July 22, 2024

Q: Will we be provided with this presentation?

A: Yes, we will post the video and slides later in August on the CCIR website.

Q: Can you explain the thinking around the expectation for the board or board committee to be reviewing FTC metrics vs. a senior person like the CCO who reports to the board/board committee considering the proper separation of duties between the board and senior management?

A: The board of directors must ensure that the company adheres to sound commercial practices. To that end, it must entrust certain directors it designates or a committee of such directors with the responsibility of seeing that such practices are adhered to and situations contrary to such practices are detected.

To achieve this, the best practices identified in the industry include setting FTC objectives to be achieved within the company, and indicators to monitor the achievement of such objectives. Depending on the hierarchical level, the level of granularity of reporting and monitoring of indicators varies and is adapted to the target audience. Thus, monitoring is often carried out by senior management, who report to the Board of Directors or its designated committee on the achievement of objectives, challenges encountered and remedial actions, so that it could assume their role and responsibilities. Some insurers use ratios, others use color codes (red, yellow, green) or shapes (e.g. diamond, round, square) to present information effectively and at the right level. Each company adapts it to its own reality.

For greater details and nuances on the roles and responsibilities of the Board of Directors and senior management, please refer to the applicable frameworks and applicable laws of the respective regulators.

Q: If the role of the Board and Board Committee is to remain at an "oversight" level, and not get into the operations, is there a risk that FTC reporting as described in the report could become too operational?

A: Normally, information from more operational areas is escalated to another level, and at each escalation level the information is adapted to the recipient. The Board of Directors receives the right level of information to be able to assess the company performance in terms of FTC and to identify the issues. In the examples received within the action plans of the insurers, the type of information provided to the Board of directors varied from one company to another, depending on the nature of their activities, their complexity, their size and the risk assessment carried out by the company.

It should be noted that some reviewed insurers did not have any reporting mechanism to the board or senior management in place at all in terms of FTC. The most important thing is to ensure that such a process exists and strives to (as per the report) give a holistic view of FTC and provide assurance that objectives and strategies have been achieved. The correct level of reporting will have to be determined based on a self-assessment of an organization’s business.