Tuesday, 8 January 2013

Administrative Monetary Penalties Are Introduced In The Insurance Sector

In the 2012 Ontario Budget, the government announced that it would implement Administrative Monetary Penalties (AMPs) in the insurance sector. AMPs will allow the FSCO to address contraventions of the law more efficiently and promote compliance.  AMP’s are civil fines that a regulator, instead of a court, imposes on someone that has committed unlawful activity. Once they are implemented, AMP’s will encourage regulatory compliance within the insurance industry and provide FSCO with a quick enforcement tool that is flexible and targeted.

 The government introduced AMPs into the insurance sector by passing changes to the following Acts:
These changes and new regulations (408/12, 409/12 and 410/12) came into force January 1, 2013.

AMPs can be imposed for contraventions of provisions of these Acts listed in the regulations that occur on or after January 1, 2013, as well as breaches of orders, undertakings and licence conditions.  The maximum penalty for an individual for a contravention of the Insurance Act and Compulsory Automobile Insurance Act is $50,000 and $100,000 for an organization or company.  The maximum penalty for a contravention of the Automobile Insurance Stability Rate Act, 2003 by an insurer is $200,000.

The contraventions to which an AMP can apply include listed Unfair or Deceptive Acts or Practices by any person or entity including insurers, agents, brokers, adjusters and those involved in the provision of goods or services to insurance claimants.
AMPs are not new to FSCO.  The Superintendent of FSCO already has the power to impose AMP’s on two types of financial services institutions – mortgage brokers and credit unions. AMP’s are also used by other regulators in Ontario and other jurisdictions.

The use of AMPs have been strongly supported by the insurance industry as a tool to finding fraud and was endorsed by the Ontario Automobile Anti-Fraud Task Force

No comments:

Post a Comment

Comments are welcome on this blog. However, comments will be moderated and inappropriate and anonymous comments will not be posted. If you wish to have your comments posted please identify yourself. No advertising will be permitted.