FA looking at options for reform

THE FACILITY Association is planning to form a new working group by the end of March to study various residual market systems and consider reform opportunities.
FA president and ceo David Simpson told Thompson’s that the association board looked at a number of alternatives over the past year and arrived at a consensus for what it should look at more closely.
“There is not an urgent impetus for change but it is the work of the board to review the mechanism from time to time (because) we have a bit of a patchwork quilt.”
He said the various systems evolved because, while all nine of FA’s jurisdictions are largely harmonized, its five risk-sharing pools operate differently, having been created in response to market circumstances.
“We have five risk-sharing pools, Alberta (grid and non-grid), New Brunswick, Nova Scotia and Ontario, in four jurisdictions, and all are somehow different,” Mr. Simpson said.
“And when you look at all jurisdictions there is another dimension — there are risk-sharing pools in some jurisdictions and not others and parameters are different for each of them — so we are trying to look at things comprehensively.”
He said that while harmonization is one aspect the working group will look at, it might find keeping the status quo is in the industry’s best interest because industry stakeholders organize themselves to some degree around the residual market.
So the time, effort and cost it takes to make changes has to be worth it.
“That’s the reason for the working group. The board really wants industry experts to come together, roll up their sleeves and look at this,” Mr. Simpson said.
He said the size of the working group, which was announced late February at the FA annual meeting in Toronto, has yet to be determined.
It’s aiming to “have a good representation of a cross section of the industry.”
The review of residual markets is one of four priorities set out in FA’s three-year strategic plan.
Mr. Simpson outlined the other priorities at the annual meeting.
They include enhancing analysis, communication and reporting capabilities; enhancing operational efficiency and the control environment, and reviewing and strengthening FA’s enterprise risk management framework.
Mr. Simpson said that FA has investigated opportunities to use telematics and predictive modelling to “further pursue opportunities to use new technologies and analytical techniques in our depopulation efforts.”
The board also developed key messages to integrate into a communications strategy in its ERM framework and its members were surveyed for reporting requirements.
He noted that the association is also now accepting electronic signatures on new applications and endorsements and is working toward replacing its accounting software.
And it has developed a new ERM framework to detect emerging risks.
Pembridge Insurance chief operating officer Bob Tisdale, chair of FA’s board of directors, said at the annual meeting that the association is continuing to monitor availability pressures across Canada.
“While we don’t see availability pressures in the immediate term, from past history we know that they can emerge very quickly,” he said. “The board will remain vigilant, especially through our structured enterprise risk management process.”