FSRA is assisting auto insurance companies to better manage risk and offer consumers accurate rates
The regulator is releasing final guidance outlining sound practices for operational risk management in the rating and underwriting of automobile insurance
To help consumers receive just, reasonable and accurate auto insurance rates and fair treatment in the underwriting process, FSRA is releasing final guidance on Operational Risk Management Framework for auto insurance companies.
Through consultation and research, FSRA has identified gaps within the industry in operational risk management and model governance.
This Information Guidance is intended to outline foundational and sound practices for operational risk management in the rating and underwriting of automobile insurance. Insurance companies can also apply these practices to manage model risk.
“FSRA is working hand-in-hand with the industry to help companies close gaps and better manage their operational risk while providing fair rates and treatment in the underwriting process for consumers,” said Tim Bzowey, Executive Vice President of Auto and Insurance at FSRA. “This is part of FSRA’s broader strategy to enhance regulatory effectiveness in Ontario’s auto insurance sector. Something we believe will benefit both consumers and auto insurance companies now and well into the future.”
This Guidance outlines the steps that insurance companies should be taking to manage operational risk. These include:
- Risk Identification
- Risk Assessment
- Risk Prioritization and Mitigation
- Risk Monitoring and Reporting
This Information Guidance is part of FSRA’s broader strategy to reform the regulation of rates and underwriting in Ontario’s auto insurance sector, which is a priority in FSRA’s 2022-25 Annual Business Plan.
In response to consultation feedback gathered from December 8, 2021 to February 25, 2022, FSRA amended the guidance to address stakeholder feedback as identified in the consultation summary, including regulatory harmonization, implementation of Operational Risk Management and clarification of technical details.
This guidance will become effective on September 20, 2022.
- Operational risk management framework in rating and underwriting of automobile insurance consultation summary report
- Operational risk management framework in rating and underwriting of automobile insurance final guidance
FSRA continues to work on behalf of all stakeholders, including consumers, to ensure financial safety, fairness, and choice for everyone.
Learn more at www.fsrao.ca.