Property and Casualty Insurance Sector Consultation

Report of Qualitative Research Findings

Delivery date: July 2018

POR Registration Number: POR-033-17
Contract Number: 59017-170007/001/CY
Date of Award: October 17, 2017

Prepared For: Office of the Superintendent of Financial Institutions (OSFI)
http://www.osfi-bsif.gc.ca
information@osfi-bsif.gc.ca

Prepared by: Pollara Strategic Insights
1255 Bay Street, Suite 900 Toronto, ON M5R 2A9
416-921-0090

Ce rapport est aussi disponible en français

Contents

• EXECUTIVE SUMMARY
• A. BACKGROUND
• B. RESEARCH OBJECTIVES
• C. METHODOLOGY
• D. RESULTS IN DETAIL
  • Overall Impressions
  • OSFI Guidance
  • OSFI Supervision
  • Communications
  • Approvals
  • Areas of Improvement and Final Comments
• APPENDIX A: Invitation Letters
  • Letter 1
  • Letter 2
  • Lettre 1
  • Lettre 2
• APPENDIX B: Discussion Guide
• APPENDIX C: Political Neutrality Certification

EXECUTIVE SUMMARY

A. Background and Research Objectives

• The primary objective of this research is to explore impressions of OSFI in the discharge of a number of key elements of its mandate as a regulator of property and casualty insurance companies, including guidance, supervisory activities and the approvals process.

B. Methodology

• A total of 51 one-on-one interviews were conducted among Chief Executive Officers (CEOs), Chief Financial Officers (CFOs) and other senior executives of P&C insurance companies regulated by OSFI.
• Interviews were conducted either in-person or by telephone from January to April 2018.

Qualitative Research Caution: Due to the relatively small base size, as well as the qualitative nature of this study, results should be considered indicative of the views of these P&C companies, rather than as quantitative findings.  These findings are intended to provide direction and ideas as opposed to definitive results.

The contract value of this study was $67,800 (including HST).

How this information is expected to be used:

The research findings will help OSFI assess how well it is achieving its mandate overall and will enable OSFI to improve on performance, as required, in its regulatory and supervisory activities as they pertain to federally regulated property and casualty insurance companies.

C. Key Findings

• Impressions on the following overall measures are viewed as strongly positive:
  • Satisfaction with OSFI’s performance as the principal prudential regulator and supervisor of Canada’s financial services industry;
  • OSFI’s ability to focus on appropriate areas of risk in the property and casualty insurance sector;
  • The approvals process, including: the assessment of OSFI with respect to communicating its expectations as it relates to information required in support of processing a request for a regulatory approval; understanding the basis on which OSFI makes decisions about the applications; responding to requests for updates on the status of the applications; and providing opportunities to discuss issues of concern before OSFI comes to a conclusion;
  • OSFI’s ability to effectively communicate with P&C Insurance companies in both written and verbal form.
• Impressions of OSFI are also positive on the following measures:
  • OSFI’s ability to provide a clear indication of its expectations in guidance and the approvals process;
  • The overall consultation process for OSFI Guideline E-21 and MCT, including the means by which companies can provide feedback and the effectiveness of the summary of stakeholder comments for E-21;
  • Proactively responding to emerging issues pertaining to the property and casualty insurance sector;
  • The changes to the Earthquake Exposure Data Filing.
• The following areas received moderately positive feedback by many but not all.  There were some, albeit a minority, who suggested these are areas which could be improved:
  • The time it takes for OSFI to respond to market developments or industry suggestions that guidance needs updating;
  • The timing of the consultation process for Guideline E-21 and MCT, including the time allowed for companies to provide feedback and the timing of OSFI’s responses;
  • Developing guidance that strikes an appropriate balance between the prudential considerations and the need for institutions to compete;
  • Ability of OSFI’s guidance to consider the nature, size and complexity of financial institutions.
• OSFI’s supervisory teams receive positive feedback in the following areas:
  • The overall knowledge of the supervisory teams as a whole;
  • The ability of OSFI teams to respond to questions companies have brought forth concerning final guidance or supervisory matters as well as the ability to interact in the official language of the company’s choice;
  • The knowledge of the Lead Supervisor is sometimes listed as an area that needs improving, often due to the perception of high turnover of these lead supervisors.

A. BACKGROUND

In 2017, OSFI commissioned Pollara Strategic Insights as an independent research firm to undertake research with key stakeholders in order to explore perceptions of OSFI and the current property and casualty insurance marketplace. The study comprised a series of confidential one-on-one in-person and telephone interviews with CEOs, CFOs and other senior executives of property and casualty insurance companies regulated by OSFI.

B. RESEARCH OBJECTIVES

The primary objective of the research is to obtain perspectives concerning the discharge of key elements of OSFI’s mandate as a federal regulator of property and casualty insurance companies.

Specific objectives are to investigate overall impressions of OSFI as well as to explore perceptions of OSFI’s performance on key elements of its role as a prudential regulator as it relates to:

• Regulations and Guidance;
• Supervision; and,
• The Approvals process.

C. METHODOLOGY

Findings are based on a total of 51 one-on-one interviews among CEOs, CFOs and other senior executives.  Interviews were conducted from January to April 2018.  The average interview length was 30 to 45 minutes.

The breakdown of these interviews are as follows:

A total of four moderators were used for this research.  The reason for multiple moderators is to ensure interviews could be done at the convenience of the respondents and in the official language of their choice. Moderators were involved in multiple debriefing sessions to discuss results of the interviews.

