Chapter 5 Flashcards
(17 cards)
What is Ontario and Alberta Finaical institute?
Ontario- financial services regulatory authority
Alberta- Alberta Treasury and finance
Explain a healthy insurance marketplace
One where consumers needs are met by products that are readily available and affordably priced and where both insureds and claimants are treated fairly according to societal expectations
What are the key objectives for a risk based regulatory model
Informed and empowered consumers
Timely and fair claims management
Meaningful choice for insurance consumers
Low system costs
Market stability
Provide facts about regulation in regards to insurance
-Property and casualty insurance industry is one of the most highly regulated business segments at both federal and provincial level
-Consumer protection is at the heart of all government regulation
-A large segment of the insurance industry coordinates its efforts to deal with regulatory pressures through the Insurance Bureau of Canada
-Not all regulation causes adverse effects
What information do regulators monitor?
Reliable statistics on the frequency and severity of claims
Trends in loss cost developments
Average length time that a claim is open
Incidence and cost of fraudulent and other illegal activity
Changes in average private passenger premiums
Consumer price index (CPI)
Strategic planning effectiveness to respond to changing consumer needs
Technology roadmap including data security
Premiums for specific demographic profiles
Insurance costs as percentage of the total costs of running an automobile and if disposable income
Reinsurance costs as a percentage
Profit or loss from a residual market mechanism
Capital basis of insurance operating in the province and other financial diagnostics
What is Office of the Superintendent of Financial Institutions (OSFI) regulatory functions?
Developing, interpreting legislation, and regulations
Issuing guidelines
Approving requests as required under legislation
What is Office of the Superintendent of Financial Institutions (OSFI) supervisory functions?
Assessing safety, soundness of institutions under its mandate:
Risk profile
Financial condition
Risk management practices
Compliance
When OSFI identifies potential problems early and intervenes when necessary to an insurer overcome failure by:
Outline best practices or risk management
Informs the public of items of general interest
Publishes warning for financial sector
Presents consultation papers of interest
Monitors insurers financial conditions
Verifies compliance
Periodic on-site examinations
Who are the Office of the Superintendent of Financial Institutions (OSFI) and their mission
The primary regulator of federally chartered Canadian and foreign property and casualty insurance companies
Its mission to protect the interest of depositors, policyholders, pension plan members, and creditors of financial institutions from undue loss, and advance and administer a regulator framework
The model by Office of the Superintendent of Financial Institutions (OSFI) can be categorized into what 4 categories?
Capital adequacy requirements
Prudential limits and restrictions
Accounting and disclosure
Sound business and financial practice
What are provinical regulators responsibilities
Approving classes of business
Approving policy forms
Controlling advertising
Enforcing criteria
Licensing
Monitoring compliance
Monitoring solvency
Overseeing claims settlement practices
Overseeing electronic marketing
Overseeing ethical, operation and trade practices
Reviewing insurance contract wordings
How does AI play a part in the future of regulation
Support risk assessment
Fraud prevention and detection
Process efficiency
Who is the Canadian Council of Insurance Regulators (CCIR)
Regulators from each province
Recommend government action related issues
Improve the efficiency and effectiveness of the regulatory framework
Harmonize and streamline licensing and filings
Fast-tracking inter-jurisdictional licensing
Streamlining financial and corporate filings
Improve relationships with all stakeholders
What is Canadian Council of Insurance Regulators (CCIR) mission
Work cooperatively with other finaical services regulators and stakeholders to facilitate and promote an efficient and effective regulatory system in Canada to serve the public interest
Guidelines that regulators have established include what?
Reserves- premium reserve is a test of the adequacy of premium rates and the claims reserve is a test of the adequacy of reserves held to pay outstanding claims and claims which have been incurred but not reported
Receivables- the collectibility of accounts receivable and reinsurance recoveries are reviewed
Investment risk- the manner in which insurers may invest their assets is subject to regulation to ensure the safety of the capital and the appropriate level of liquidity
With OSFI on-site reviews, what do they review?
Insurance risk- product and its pricing
Underwriting of risk- selection, approval, retention, transfer (reinsurance), effect of claims reserving and settlements
Legal and regulatory compliance- confirms to ethical standards
Dishonest or error detection- data or disaster recovery plan
Other risks- providers guidance to insurers assess their exposures to risk related to climate, cyber, and third party risk
What does the Financial Consumer Agency of Canada (FCAC) do?
Supervises financial institutions
Promotes adoption of policies and procedures
Monitors implementation of codes of conduct
Promotes consumer awareness
Fosters understanding of finaical services
