By Ian Burns | LexisNexis Canada

Two oversight bodies for Canada’s insurance regulators are currently seeking input on new recommendations to ensure fair treatment of customers, and legal experts are saying it reflects a move to get regulations more consistent across the provinces as well as in line with international standards.

The Canadian Council of Insurance Regulators (CCIR) and the Canadian Insurance Services Regulatory Organizations (CISRO) released a draft joint guidance May 3 for public consultation that sets out their overarching expectations for how insurers and intermediaries conduct insurance business and ensure the fair treatment of customers.

“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 CCIR chair Patrick Déry. “It aims at fostering meaningful discussions between regulators, insurers and intermediaries on market conduct.”

Although each province and territory in Canada has its own set of regulatory standards for insurers, the CCIR and CISRO note that each have a common set of expectations pertaining to the conduct of business to ensure the fair treatment of customers.

The guidance is looking into issues of disclosure on contracts, with the two organizations saying customers be given “appropriate information in order to make an informed decision before entering into a contract.” CCIR and CISRO say disclosure to customers should be “up to date and provided in a way that is clear, fair and not misleading, using plain language wherever possible,” and all advice given by insurers be explained and documented, particularly in the case of complex products.

CCIR and CISRO say they also expect that policyholders are provided information that allows them to make informed decisions throughout the lifetime of their contracts, ensuring that when changes are made to policies the customer’s rights and obligations are known and that consent to changes is obtained. All claims should be “examined diligently and fairly settled,” with written documentation maintained throughout, and that ensuring dispute resolution procedures follow a “balanced and impartial approach.”

Nicole Mangan of Richards Buell Sutton LLP said the guidance seems to be “very aware of how everyone can work better to ensure that all aspects of consumer rights from beginning to end are the focus of both insurers and their agents.”

“What I think they’re striving to do is ensure that there are consistent standards both nationally and internationally, and I think their goal is related to customer expectations because your customers don’t vary their expectations province to province just because the provincial regulations vary province to province,” she said. “I think they’re really trying the best they can to put into place a national standard and expectation, and they’ve really tried to think about the product and the life cycle in insurance from beginning to end.”

Mangan noted CCIR and CISRO are not only speaking about responsibility towards customers of those involved in the insurance field but also the different legal implications that come into play.

“I think they’re being careful to try and put out guidelines that are general enough that they aren’t stepping on any provincial authority and would be something that it would be practical to put in consistently at a national level,” she said. “But at the same time they’re talking about the professional responsibility obligation of people in the profession such as brokers, the ethical obligations associated with the industry, they’re talking about privacy law obligations. So you really start to see it’s not just about the simple regulation of insurance, but also kind of a kind of complex set of legal responsibilities they’re trying to tie together with one set of standards.”

Heather Vaughan of Benson Percival Brown LLP said she believed the purpose of the CCIR and CISRO’s actions is to bring some insurance regulations under a common set of standards, both nationally and internationally.

“So they’ve sort of looked to the international standards to see how they can bring those in Canada. The IMF and other organizations are always looking to see what’s going on in member countries,” she said. “They just want to make sure that we’re following the best practices in the insurance sector and are compatible with what people are doing internationally.”

Vaughan also said the guidance is attempting to address technological advances in the industry as well.

“Insurance is going through the same sort of disruption that everyone else is undergoing,” she said. “How can we get our clients the services they want and how can we sell to our clients the way they want to be sold to?”

Mangan said the CCIR has a 2017-2020 strategic plan which includes prioritizing co-operative supervision and enhanced consumer protection, leading to more collaboration within the industry.

“You can see [the guidance] is designed to target the industry as a whole. They talk about agents and brokers, they talk about companies, they talk about third party administrators,” she said. “So you can see what they are trying to do is basically take the approach that if everyone has all the same obligations throughout the industry, it will kind of bring that consistency and cohesiveness to the products being offered.”

The public consultation period is open until June 18, 2018. The proposed guidance can be found on the CCIR and CISRO websites. A joint CCIR-CISRO working group will review public feedback over the summer, and expects to release the finalized guidance in the fall of 2018.

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