When allowed by the participants, the discussions were audio recorded.  In situations where participants felt uncomfortable with audio recordings, detailed notes were taken during the interview and transcribed after.

Qualitative Research Caution: Due to the relatively small base size, as well as the qualitative nature of this study, results should be considered indicative of the views of these P&C companies, rather than as quantitative findings.  These findings are intended to provide direction and ideas as opposed to definitive results. The small sample sizes allow for only limited subgroup analysis.  However, where thematically consistent differences occur, they are noted.

D. RESULTS IN DETAIL

Overall Impressions

Overall satisfaction with OSFI as the Principal Prudential Regulator and Supervisor

• Consistent with findings in previous consultations, overall satisfaction of OSFI among property and casualty insurance companies is strongly positive.
• Participants volunteer a number of reasons for this satisfaction:
  • OSFI’s continued role in protecting the Canadian economy;
  • OSFI’s efforts to build relationships within the P&C Insurance industry;
  • The openness and willingness of OSFI to communicate with individual companies; and,
  • OSFI’s efforts in simplifying its processes.
• As was seen in past consultations with the P&C sector, many participants find their working relationship with OSFI to be better than with other regulators.
• While not the view of every participant,  many also feel positively about OSFI for the following reasons:
  • Treating a company on an individual based on its specific features;
  • Asking the right questions to learn about the company;
  • Being consultative – asking for industry feedback and using that feedback;
  • Focusing on appropriate areas of risk; and
  • Engaging on the industry not only on an individual basis but through conferences and seminars.

Assessment of OSFI focusing on the Appropriate Area of Risk

• As in the 2014-15 consultation, many, particularly large companies, feel that OSFI is focusing on the appropriate areas of risk:
  • OSFI has its finger on the pulse of what is coming up and focuses on what is important to the majority;
  • OSFI solicits input from the industry rather than depending on its own views alone;
  • In a few instances, OSFI is ahead of other countries when it comes to considering specific areas of risk; and,
  • OSFI will refresh requirements of a guideline as issues change.
• Many respondents from smaller companies feel less positively about OSFI’s focus on risk for the following reasons:
  • OSFI can limit its focus to areas of risk for only large companies;
  • OSFI can take too long to react and needs to move faster on emerging risks; and
  • OSFI can sometimes over-regulate which treads on a company’s ability to compete.

Assessment of OSFI on how it proactively Responds to Emerging Issues in the Property and Casualty Insurance Sector

• Participants see this as a balancing act between ensuring coverage of what could become a risk and not over-regulating, which can be a difficult task.
• The majority react positively, feeling OSFI is doing all it can (and should) be doing in this area. Specifically, participants appreciate OSFI initiating conversations with the industry as soon as it senses an emerging risk and before beginning the regulatory process.
• There are a few who feel OSFI can be too proactive which leads to time and resources being spent on issues that will likely not become areas of risk. 

Areas of Risk that should be Considered Priorities

• As in the 2014-15 consultation, Cyber-Risk is still the most often mentioned risk that should be a priority for OSFI. These risks take many forms such as:
  • Disruptive Technology;
  • Cyber or Crypto-currency;
  • Automation and innovation changes; and
  • Regulations for new business models based on technologies.
• Other areas of risk mentioned by some which should be, or continue to be, considered by OSFI include:
  • IFRS 17;
  • Capital requirements;
  • Climate change;
  • Use of big data to understand P&C consumers;
  • Operational risk; and
  • Regulation of auto insurance.

OSFI Guidance

Responding in a Timely Manner that Guidance Needs Updating

• More than half of those interviewed have a positive impression of the timeliness with which OSFI responds to industry suggestions that guidance needs updating, with many saying this area has seen improvement over the past few years.
• Most positive comments revolve around the consultation process:
  • OSFI asks for input instead of making decisions that may not work for the industry;
  • The industry appreciates being consulted; and
  • The consultation process helps to build relationships between OSFI and P&C companies.
• There are many who believe OSFI should respond faster in order to move with the speed of business.  This is particularly true when the issue at hand is more complicated.
• Those who want the process to speed up do understand the importance of industry consultation and the time it takes to achieve this – they do not want this to be sacrificed, but feel something needs to be done to speed up the process.

OSFI Develops Guidance that Strikes a Balance between Prudential Considerations and the Need for Institutions to Compete

• Compared to the last P&C sector consultation (2014-15), impressions of OSFI in balancing prudential considerations with the need for companies to compete is somewhat more positive;
  • OSFI is thought to lean toward being prudential rather than competitive, but this is to be expected in a conservative country like Canada and it is what kept Canada safe through 2008.
• Many believe this has been an area of improvement, as OSFI is more balanced now than it has been in the past.
• A number of participants believe OSFI needs to further right this balance, believing OSFI is too prudential without understanding how this will affect business domestically or globally, and without taking into consideration the nature, size and complexity of the individual companies.

Effectiveness of OSFI’s Guidance in Providing Clear Indication of Expectations

• In keeping with findings from the last consultation with P&C companies, most feel that OSFI’s guidance provides a clear indication of its expectations. And if they do have any questions, OSFI provides quick answers.
• However, most agree the guidance does contain some “grey areas”, which allows the guidance to be interpreted in a way that is appropriate to the individual company’s nature, size and complexity.
• A small group would rather OSFI be more upfront on their expectations for individual companies. They feel more specificity would be helpful when interpreting the guidance for their company, with a few specifically asking for examples based on company size.

