Regulatory Reform

Disruptive technologies are affecting all aspects of the operations of insurers, including the products that are offered and how they are distributed.

These changes are creating significant challenges for insurance regulators as their regulatory frameworks become disrupted as well.

The traditional model for regulating insurance was based upon a concept that an insurer needed to be licensed within a specific jurisdiction that had borders around it. For example, an insurer that wished to do business with residents of Ontario required both a licence at the federal level issued by the Office of the Superintendent of Financial Institutions (OSFI), as well as one issued by the Financial Services Commission of Ontario (FSCO).

Brian Reeve, Partner, Cassels Brock & Blackwell LLP

More recently, it has become difficult for Canadian insurance regulators to stop the sale of insurance transactions from online unlicensed insurers. Both OSFI and FSCO lack jurisdiction to either prohibit or enforce Canadian insurance regulatory laws for transactions occurring outside of Canada.

The physical location of the insurer has become less relevant and the use of cloud computing has increased the complexity of determining where an insurance transaction is actually occurring and where the data regarding it is stored. The location of a website’s servers has become an important issue for insurance regulators who have traditionally required full records to be physically maintained in their jurisdictions.

Brian Reeve, Partner, Cassels Brock & Blackwell LLP

Read the full article in the Digital Edition of the October 2017 Canadian Underwriter.

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