Canadian insurance regulators have teamed up to create a proposed set of guidelines outlining expectations regarding the way insurance companies and advisors conduct business and ensure the fair treatment of customers.
The Canadian Council of Insurance Regulators (CCIR) and the Canadian Insurance Services Regulatory Organizations (CISRO) announced on Thursday the release of the draft joint guidance for the insurance industry.
“Fair treatment of customers has become the key focus of financial services regulatory authorities in Canada and abroad and this proposed guidance will be its cornerstone in the insurance sector,” said Patrick Déry, chairman of CCIR, in a statement. “It aims at fostering meaningful discussions between regulators, insurers and intermediaries on market conduct.”
The guidance is modelled after the international standards for insurance regulation, as developed by the International Association of Insurance Supervisors. However, this proposal is tailored to the specific characteristics of the Canadian insurance market.
The proposal is principles-based, and aims to provide insurers and advisors with flexibility in deciding how to achieve the expected outcomes based on the nature, size and complexity of their activities. It is the latest effort by Canadian insurance regulators to increase regulatory and supervisory harmonization.
“Intermediaries have an important role to play in the insurance system, and having common guidance sets clear expectations across the industry,” said Ron Fullan, chairman of CISRO, in a statement.
The guidance includes a section on advice, in which the regulatory bodies outline their expectations for scenarios in which consumers receive insurance advice. This includes the expectation that advisors explain and document the reason for recommending a product — “particularly in the case of complex products and products with an investment element,” the guidance states.
The guidance also indicates that insurance companies and distribution firms are expected to establish ongoing training programs that allow advisors to maintain an appropriate level of knowledge about products, legal and regulatory requirements, and other areas.
The proposed guidance, which is out for public consultation until June 18, can be found on the CCIR and CISRO websites.
A joint CCIR-CISRO working group will review public feedback over the summer, and a final guidance is expected to be published in the autumn.