Guidance Considers the Nature, Size and Complexity of the Financial Institution

• Many participants are pleased to report that OSFI has improved in this area compared to a few years ago. 
• However, a number feel this area could be further improved as the guidance itself is not felt to be written in a way that makes concessions to the nature, size or complexity of companies as only one guideline is published for all:
  • Most who feel this way understand the vague nature of the guidance allows the OSFI supervisory teams to tailor the guidance to the nature size and complexity of the company. While many say supervisors do interpret it based on the specifications of the individual company, others say their supervisors do not, particularly if the supervisor is new and perhaps does not know the company.
  • Many who feel this area could be further improved would like the guidance itself to contain examples for organizations of different sizes or to specifically indicate areas which are intended only for companies of a certain size.
  • Small companies as well as branches are most likely to say the guidelines are not written in a way that is relevant to them.

Assessment of Consultation Process when Developing Guideline E-21

• The majority feel positively about the consultation process that was followed for Guideline E-21:
  • The amount of time given to consolidate feedback is sufficient for most;
  • The time it took for OSFI to respond to the feedback given is acceptable;
  • The companies’ feedback offered was considered and changes were made to the guideline based on that feedback.
• Negative perceptions about the consultation process are most frequently provided by smaller companies who sometimes felt their feedback was not considered.
• Many indicated they would like more time to consolidate feedback, or want a consultation process that is not held in the summer.
• More than half of those interviewed are aware of the summary of stakeholder comments provided with the release of Guideline E-21.  Most feel positively about this summary and would like OSFI to continue to produce them as they provide insight into industry priorities and help companies understand the guidance better.
• A small group did not find the summary to be quite as helpful:
  • Not all issues were addressed;
  • Rationale for OSFI’s decision is weak or unclear;
  • The document is also perceived by some to be difficult to read.

Assessment of 2018 Minimum Capital Test Guideline Consultation Process

• As with the other OSFI consultations, participants appreciated being asked for their input on the Minimum Capital Test.  However, many companies did not offer feedback on this particular guideline as they found the changes in it to be minor and they had nothing else to add.
  • A few smaller players do not believe their input would have been taken into consideration.
• The process of obtaining this feedback is believed to be the same effective process that OSFI typically uses to consult on guidance.
• The main area of contention raised is the timing of the consultation – specifically being six weeks over the summer.

Effectiveness of Communicating Expectations Regarding the Annual Earthquake Exposure Data Filing

• On the topic of the effectiveness of communicating expectations regarding the annual Earthquake Exposure Data Filing, many participants had very little to say as the form either is not relevant to their company, or not something they personally deal with.
• There are a few who were still not clear on the expectations of this filing as they found the requirements to be vague.

OSFI Supervision

Effectiveness of OSFI’s Supervision of Company or Branch

• Overall perceptions of OSFI’s effectiveness in supervising their company continue to be highly positive.
  • Most companies believe OSFI provides an effective amount of supervision.  Larger companies find the regular contact they have with OSFI, such as quarterly meetings to discuss potential upcoming issues, to be effective.  Smaller companies find less contact with OSFI to be effective as they do not have any need for more and believe more contact would be onerous.
  • Supervisory recommendations are considered effective as they most often are not just orders, but come with a discussion on how to best make the changes in the company.
• Comments on OSFI’s effectiveness in supervision are often linked to the lead supervisor or the people on the supervisory team, with whom participants had the most contact.
• Many participants expressed satisfaction with the effectiveness of OSFI’s supervision because they are satisfied with the effectiveness of their supervisory team.
  • The team as a whole is considered to be knowledgeable about the industry as well as the individual company.
  • The team has built a co-operative relationship with the company.
  • The team helps them reach their goals, while remaining true to OSFI’s requirements.
• The minority who made negative comments about the effectiveness of their supervisory team were most likely to link these comments to the lead supervisor specifically, rather than the team as a whole.
  • This is often due to the perceived lack of knowledge of the individual supervisor, specifically about the individual company.
• Those who feel negatively about their lead supervisor, and therefore the effectiveness of OSFI’s supervision, are likely to talk about the high turnover and the seemingly large number of different supervisors they have had in the past few years. This is consistent with findings from both the 2014-15 and the 2011 consultations.
• While these participants feel less positive about their lead supervisor, they do not feel the same about the rest of the supervisory team, particularly the manager.  In fact, they often say the supervisor manager will fill in the knowledge gap and allow companies to get the answers they need.

Supervisors Apply Guidance Based on Nature, Size and Complexity of Company

• While most feel OSFI guidance is not tailored to the nature, size and complexity of companies, they agree the role of OSFI supervisors is to apply the guidance in a way that is scaled to reflect the nature, size and complexity of companies.  Most feel OSFI’s supervisors do well on this front. 
• When discussing the reasons for positive assessments, most will relate OSFI’s supervision directly to their own experience with their own supervisor.  Those who are satisfied with this aspect of OSFI’s supervision are likely to say their lead supervisor has an in-depth understanding of their company.
• Quite a few participants, however, do not think their supervisor applies guidance in this manner.  These participants also say their lead supervisor does not have as much knowledge of their company and are more interested in ensuring they “tick all the boxes” rather than apply the guidance in a logical manner.

Supervisory Activities are Scaled to the Nature, Size and Complexity of the Company

• Overall, participants feel more positively about OSFI’s supervisory activities being scaled to the nature, size and complexity of their company than they feel about guidance being applied in the same manner. 
  • Larger companies have more frequent and in-depth supervision; but this level is appreciated.
  • Smaller companies do not have as close a relationship with OSFI and do not receive as much supervision.  Smaller companies understand the reduced supervision and agree with the level as many of these companies are less complex. 
• A minority of participants do feel the level of supervision could be improved, particularly when it comes to regulatory burden. This is particularly true of smaller companies who believe OSFI asks for the same requirements from them as they do from larger companies.  These smaller companies not only find this burdensome, they believe it is unnecessary and unfair. 

