Why this broker regulator is keeping an eye on the hard market

Ontario’s broker regulator has the current hard market conditions on its radar screen, scrutinizing what’s happening between brokers and their carrier partners through the lens of consumer fairness.

Scott Bell, outgoing president of Registered Insurance Brokers of Ontario (RIBO), made a pointed reference to the hard market during his address at the regulator’s annual general meeting Thursday in Toronto. He made his remarks after providing a brief update on the province’s new guiding principles regarding the fair treatment of consumers.

“On the subject of fairness, I want to touch on the current state of insurance markets in Ontario,” Bell said while summarizing RIBO’s accomplishments during his term. “The hard market has created a challenging environment for Ontario’s insurance brokers. Yes, most importantly, for their customers.

“Certainly, many insurance brokers have found themselves struggling between meeting the expectations of the brokerage owners or the markets [insurance companies] and the best interests of their clients. Sometimes those expectations are presented in explicit terms. Other times, those expectations are implied but are also less clear.

“Let me be clear: brokers must remember to do what we have always done so well – treat customers fairly.”

Over the past six months, the Canadian Council of Insurance Regulators (CCIR) and the Canadian Insurance Services Regulatory Organizations (CISRO) — in addition to Ontario’s past insurance regulator, the Financial Services Commission of Ontario (FSCO), and British Columbia’s Ministry of Finance — have released fair treatment proposals.

RIBO worked through CISRO to refine the guidelines, which were introduced in Ontario last September. Bell said Ontario’s regulator issued an update to the fair treatment of customers guideline “to support the fairness expectations across the country.”

Bell then noted that RIBO has a watchful eye on market conduct during the hard market conditions. One passage in his speech, although generic, strongly implied that RIBO was interested in evidence of carrier behaviour that would place brokers in a position of having to treat a consumer unfairly.

“Brokers are not salespersons,” Bell said. “Brokers are risk advisors. They are professionals. It is a broker’s role to understand client circumstances and to make recommendations accordingly. Regardless of how difficult markets may become, RIBO and [brokers’] customers expect brokers to always prioritize their interests over anything and everyone else.

“If, for whatever reason, you are being required to treat customers as a secondary concern, please reach out to RIBO and we will endeavor to assist you,” Bell said.

RIBO regulates brokers, not insurance companies, which fall under the jurisdiction of the new Financial Services Regulator Authority of Ontario (FSRA). Bell observed elsewhere in his speech that RIBO and FSRA were committed to working together in the regulation of insurance in Ontario and “we look forward to a cooperative and productive relationship with them.”

Although he never said as much explicitly, Bell’s speech, taken in context, could easily be interpreted to mean that incidents of brokers not acting fairly because of the dictates of carriers during a hard market may ultimately end up on FSRA’s doorstep by way of RIBO.

David Gambrill