The Financial Services Regulatory Authority of Ontario (FSRA), Ontario’s new, independent financial services regulatory agency, has made reducing the regulatory burden and improving regulatory effectiveness its top two priorities in its inaugural budget.
In its draft 2019-2020 Priorities and Budget, FSRA noted there is more than $48 billion of premium in both the life and health (LAH) sector and the property and casualty insurance (P&C) sector which includes the services of more than 250 insurers.
Enforcement of new conduct guidelines
FSRA said one of the first things it will do is develop a plan to support appropriate oversight and enforcement of new conduct guidelines in both sectors of the industry.
Stakeholders in the LAH industry have said there is a lack of regulation of intermediaries between insurers and agents, such as managing general agencies, which perform oversight and management functions and that they should have corresponding conduct requirements.
FSRA said it will develop a plan to support the required oversight and noted that if either the LAH or P&C sector adopts a code of conduct, it will be reviewed by FSRA which will consider using it for supervision in that sector.
Barriers to effective oversight
It will also ensure that there is “coordination and collaboration with stakeholder groups across the insurance spectrum and the Ministry of Finance in the event that any barriers to effective oversight are identified.”
For example, the report states that stakeholders in both insurance sectors have raised concerns regarding “perceived lack of coordination and information sharing to identify and remove ‘bad actor’ [non-compliant] registrants, and weak standards for continuing education and professional insurance to support good practices.”
Lack of alignment across jurisdictions
Licensing systems have also been criticized for being difficult to use and a lack of alignment across jurisdictions which creates unnecessary burden.
For example, says the report, many direct agents in the P&C sector hold licences in each province in which the company operates, and are subject to different requirements and systems that aren’t integrated across jurisdictions.
To deal with these issues, FSRA expects to consult with stakeholders in each sector to identify required improvements in licensing systems and requirements
FSRA said it will also consult with stakeholders and regulators from across the entire financial services spectrum to look for harmonized conduct expectations and how they can be applied on a day-to-day basis.
To learn more, consult FSRA’s proposed 2019-2020 Priorities and Budget online here.