OSFI provides Opportunity for Companies to Discuss Issues of Concern before OSFI comes to a Conclusion

• Similar to feedback in the 2014-15 consultation, the vast majority of those interviewed assess OSFI positively on the opportunity to discuss concerns before OSFI comes to conclusions.
• In fact, many said supervisors will often seek clarity and additional information long before the point of coming to a conclusion.
• A small minority of participants have negative comments to make on this front.

How the Supervisory Team could be Improved

• Most had involvement with their lead supervisor in the past year.
• A good number of participants were satisfied with the relationship they have with their supervisory team as a whole.  They could not think of any areas where it needs to be improved.
• However, this satisfaction is not always directed to the lead supervisor. Many say their current lead supervisor is lacking when it comes to overall knowledge.
  • This is often attributed to the fact the supervisor is new to OSFI and is perceived to know little about the legislation, guidance and individual companies, or they are new to the role of supervisor to that specific company.
  • While lead supervisors do not always have the knowledge these participants would want, most participants do say their lead supervisor is making an effort to increase their knowledge level quickly.
  • New supervisors will bring other team members to meetings to ensure all questions can be answered, accounting for the overall satisfaction in the team as a whole.
• Not surprisingly, those who made suggestions on how the supervisory team could be improved often focused their comments on the consistency of the team, specifically keeping the same lead supervisor who knows their company.
• A few wish OSFI had better internal communication so they would not have to repeat information or duplicate requirements when dealing with different departments within OSFI.
  • A few referred to better communication with other regulators (particularly provincial) to ensure their requirements are not contradictory.

Communications

Assessment of OSFI in Regard to Responding to Questions concerning Guidance or Supervisory Matters

• Most participants could recall instances where they went to OSFI with an inquiry regarding a final OSFI guideline. The need to ask questions is not viewed negatively.  With OSFI’s role as a principles-based regulator, most respondents understand that there will be questions with regard to interpretation.
• Participants feel very positively about OSFI’s response to their questions about guidance. OSFI is open to receiving any and all questions and their timely responses are clear and easy to understand.
• A few did mention that more complicated questions are not answered immediately by the lead supervisors, but rather input is sought from other people (their managers or Ottawa) within OSFI.  While a few wish this process could be faster, most appreciate the transparency and understand why a response would take longer to finalize.
• Most had not brought forward enquiries about supervisory matters.  Those who had done so felt that OSFI had managed these questions well.

Assessment of Written Correspondence

• Overall, participants respond positively about OSFI’s written correspondence.
  • It is provided in a timely manner, usually meeting set deadlines.
  • It contains the necessary information.
  • Most feel it is provided in an understandable format, although a small group find the written correspondence somewhat cumbersome.
• Written and oral communication are not always consistent, but they are not necessarily contradictory in nature.  Most do not believe this lack of consistency to be a negative.
  • Verbal communication is easier to understand – OSFI will get right to the point in a conversation and express the views in a way that makes sense.
  • Verbal communication is where OSFI is able to tailor its guidance to the nature, size and complexity of the individual company. 

Ability to Use the Official Language of your Choice

• Whether participants wanted to communicate in English or French, no one experienced any issues when it came to dealing with OSFI in the language of their choice.

Approvals

Satisfaction with Processing of Application for Approval

• More than half of the participants had made a request for regulatory approval from OSFI in the past year or two.
• Most are very satisfied with the approval process and the role OSFI plays in it:
  • OSFI is transparent as to what is required to obtain the approval, and these requirements are not difficult.
  • OSFI has made efforts to make the approvals process as simple as possible.
  • OSFI is very accommodating and will work with companies to ensure internal deadlines are met.
• Similar to the 2014-15 consultation, there are a few in this consultation who indicated they had a different experience with the approval process. These participants admit their requests were perhaps more complex; however, they are not satisfied with the approvals process and feel that:
  • OSFI is not transparent when it comes to the information requirements for the approval; and,
  • OSFI is not transparent with timelines, leaving them unsure when the decision will be made.

Assessment of Communicating Expectations

• Most comment positively on how OSFI communicates its expectations when it comes to regulatory approvals. 
  • The initial meeting to discuss the process is helpful and answers many questions before they begin the application process.
  • Written communication is consistent and reiterates what is said verbally.
• Those few who feel their approval request is complex, and therefore were less satisfied with the approval process overall, also said they were less happy with the way OSFI communicated its expectations at the start of the approvals process.

Understanding the Basis on Which OSFI Makes their Decision

• Most feel OSFI is open and transparent with its reasoning, so companies have at least a basic understanding of how OSFI reaches its decision, even when it is not in their favour.
• If there is a reason that the company would not be receiving approval, they would usually know about it ahead of time and are able to make changes – this usually means revising the application or providing more information, but also sometimes means making changes within their own business plan to deal with the issue or concern.

Providing Opportunities to Discuss Issues Before Coming to Conclusions

• Most feel very positively about OSFI on this issue. This is an important part of the open and communicative relationship companies feel they have with OSFI. OSFI will contact them to discuss issues or clarify questions before they escalate.
• This openness and willingness to have a conversation is appreciated by companies seeking a regulatory approval.
• Only a few do not have a good experience when it comes to discussing issues of concern with OSFI.

