead to consumer harm.”
The outcomes of FSRA’s review will be shared with the public to promote industry compliance. They will also help inform the development of the regulator’s Market Conduct Supervision Framework for Non-Auto Property and Casualty Insurance.
The supervision plan can be accessed here.
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