Risk based regulation involving self-assessments overseen by a company’s governing structure are an effective and ever growing mode of regulation. In Canada, the federal insurance regulator which oversees the prudential (solvency) of the majority of Canadian insurers and all foreign insurers operating in Canada has adopted this form of regulation. The provincial regulators are looking at it for market conduct regulation and, where they have responsibility, prudential (solvency) regulation.

Sophisticated web-based self-assessment systems are available in Canada. A properly operating self-assessment system provides a central and readily accessible location for problems identified and how they are dealt with by the company.

Insurers are understandably concerned that a robust and effective self-assessment system not provide a roadmap for plaintiffs and others wishing to attack the company. A number of U.S. states have introduced privilege provisions to address this concern.

Since 2005, a working group of the Canadian Council of Insurance Regulators (CCIR) has been looking at this issue. After consulting with a number of groups, the group issued its final report earlier this year.

The report recommends that privilege be extended to self-assessments and proposes a form of wording that can be included in legislation to achieve this. A copy of the proposed privilege model is available on request.

One Canadian provincial jurisdiction has already taken steps towards this end and others hopefully will do so in the near future.

Until privilege is extended, compliance officers overseeing such systems need to be careful and vigilant to ensure that any privileges available in law are maintained and are not inadvertently lost.