Areas of Improvement and Final Comments

• One of the most often mentioned areas suggested by participants for improvement by OSFI is the treatment of companies based on nature, size and complexity.
  • While all agree that OSFI has made headway in this area over the past few years, it is an area that needs further improvement.
• A few mention regulatory burden as an area for improvement.
• While a few would like Guidance to be developed faster, they do not want to give up the consultation process, so are unsure how this could be accomplished.
• A small group of companies would like their lead supervisor to be more knowledgeable, particularly about the individual companies.  This is mainly attributed to the lack of consistency in lead supervisors as a result of turnover.  These companies agree the lead supervisors are doing their best to get up to speed and that other members of the supervisory team are filling in the gaps.

APPENDIX A: Invitation Letters

Letter 1

On behalf of Pollara Strategic Insights, I would like to invite you to participate in an important study, in partnership with the Office of the Superintendent of Financial Institutions (OSFI).  This study consists of interviews with senior representatives of the Property and Casualty Insurance companies under OSFI’s supervision.  The purpose of this study is to obtain an assessment of OSFI’s effectiveness as a regulator and supervisor.  The results of this consultation will help OSFI to improve its performance for you and your organization.

This research is strictly confidential.  Your name was selected at random by Pollara from a list of senior members of Property and Casualty Insurance companies in Canada provided by OSFI.  However, OSFI will not know who has been invited to take part in this research, nor will they know who participated.  Results of this information will be shared with OSFI in a summary report only, with no results being attributed to any one person or organization.

Included in this package is a letter of confirmation from OSFI, as well as the interview guide which will form the basis of the questions we will be asking.  A member of my team will be in contact within the next week to obtain your consent and schedule this interview at a time which is convenient to you.  The interview could take up to one hour to complete.  You will have the option to complete the survey in either English or French, as you prefer.

Thank you again for your consideration.  If you have any questions, or if you would likely to discuss the study in more detail, please do not hesitate to contact me.

Sincerely yours,

Lesli Martin
Vice-President, Pollara Strategic Insights
LesliMartin@pollara.com
(416) 921-0090 ext. 2306

This research project has been registered with the Marketing Research and Intelligence Association (MRIA).  To obtain more information about this study through this registration, please go to one of the following websites www.surveyverification.ca or www.verificationsondage.ca and reference MRIA Project Registration Number: 20171116-974B.

All information collected through this process will be administered according to the requirements of the Privacy and Access to Information Acts.  More information about these Acts can be found at http://laws-lois.justice.gc.ca/eng/acts/P-21/ and http://laws-lois.justice.gc.ca/eng/acts/A-1/

Letter 2

I am writing to invite your participation in an important confidential study that is being conducted by Pollara on behalf of the Office of the Superintendent of Financial Institutions (OSFI) with representatives of the Property and Casualty Insurance companies we regulate and supervise. The results of this consultation will help OSFI to improve its performance, which we believe will be of ultimate benefit to you and your organization. 

Within the next week, a representative of Pollara will contact you to arrange a suitable time for an in-person interview of about one hour in length. Prior to the interview, we ask that you review the enclosed interview guide, as it will form the basis of the questions you will be asked. Please feel free to canvass your colleagues for their views to obtain a broader perspective, if you feel this would be helpful.

OSFI is committed to a confidential consultation process, which includes ensuring that the identities of those who participate are not disclosed to us. Although I have signed this letter personally, it has been addressed and mailed to you by Pollara. In addition, the report that OSFI will ultimately receive from Pollara will include only summary form, non-attributable feedback. The findings from this consultation will be posted on OSFI’s website in 2018.

If you would like to discuss the study at any time during the process, please contact Lesli Martin, Vice-President, Public Affairs, Pollara, at (416) 921-0090 (ext. 2306).

We hope we can count on your participation.

Sincerely,

Jeremy Rudin
Superintendent

Encl.

APPENDIX B: Discussion Guide

P&C Sector Consultation (PCSC)  2017-2018

Introduction

Pollara has been retained by the Office of the Superintendent of Financial Institutions (OSFI) to conduct this study with senior executives of federally regulated property and casualty financial institutions.

Since 1998, OSFI has commissioned consultations with senior members of the financial community to obtain their assessment of its effectiveness as a supervisor and regulator. OSFI is committed to monitoring how well it is achieving its strategic objectives, both to be accountable to stakeholders and to help improve effectiveness. It is for these reasons that we are asking your company/branch to participate in this research.

You can be assured that Pollara, as an independent third party, will hold your comments in strict confidence. OSFI will not know who was interviewed or what specific companies have said about it.

As a standard industry practice, Pollara has put in place secure communication and usage procedures to ensure that confidentiality is maintained at all times.

Pollara will provide OSFI with a full report aggregating the findings from this research.

Part 1 - Overall Impressions

1. Overall, how satisfied are you with OSFI as the principal prudential regulator and supervisor of Canada’s financial services industry?

2. How would you assess OSFI on the extent to which it focuses on the appropriate areas of risk in the property and casualty insurance sector?

3. How would you assess OSFI with respect to how proactive it is in responding to emerging issues pertaining to the property and casualty insurance sector?

4. What one or two risk areas do you believe should be priorities for OSFI in the next couple of years pertaining to companies in the property and casualty insurance sector?

5. What one or two things does OSFI need to improve upon as a regulator and supervisor?

Part 2 – Guidance

As needed, OSFI develops Guidance (which may include guidelines and advisories) for companies/branches in the property and casualty insurance sector.

6. How would you assess OSFI with respect to responding in a timely manner to market developments or to industry suggestions that guidance needs updating?

