CAFII Board and EOC – Regulatory Update December 14, 2010
By Lawrie Savage & Associates Inc
Federal
Bill C28 Update - The Fighting Internet and Wireless Spam Act ("FISA")
Bill C28 has had first reading in the Senate on November 24. It has all party support and is expected to be in force early in 2011. FISA requires consent for a company to send commercial emails and such emails must provide an unsubscribe function. Unsolicited emails are considered spam. There are some exceptions for consent requirements including for an existing business relationship. Penalties for noncompliance are high – up to $1 million per violation for individuals.
Privacy Act Amendments
Bill C29 had 2nd reading in the house on October 26th 2010. The bill amends the Personal Information Protection and Electronic Documents Act ("PIPEDA"). Of importance is the new requirement for companies to notify an individual if there has been a privacy breach of personal information.
Amendments also define consent. Consent is only considered valid if the individual understands the nature, purpose and consequences of the collection, use or disclosure of the personal information. Thus the collecting organization will have to clearly explain the reason for the collection of information.
Reinsurance Regulations to be Repealed
OSFI has been reviewing and revising reinsurance regulations starting with an industry consultation in December 2008. Currently regulations limit property and casualty insurance companies to cede no more than 75% of their gross premiums in total and no more than 25% of their gross premiums to unregistered reinsurers. OSFI plans to repeal the following regulations:
- The Reinsurance (Canadian Companies) Regulations, SOR/ 92-298; and
- The Reinsurance (Foreign Companies) Regulations, SOR/ 92-302.
With the repeal of the regulations, the reinsurance framework moves from a rules-based to a principles-based approach. OSFI already has sound reinsurance practices and procedures in place. However, it is completing a review of guidance on reinsurance practices that will set higher reinsurance standards for insurance companies.
Alberta
Alberta Insurance Council Move
Effective December 3, 2010, the Alberta insurance Council office’s new address will be Suite 600 Bell Tower, 10104-103 Avenue, Edmonton, Alberta T5J 0H8
Policymaker/Regulator Visit
On December 2nd , Moira Gill , John Lewsen and Dave Minor met with Tim Wiles, Deputy Minister and Ellen Nygaard ( Assistant to Dennis Gartner) . Arthur Hagan and Brad Geddes were also in attendance. Meeting notes will be circulated.
Manitoba
ISI Consultation Paper Published
The Insurance Council of Manitoba has been asked by policy makers in the provincial government to make recommendations with respect to regulation of intermediaries involved in the sale of incidentally sold insurance (ISI) products. The council has struck a new joint committee of the Life and General Insurance Councils to respond with a proposed regulatory framework. The province plans to draw on the regulatory regimes for ISI in use in Alberta and Saskatchewan.
A draft outline of an ISI regulatory regime has been posted on the council website for comment. The council notes that regulatory changes will be required prior to implementation. Comments are due by January 21, 2011. The Committee will also receive in person presentations restricted to one hour following submission of written comments and on written request. These presentations will be held on February 22, 2011. On December 6, Moira Gill and Chris Plumley met with Erin Pearson. Meeting notes will be circulated.
Ontario
New 3 year Strategic Plan to be Developed
In the next few months, the Financial Services Commission of Ontario (FSCO) will be developing a new three year strategic plan (2011-2014) based on industry consultations. FSCO’s plan will consider whether FSCO’s initiatives are reflective of the current environment in the insurance sector. CAFII chair has been invited to participate. The goal of the meeting is to get input from industry leaders on initiatives are reflective of the current environment in the insurance sector. Suggested topics for CAFII to raise would be to:
- promote electronic commerce given its efficiency and demand by consumers. There is a CCIR paper on this forthcoming and we would support this.
- Support mutual recognition of agent and broker licensing given the increasing use of electronic commerce note the move to principles based regulation internationally and be supportive. CAFII
- supportive of CCIR survey standards project to have best practices established.
- Support CCIR review of MGAs as their use has increased
- FSCO has been very involved with auto insurance and while this is not a CAFII topic it is still an area with many issues to be addressed - CAFII can agree with this
Private Members Bill 130 – Ban on Credit Score Usage
Mike Colle has introduced Bill 130: The Homeowners Insurance Credit Scoring Ban Act, 2010 that calls for an outright ban on the use of credit scoring in personal lines insurance in Ontario. The Bill, which passed first reading, calls for a ban of the use of credit scoring in personal property insurance. Credit information has been prohibited for in auto insurance rating and underwriting since 2005.
Quebec
Consultation on Distribution without a Representative (DWR)
A pre-release version of the consultation document was sent to CAFII. CAFII made two submissions and managed to get a number of items removed or softened in the paper which would have been detrimental in the media. There remain some loss ratio numbers and claims numbers that are sensitive but no negative media has yet been observed. The paper is calling for solutions to issues that have been raised. While many can be handled easily, others are more of a problem. Of concern are the proposals relating to disclosure of remuneration. The proposals are to disclose in writing in the guide, or have a separate form that would be handed to the consumer or have the consumer pay the remuneration separately from the premium. In all cases the distributor would be required to bring the remuneration to the client's attention and have them initial the disclosure. The paper has also stated that the DWR regime is "ill-suited for telemarketing". Proposals for telemarketing are to have pre-approved scripts
and extended rescission periods.
Comments are due by Feb 25, 2011. All submissions will be posted on the website. The paper can be found at http://www.lautorite.qc.ca/files//pdf/consultations/assurance-planificationfinanciere/2010nov25-dist-sans-representant-en.pdf
AMF New Website
The newly designed website has media section where Danielle Boulet has posted her remarks to CAFII and CADRI board meetings.
New Brunswick
New Brunswick Consumer Advocate
The Consumer Advocate has a redesigned website and is now on Facebook. Users can access all news from the advocate’s office and participate in discussions on the Facebook page.
Nova Scotia
Auto Insurance Review
Nova Scotia has announced that it has established an advisory committee to be led by Ron L’Esperance . The scope and subject matter of the review will be decided, based on research, consultation and feedback from stakeholders, the public and government. The research phase is underway and a public consultation process will be launched in the new year.
Canadian Council of Insurance Regulators
New Strategic Plan Consultation
Danielle Boulet, Chair of the CCIR, has advised that the CCIR will be issuing its draft new strategic plan for industry comment in the next few months. Ms Boulet noted that it is not usual practice for the CCIR to release the draft plan but since this is "likely to be quite a different kind of plan... this will help to bridge the gaps that exist between industry expectations and what the CCIR can deliver"
Credit Score Consultation
The Credit Score working group of the CCIR plans to have an issues paper released for comment in Spring 2011.
Electronic Commerce Working Group
Eric Stevenson of the AMF is the new chair of the Electronic Commerce Working Group. The group is is preparing a paper which covers issues such as electronic beneficiary designations, auto insurance cards and a possible regulatory framework to protect consumers who purchase insurance online. This will include confidentiality, identity verification, information security, transaction reliability and record maintenance. The AMF has noted that insurance purchases online increased by over 100% during 2009.
Survey Consultation
The CCIR will release a consultation on survey standards later this fall. The standards will include best practices to lessen the burden of surveys on industry.