1. Supervision of Insurance Market Conduct in Canada
During this presentation I would like to update you on one of the CCIR’s key priorities and initiatives from our current Strategic Plan, that is “Developing and implementing a Cooperative Market Conduct Supervisory Framework”.
But, to do so, I think it is important that we explore not only the purpose and objectives of the cooperative supervisory framework in Canada, but also the context and influences that have elevated its importance and provided much of the momentum for CCIR’s work in this area.
IAIS Global Seminar
Budapest
June 17, 2016

2. Canadian Regulatory Framework
Constitutional federation
Federal government
13 provincial & territorial governments
Areas of exclusive authority set out in Constitution
Regulation of insurance:
Federal – solvency control
Provinces and territories – market conduct & solvency
CCIR
Association of Canada’s insurance regulators
Canadian Regulatory Framework
Canada is a constitutional federation comprised of a federal government and 13 provincial and territorial governments. The constitution stipulates the areas of authority for the federal government and the provinces and territories.
In terms of the regulation of insurance, this division of powers results in the federal government being primarily concerned with solvency. At the federal level, solvency regulation is carried out by the Office of the Superintendent of Financial Institutions. The provinces and territories have authority over market conduct and insurer solvency. Each province and territory has its own supervisory author, which regulates market conduct (and solvency in certain provinces). As a result, there are 13 separate bodies regulating marking conduct across Canada.

3. CCIR Canadian Council of Insurance Regulators
Comprised of the provincial and territorial regulators
Facilitates and promote an efficient and effective insurance regulatory system in Canada
Develops solutions to common regulatory issues
CCIR
The Canadian Council of Insurance Regulators is an association of the countries provincial and territorial insurance regulators. The CCIR was established in order to promote cooperation and greater consistency across the country.
Now over 100 years old, the CCIR provides a forum for the provincial and territorial insurance regulators to work together and develop solutions to common issues.
The CCIR has also provided the basis for the Cooperative Framework that is being developed and introduced in Canada.

4. Financial Sector Assessment
2013 IMF assessment of Canada’s insurance regulatory model
Assessed alignment with the Insurance Core Principles (ICPs)
Findings:
High degree of observance of ICPs
Supervisory authorities must be proactive in enhancing consistency
Financial Sector Assessment
In fact, the IMF assessed the Canadian regulatory framework’s observance of the ICPs in the finds were generally positive, noting that Canada was largely in observance with the ICPs.
However, the IMF also recommended that the Canadian insurance supervisory authorities need to be more proactive and enhance consistency, with respect to market conduct supervision.

5. Enhancing Insurance Regulation in Canada
Increase observance with the ICPs
Establish a coordinated approach to insurance supervision and consumer protection
Increased information sharing and cooperation among supervisory authorities
Proactive identification and response to risks – increased consumer protection
Enhancing Insurance Regulation in Canada
CCIR has always looked to harmonize and seek improvements to the regulation of the Canadian market. With our enhanced focus on market conduct and new cooperative framework, our goals are to
Increase observance with the ICPs
Introduce a more coordinated and cooperative approach to market conduct supervision and consumer protection
Increase information sharing
Provide for more proactive supervision and consumer protection

6. Cooperative Supervision
CCIR members will be working together “on the ground” to
Conduct cooperative market analysis
Develop cooperative supervisory plans for common concerns, risks & priorities
Conduct cooperative insurer-specific reviews
Conduct cooperative thematic reviews
Includes sharing & leveraging resources in supervisory activities across provincial and territorial boarders
Cooperative Supervision
The cooperative framework is expected to achieve this by establishing regulatory partnerships among CCIR members and a more coordinated approach to supervision that is akin to a regulatory college. In other words, CCIR members will work together, directly and “on the ground”, to address common concerns.
We will share information from across the provinces and territories and work together to assess it to identify potential risks and issues in the market
Develop cooperative supervisory plans that are multijurisdictional in scope to address any common concerns or risks
Work together to conduct more comprehensive thematic reviews and reviews of specific insurers
Ultimately, insurance supervisors will work in partnership in conducting supervisory activities, effectively sharing and leveraging their resources in the process. By working closely together and coordinating supervisory activities, CCIR members and the insurance market in Canada will experience many of the benefits associated with a more centralized approach. This includes:
Reducing the potential for regulatory duplication, which reduces regulatory costs within the market
Expanding the scope of data and market analysis, which will provide greater context and an increased ability to identify trends within the market
Extend the reach of the supervisory activities as they will be conducted in multiple provinces and territories

7. Memorandum of Understanding
First step in CCIR commitment to cooperative supervision
Provides basis for more effective communication, information sharing and cooperative supervisory activities
10 of 13 CCIR members have signed the MOU (>95% of premiums)
Memorandum of Understanding
As a first step in increased information sharing and collaboration, the CCIR developed a Memorandum of Understanding for its members. The MOU is an agreement among the provinces and territories for greater information sharing and collaboration in the supervision of insurance across Canada. It establishes protocols for exchanges of information and confirms the commitment of CCIR members to coordinated market conduct supervision.
In terms of our current status in the development and implementation of the cooperative framework, 10 of the CCIR’s 13 member provinces and territories have signed the MOU. The three remaining jurisdictions are expected to sign the MOU in the near future.

8. Cooperative Framework
Framework for Cooperative Market Conduct Supervision in Canada published in November 2015
Details how CCIR members will work together
Identifies types of info to share and cooperative activities
Cooperative reviews (thematic and entity specific)
Systemic market analysis
Consumer complaint statistics
Reviews of new products and product changes
Cooperative Framework
We published the Framework for Cooperative Market Conduct Supervision in Canada in November 2015, which builds upon the foundations of the MOU by providing more detail on how the CCIR members will share information and work together.
It also provides detail on the type of cooperative activities that will be conducted under the cooperative framework, including thematic and entity-specific reviews as well as market analysis and product reviews.

9. Cooperative Market Analysis
Developing harmonized annual statement on market conduct
Reviewing complaint data systems to improve usage and effectiveness
Assessed data to include:
Consumer complaints
Corporate culture and policies
Market practices
Operations
Objectives:
Provide consistent, national and regular/annual source of data
Identify trends and risks in the market across Canada
Cooperative Market Analysis
CCIR is also currently working on a harmonized annual statement for market conduct. The annual statement is intended for national use and will provide regulators with basic information needed to proactively monitor market conduct practices and identify risks, particularly as they relate to the fair treatment of consumers.
The harmonized form will reduce duplication and eliminate the need for insurers to provide similar and often identical information to multiple regulatory authorities.
Some examples of the types of data that will be collected through the annual statement are listed on the slide.

10. Next Steps Building upon current momentum
Conduct cooperative & coordinated supervisory activities this year
Annual Statement on Market Conduct implementation targeted for Q1 2017
Next Steps
In terms of the next steps for the implementation of the Cooperative Supervisory Framework, CCIR members will continue with the momentum that has been built.
For cooperative supervisory activities, we would like to begin working together this year. An aspect of our meetings this week will include a review of potential risks and priorities that may be suited to cooperative supervision and to identify the projects that we will work collaboratively on – under what we are targeting for our first annual cooperative supervisory plan.
For collecting and analysing data, we have targeted 2017 to roll out the Annual Statement on Market Conduct based on 2016 data. We are currently working with industry stakeholders to finalize the statement and ensure the availability of data for the first collection cycle.