7. How would you assess OSFI with respect to developing guidance that strikes an appropriate balance between prudential considerations and the need for institutions to compete?

8. Overall, how effective do you think OSFI’s guidance is in providing a clear indication of OSFI’s expectations?

9. How would you assess OSFI’s guidance on the extent to which it considers the nature, size and complexity of financial institutions?

The following series of questions focus on several different work streams related to Guidance that OSFI has issued recently.

10. In June 2016 OSFI released Guideline E-21: Operational Risk Management.

How would you assess the consultation process OSFI followed when developing Guideline E-21 (e.g., means by which insurance companies/branches could provide feedback, timing for feedback, timing of OSFI’s response)?

11. Accompanying the final Guideline E-21 was a summary of stakeholder comments, which included an explanation of how OSFI dealt with the issues raised through the consultation process.

Were you aware that OSFI provided this summary of stakeholder comments with the release of the final Guideline E-21?

• □ Yes (go to Q12)
• □ No (go to Q13) 

12. How effective was the summary in communicating the decisions OSFI took on the issues raised by stakeholders regarding Guideline E-21?

In 2017, OSFI released a draft of the 2018 Minimum Capital Test (MCT) Guideline for public consultation. P&C insurers were invited to comment on the draft Guideline between June 15^th and August 4^th, 2017.

13. How would you assess the consultation process OSFI followed, including the means and timing by which your company could provide feedback and the timing of OSFI’s response?

In March 2014, OSFI published a new version of the Earthquake Exposure Data Form, which was developed to be consistent with the expectations and terminologies from Guideline B-9: Earthquake Exposure Sound Practices.

Earthquake Exposure Data is collected annually from P&C companies/branches. Based on an analysis of the 2015 and 2016 industry submissions, and discussions with preparers, OSFI further updated the form.

14. How effective has OSFI been in communicating its expectations to the P&C insurance industry regarding the annual Earthquake Exposure Data Filing? 

Part 3 - Supervision

The following questions pertain to OSFI’s supervision as it relates to your company/branch.

15. Overall, how effective do you think OSFI is in supervising your company/branch (e.g., ongoing monitoring, on-site reviews including supervisory recommendations, reporting requirements, etc.)?  

16. When carrying out supervisory work, how would you assess OSFI on the extent to which it applies guidance in a manner that is scaled to reflect the nature, size and complexity of your company/branch?

17. How would you assess OSFI on the extent to which its supervisory activities are scaled to reflect the nature, size and complexity of your company/branch?

 18. How would you assess OSFI with respect to providing an opportunity for your company/branch to discuss issues of concern with OSFI prior to OSFI coming to a conclusion?

19. Have you had any dealings with your Lead Supervisor (formerly known as Relationship Manager) over the past 12 months?

1. □ Yes
2. □ No

If you have not dealt with your Lead Supervisor in the past 12 months, please skip to 22.

20. How would you assess the overall knowledge level of your Lead Supervisor (e.g., knowledge of legislation; OSFI guidelines; regulatory policy; P&C insurance sector issues and risks; your company/branch)?

21. Thinking about your company’s/branch’s interactions with your Lead Supervisor and the Supervision team (e.g. actuarial and other specialist teams), what, if anything, do you believe needs to be improved?  

Part 4 - Communications with OSFI

22. Overall, how would you assess OSFI with respect to responding to questions your company/branch has brought forward concerning final OSFI guidance, including questions related to interpretation (e.g., consistency; clarity; timeliness)?

23. Overall, how would you assess OSFI with respect to responding to enquiries your company/branch has brought forward about supervisory matters (e.g., consistency; clarity; timeliness)?

24. Overall, how would you assess OSFI with respect to its written correspondence (e.g., clarity; timeliness; and, consistency between written and oral communications)?

25. Thinking about your dealings with OSFI’s staff on any supervisory or regulatory matter, how satisfied are you with OSFI’s capacity to interact with you in the official language of your choice (i.e., English or French)?

25b) [If dissatisfied] In which areas are you are dissatisfied (e.g., OSFI’s capacity to speak, write or read materials in the official language of my choice)?

Part 5 – Approvals

As you know, OSFI’s Superintendent, and in some cases, the Minister of Finance, must approve certain business transactions or initiatives which companies in the property and casualty insurance sector wish to undertake.  The following questions pertain to OSFI’s approval process as it relates to your company/branch.

26. To the best of your knowledge, has your company/branch ever made a request for a regulatory approval from OSFI?

• □ Yes
• □ No

If no, go to question 33.

27. Has your company/branch made a request for a regulatory approval in the past 1-2 years?

• □ Yes
• □ No

If no, go to question 30.

Thinking about request(s) for a regulatory approval your company/branch has submitted in the past 1-2 years…….

28. Overall, how satisfied are you with OSFI in processing applications from your company/branch?

29. How would you assess OSFI with respect to communicating its expectations as it relates to the information required in support of processing a request for a regulatory approval?

30. How well do you understand the basis on which OSFI makes decisions about your company’s/branch’s applications?

31.  How would you assess OSFI with respect to responding to your company’s/branch’s requests for updates on the status of applications?

32. How would you assess OSFI with respect to providing an opportunity for your company/branch to discuss issues of concern with OSFI prior to OSFI coming to a conclusion?

Part 6 – Final Comments

33. Are there any other comments or suggestions for improvements you would like to make concerning the issues raised today, or concerning any other issues you feel are particularly relevant at this time?

On behalf of OSFI, Pollara would like to thank you for your participation.

