Regulators create new insurance complaint reporting system

(August 22, 2005) Insurance regulators in Ontario and Quebec are joining forces on a new complaint reporting project, expected to be the blueprint for a future national system.

The change, which resulted from an industry-wide working group established at the beginning of the year, will require insurance companies in both the property/casualty and life and health industries to switch from reporting aggregate complaint data to reporting detailed complaints on a case-by-case basis.

That data includes the root cause of the complaint, the date the file was opened and closed, whether the complaint resulted in a lawsuit and whether it could have larger impact on the firm or the industry as a whole.

If the complaint is settled by the firm internally, it will not have to be reported to regulators.

Firms will be able to report to the Financial Services Commission of Ontario (FSCO) and Quebec’s Autorité des marchés financiers (AMF) through a secure online system currently under development.

“The data entered in the system will allow authorities to assess market conduct practices, assess companies’ corporate governance controls and put context to issues and reports raised by the media and other members of the public,” FSCO says. “In addition, the information that is gathered will enable regulators to focus resources to areas where they are most needed.”

All the data will remain private, FSCO says, but may be subject to requests from the public under the Freedom of Information Act.

The new system is expected to be ready for launch this fall. Companies will be expected to start collecting data for the second half of this year, and report by January 2006. Complaint reporting will continue on a twice per year schedule. Firms who do not comply could face sanctions, with the removal of a company’s licence to operate expected to be the stiffest penalty.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com