In the wake of a month marked by four natural catastrophes resulting in over 228,000 claims, Canada’s property and casualty (P&C) insurance industry is making an urgent call for reform in the licensing of insurance adjusters. The industry’s reliance on a fragmented approach to licensing is proving increasingly inadequate, particularly in times of crisis when swift mobilization of adjusters is crucial. An open letter from a coalition of leading insurance associations, including the Insurance Bureau of Canada and the Canadian Association of Mutual Insurance Companies, underscores the need for a more efficient licensing process.
The Necessity of Licensing Reciprocity
Current Licensing Challenges
The coalition’s letter emphasizes that the current convoluted licensing process significantly delays the movement of adjusters between provinces, hampering rapid deployment during natural disasters. Instances like Tropical Storm Beryl have shown that temporary regulatory measures are not sufficient to address the underlying inefficiencies. For example, Ontario’s Financial Services Regulatory Authority (FSRA) enacted short-term measures allowing out-of-province adjusters to manage claims, but these solutions are temporary and involve cumbersome application processes. Such limitations mean that during past disasters, insurers were forced to depend on U.S. adjusters to meet the demand, highlighting the inefficiencies of the existing system.
Labor shortages in both the P&C and restoration contracting industries have made the situation even more pressing. Adjusters need to move swiftly between provinces to respond effectively to a surge in claims following a natural catastrophe. The current licensing process, however, acts as a bottleneck, slowing down response times. This inefficiency is not just a matter of regulatory inconvenience but has real-world impacts, delaying claims processing and prolonging the recovery period for disaster victims. Hence, the insurance industry is strongly advocating for a licensing reciprocity regime, which would allow adjusters licensed in one province to operate nationwide, thereby facilitating quicker and more effective disaster response.
Temporary Measures: Helpful but Inadequate
While temporary regulatory measures enacted by entities like Ontario’s FSRA following natural disasters offer some relief, they are not a long-term solution. The short duration and intricate application processes involved in these temporary measures restrict their effectiveness. For instance, following Tropical Storm Beryl, the FSRA allowed out-of-province adjusters and affiliated insurer employees to handle claims. However, these measures were limited in scope and duration, making them merely a stopgap solution rather than a permanent fix. This approach is seen as helpful but inadequate for addressing the core issues of mobility and efficiency in disaster response.
To illustrate, the temporary measures often come with an expiration date, forcing insurers to spend additional resources on reapplying for permissions or managing a new set of out-of-province adjusters each time a catastrophe strikes. This not only drains financial resources but also prolongs the disruption faced by affected policyholders. The cumbersome nature of these processes means that valuable time is lost in administrative tasks, time that could otherwise be spent on actual claims management and customer support. The insurance industry, therefore, continues to press for more permanent reforms that can offer a sustained solution to the current limitations.
Past Efforts and Future Proposals
Previous Initiatives
The call for licensing reforms is not new. Past initiatives, such as the Atlantic Superintendents of Insurance’s 2017 effort to establish common licensing protocols in the Atlantic region, serve as precedents for harmonized licensing. Despite these regional efforts, a comprehensive national solution has yet to be realized. The Canadian Independent Adjusters’ Association (CIAA) also proposed a national emergency licensing protocol in 2018. This initiative aimed to implement both a short-term emergency licensing framework and a long-term national licensing qualification. Unfortunately, this proposal remains pending consideration by the regulatory bodies, underscoring the slow pace of reform in this crucial area.
These earlier efforts highlight that there is a recognized need for streamlined licensing processes, but achieving consensus and implementation across all provinces has proven challenging. The Atlantic initiative showed promise by setting a collaborative example that could potentially be scaled to a national level. Nonetheless, the lack of subsequent nationwide adoption reveals a gap in regulatory coordination and willingness to embrace change. As natural catastrophes become more frequent and severe, this gap becomes increasingly problematic.
The Push for a Unified Licensing Approach
Following a month plagued by four major natural disasters that have led to over 228,000 insurance claims, Canada’s property and casualty (P&C) insurance sector is urgently calling for reform in the licensing of insurance adjusters. The traditional, fragmented licensing system is falling short, especially during crises when the rapid deployment of adjusters is vital. In response, a group of top insurance associations, including the Insurance Bureau of Canada and the Canadian Association of Mutual Insurance Companies, has issued an open letter. This letter highlights the pressing need for a more streamlined and efficient licensing process. The existing system’s inefficiencies become glaringly obvious during emergencies, making the quick mobilization of adjusters difficult. Without timely and effective adjustment, the repercussions for policyholders can be severe, leading to delays in claims settlements and extended recovery periods. Hence, the industry’s leaders are united in advocating for a reform that would ensure a more cohesive and effective approach, ultimately benefiting all stakeholders involved.