Consultation du secteur des assurances multirisques (PCSC)  2017-2018

Introduction

Le Bureau du surintendant des institutions financières (BSIF) a retenu les services du cabinet Pollara pour réaliser la présente étude auprès de cadres dirigeants de sociétés d’assurances multirisques fédérales.

Depuis 1998, le BSIF commande des études auprès de dirigeants du milieu financier pour recueillir leur opinion au sujet de son efficacité à titre d’organisme de réglementation et de surveillance. Le BSIF s'est engagé à faire le point sur son rendement par rapport à ses objectifs stratégiques de manière à pouvoir en rendre compte à l’ensemble de ses interlocuteurs et à accroître son efficacité. Voilà pourquoi nous sollicitons la participation de votre société ou de votre succursale.

À titre de tierce partie indépendante, Pollara s’est engagée à traiter vos réponses de façon strictement confidentielle. Le BSIF ne saura ni qui a participé au sondage, ni quelles observations ont été faites par un organisme en particulier.

Conformément aux normes de pratiques professionnelles, Pollara a mis en place des procédures de communication et de traitement de l’information sécuritaires visant à garantir la confidentialité en tout temps.

Pollara remettra au BSIF un rapport complet regroupant les résultats de la présente étude.

Partie 1 – Impressions globales

1. Dans l’ensemble, à quel point êtes-vous satisfait de la prestation du BSIF en qualité de principal organisme de réglementation et de surveillance prudentielles du secteur des services financiers du Canada?

2. Que pensez-vous de la prestation du BSIF pour ce qui est de faire porter ses efforts sur les domaines à risque pertinents du secteur des assurances multirisques?

3. Que pensez-vous de la proactivité dont le BSIF fait preuve face aux nouveaux enjeux du secteur de l’assurance multirisque?

4. En un point ou deux, quels domaines à risque devraient constituer une priorité pour le BSIF ces prochaines années en ce qui concerne les sociétés du secteur des assurances multirisques?

5. En un point ou deux, quelles améliorations le BSIF pourrait-il apporter à sa prestation en qualité d’organisme de surveillance et de réglementation?

Partie 2 – Consignes

Le BSIF élabore des consignes (sous forme de lignes directrices et de préavis par exemple) à l’intention des sociétés  et succursales de sociétés du secteur des assurances multirisques.

6. Que pensez-vous de la prestation du BSIF pour ce qui est de réagir en temps opportun à l’évolution des marchés ou aux suggestions de ses interlocuteurs selon lesquelles ses consignes ont besoin d’être mises à jour?

7. Que pensez-vous de la prestation du BSIF pour ce qui est d’établir des consignes qui représentent un juste équilibre entre les préoccupations d’ordre prudentiel et la nécessité pour les sociétés de faire face à la concurrence?

8. Dans l’ensemble, à quel point les consignes du BSIF traduisent-elles clairement ses attentes?

9. Que pensez-vous de la prestation du BSIF en ce qui a trait à la mesure dans laquelle ses consignes tiennent compte de la nature et de la taille des institutions financières, et de la complexité de leurs activités?

Les prochaines questions portent sur différents volets de travail se rapportant aux consignes que le BSIF a diffusées récemment.

10. En juin 2016, le BSIF a publié sa ligne directrice E-21, Gestion du risque opérationnel.

Que pensez-vous du processus de consultation qu’a suivi le BSIF dans son élaboration la ligne directrice E-21 (p. ex., les moyens par lesquels les sociétés et succursales de sociétés d’assurances ont pu faire part de leurs commentaires, échéanciers pour le faire, ponctualité des réponses du BSIF)?

11. La version finale de la ligne directrice E-21 était accompagnée d’un condensé des commentaires reçus des interlocuteurs et d’une explication de la façon dont le BSIF en a tenu compte dans la rédaction de la ligne directrice.

Saviez-vous que la version définitive de la ligne directrice E-21 accompagnée de ce condensé des commentaires reçus des interlocuteurs?

• □ Oui [Passer à la question 12]
• □ Non [Passez à la question 13]

12. Dans quelle mesure le condensé communiquait-il efficacement les décisions prises par le BSIF en réponse aux questions soulevées lors de l’exercice de consultation relatif à la ligne directrice E-21?

En 2017, le BSIF a publié une nouvelle version à l’étude de la ligne directrice sur le test du capital minimal (TCM) dans le cadre d’un exercice de consultation et invité les assureurs multirisques à lui faire part de leurs questions et observations entre le 15 juin et le 4 août 2017.

13. Que pensez-vous du processus de consultation qu’a suivi le BSIF, notamment en ce qui a trait aux délais qui vous ont été accordés pour faire part de vos observations et à ceux dans lesquels le BSIF leur a donné suite?

En mars 2014, le BSIF a publié une nouvelle version de son relevé sur les engagements relatifs aux tremblements de terre, lequel reflète les attentes et la terminologie de la ligne directrice B-9, Saines pratiques de gestion de l’exposition au risque de tremblement de terre. 

Une fois l’an, toutes les sociétés et succursales de société d’assurances multirisques doivent produire leurs données sur les engagements relatifs aux tremblements de terre auprès du BSIF. Le formulaire qu’elles remplissent à cette fin a été mis à jour en fonction du résultat de l’analyse des données de 2015 et 2016.  

14. Dans quelle mesure le BSIF a-t-il su communiquer efficacement au secteur des assurances multirisques ses attentes relatives à la production de données annuelles sur les engagements relatifs aux tremblements de terre?

