CCIR finalizes risk-based regulation approach; now up to individual regulators to adopt

The Canadian Council of Insurance Regulators (CCIR) has posted online the final version of its approach to risk-based market conduct regulation.In the process, the insurance regulator has let it be known that it is now up to individual provincial regulators to choose whether or not they wish to adopt the principles outlined in the CCIR’s final report. Also, it will be a matter of discretion as to which risk-based principles the individual provincial regulators choose to adopt.”The adoption of the risk-based methods for assessing market conduct is not an all-or-nothing proposition,” CCIR notes in its final report. “There will be circumstances where risk-based approaches work best and situations where more traditional methods are a better fit. It will be up to individual regulators to decide what methods work best in a given situation.”CCIR also notes: “Because automobile insurance is not within the purview of several CCIR members, collaborative risk-based approaches may be of limited usefulness for this line of business.” Still, the report notes, without being specific, “some aspects of automobile insurance regulation may be approached in this fashion.”The paper defines market-based conduct regulation as “directing regulatory efforts to the most significant issues that have the greatest potential for consumer harm or that could weaken public confidence if left unchecked.” It is often further described as a collaborative effort between regulators and the industry to promote core principles.For market participants, such principles would include: Fair treatment of consumers, disclosure, compliance, and good governance.For regulators, such principles would include: understanding (industry issues and concerns), reliance on governance, judgment, risk assessment, selective use of tools and co-operation.