Canadian insurance regulators to receive feedback until Apr. 4
The Canadian Council of Insurance Regulators (CCIR) and the Canadian Insurance Services Regulatory Organizations (CISRO) have begun seeking feedback from the public to improve their released draft guidance for incentive arrangements related to sale of insurance products.
The Incentive Management Guidance aims to ensure that incentive arrangements are aligned with the fair treatment of customer (FTC) principle under the Guidance: Conduct of Insurance Business and Fair Treatment of Customers. The draft guidance applies to insurers and intermediaries that pay compensation or design incentive arrangements.
Incentive arrangements involves “monetary and non-monetary compensation offered by insurers or intermediaries to their employees and other persons or entities acting on their behalf in the sale and servicing of insurance products.”
The draft guidance particularly sets out expectations for insurers and intermediaries paying compensation or designing incentive arrangements related to sale and servicing of insurance products across Canada.
Under the draft guidance, insurers and intermediaries are expected to incorporate FTC principle in designing and implementing incentive arrangements. With this, they are expected to review their incentive arrangements periodically and implement any changes required to manage FTC-related risks.
Insurers and intermediaries are expected to design and implement incentive arrangements that include criteria minimizing risks of unfair outcomes to their customers. They are also expected to regularly identify and assess any risk that may arise from incentive arrangements, so that appropriate controls can be introduced or their incentive arrangements can be adjusted.
Moreover, insurers and intermediaries are expected to create effective post-sale controls to help them detect incentive arrangements that may lead to inappropriate sales, identify residual FTC-related risks, and improve the design and implementation of their incentive arrangements.
The CCIR and CISRO will receive feedback until Apr. 4.