Partie 3 – Surveillance

Les questions qui suivent portent sur la surveillance que le BSIF exerce à l’égard de votre société ou de votre succursale.

15. Dans l’ensemble, que pensez-vous de la prestation du BSIF en ce qui a trait à l’efficacité des mesures de surveillance qu’il applique à votre société ou à votre succursale (p. ex., surveillance continue, examens sur place, y compris recommandations en matière de surveillance et exigences relatives à la production de rapports)?

16. Que pensez-vous de la prestation du BSIF pour ce qui est d’appliquer ses consignes d’une manière adaptée à la nature, à la taille et à la complexité de votre société ou succursale dans le cadre de ses travaux de surveillance?

17. Que pensez-vous de la prestation du BSIF pour ce qui est d’exercer ses activités de surveillance d’une manière adaptée à la nature, à la taille et à la complexité de votre société ou votre succursale?

18. Que pensez-vous de la prestation du BSIF pour ce qui est d’offrir à votre société ou succursale la possibilité de discuter de ses préoccupations avec lui avant qu’il tire une conclusion?

19. Avez-vous eu des rapports avec le chargé de surveillance (auparavant appelé le gestionnaire des relations) de votre société ou de votre succursale au cours des 12 derniers mois?

1. □ Oui
2. □ Non

Si vous avez répondu non, veuillez passer à la question 22.

20. Que pensez-vous de la prestation du chargé de surveillance de votre société ou succursale en ce qui a trait à l’étendue de ses connaissances (p. ex., connaissance des mesures législatives, des lignes directrices du BSIF, des mesures de réglementation, des questions et des risques propres au secteur de l’assurance multirisque et de votre société ou succursale)?

21. Selon vous, quelles améliorations y aurait-il lieu d’apporter aux rapports que le chargé de surveillance et l’équipe de surveillance entretiennent avec votre société ou votre succursale, s’il y a lieu?  

Partie 4 – Communications avec le BSIF

22. Dans l’ensemble, que pensez-vous de la prestation du BSIF pour ce qui est de répondre aux questions de votre société ou succursale au sujet de la version définitive des consignes, notamment aux questions qui ont trait à l’interprétation (p. ex., uniformité, clarté et ponctualité)?

23. Dans l’ensemble, que pensez-vous de la prestation du BSIF pour ce qui est de répondre aux questions de votre société ou succursale au sujet de questions de surveillance (p. ex., uniformité, clarté et ponctualité)?

24. Dans l’ensemble, que pensez-vous de la prestation du  BSIF pour ce qui est de la correspondance écrite (p. ex., clarté, ponctualité et uniformité des communications écrites et orales)?

25. En songeant aux rapports que vous avez eus avec le personnel du BSIF au sujet de questions de surveillance ou de réglementation, à quel point êtes-vous satisfait de la  capacité de son personnel de s’entretenir avec vous dans la langue officielle de votre choix (c’est-à-dire en anglais ou en français)?

25b) [Si insatisfait] À quels égards êtes-vous insatisfait de la prestation du BSIF (p. ex., capacité de s’exprimer oralement ou par écrit, ou de lire des documents dans la langue officielle de votre choix)?

Partie 5 – Agréments

Comme vous le savez, le surintendant des institutions financières et, dans certains cas, le ministre des Finances doivent approuver certaines opérations ou mesures que les sociétés du secteur de l’assurance multirisque souhaitent réaliser.  Les questions qui suivent portent sur le processus d’agrément du BSIF à l’égard de votre société ou succursale.

26. À votre connaissance, votre société ou succursale a-t-elle déjàprésenté une demande d’agrément réglementaire au BSIF?

• □ Oui
• □ Non

Si la réponse est non, veuillez passer à la question 33.

27. Votre société ou succursale a-t-elle présenté une demande d’agrément réglementaire au cours des deux dernières années?

• □ Oui
• □ Non

Si la réponse est non, veuillez passer à la question 30.

En ce qui a trait aux demandes d’agrément réglementaire que votre société ou succursale a produites au cours des deux dernières années...

28. Dans l’ensemble, à quel point êtes-vous satisfait de la façon dont le BSIF traite les demandes d’agrément de votre société ou succursale?

29. Que pensez-vous de la prestation du BSIF en ce qui a trait à la communication de ses attentes concernant l’information dont il a besoin pour traiter une demande d’agrément réglementaire?

30. Dans quelle mesure comprenez-vous le fondement des décisions du BSIF au sujet des demandes d’agrément que votre société ou succursale a soumises?

31. Que pensez-vous de la prestation du BSIF pour ce qui est de répondre aux questions que lui adresse votre société ou succursale concernant l’état de ses demandes?

32. Que pensez-vous de la prestation du BSIF pour ce qui est d’offrir à votre société ou succursale la possibilité de discuter de ses préoccupations avec lui avant qu’il tire une conclusion?

Partie 6 – Observations finales

33. Avez-vous d’autres remarques ou suggestions d’amélioration à faire au sujet des points dont il a été question aujourd’hui, ou de toute autre question que vous jugez particulièrement pertinente actuellement?

Au nom du BSIF, Pollara vous remercie de votre participation.

APPENDIX C: Political Neutrality Certification

I hereby certify as Senior Officer of Pollara Strategic Insights that the deliverables fully comply with the Government of Canada political neutrality requirements outlined in the Policy on Communication and Federal Identity and the Directive on the Management of Communications

Specifically, the deliverables do not include information on electoral voting intentions, political party preferences, standings within the electorate or ratings of the performance of a political party or its leaders.

Signed by:
Lesli Martin
Vice President
Pollara Strategic Insights