The Alberta Insurance Council has been served notice it will lose its independent authority in 2003. The Alberta Finance Ministry will no longer allow the Council to elect a Chair, but will have the government appoint one.

“We wanted to bring this council in line with the procedures and policies we use for all our other agencies. They are all done that way. This one was a bit of an anomaly and we wanted to bring it in-line with what we are doing with our other boards and commissions,” says Jerry Bellikka, Director of Communications for the Ministry.

The Alberta Insurance Council (AIC) has had an elected Chair since 1996. It is concerned the move will prevent it from acting in the best interest of the Alberta public. AIC Chair Lois Yanke sent a protest notice to that effect in December to all members of the Legislative Assembly of Alberta.

Mr. Bellikka contends the move will have little real impact. “This is just a simple housekeeping thing,” he says. “In no way do we feel it is going to infringe on the council’s independence or ability to do its job. Perhaps people are making too much of this.”

That may be, but the selected individual will now be a public member rather than an industry member, pointed out Joanne Abram, General Manager for the AIC and Chair of the LLQP development committee.

Further, funding for the Council may also be modified. “The Insurance Councils are not funded by the government,” says Ms. Abram. “There are no taxpayer dollars that go into our operations. The Council is funded entirely by its stakeholders – the agents, adjusters, and brokers that we regulate. We feel that in order to maintain the credibility and independence of the Council it is very important that they have one of their industry members as Chair.”

The AIC until now has been composed of two appointed public members and one appointed member from each of three sector-specific councils. The latter are the Life Insurance Council, the General Insurance Council, and the Insurance Adjusters Council.

The AIC has not been told when the change will be effected, or why, though it has been advised the move will be made between January and June and sooner than later.

Ray Wold, Chair of the AIC until September 2002, questions the motive for the change. “Any of us who have looked at good business practice are asking that question. Why would they do something that puts the insurance business a decade or more behind where it is?”

Mr. Wold wonders if it isn’t the result of poor information being given to the ministry. “I think the Minister certainly is not being informed properly. She has a major mandate and I think she is depending on people who are just not competent.”

Besides the notice to the legislative assembly, the AIC has sought and obtained, “the full support of the stakeholders – the people that we regulate. All five of the CAIFA chapters in the province have come to the support of the AIC, and that information is being presented to the government as well,” says Ms. Abram.

The Independent Financial Brokers of Canada (IFBC) has also lent its support to the AIC. David Barber, President for the group, says he fears having an appointed Chair will change the direction of the AIC towards less autonomy.

CLHIA disapproval

Rumors in the industry say that the Alberta government’s decision to have an appointed Chair was motivated by pressure coming from the Canadian Life and Health Insurance Association (CLHIA) who opposed the new Life Licensing Qualification Program (LLQP) program, implemented January 1.

As an association of insurance companies, CLHIA feared the LLQP would raise the bar too high. In turn, fewer candidates would pass the exam and would be unable to enter the life insurance sector. Companies would not be able to find enough candidates to fill up their ranks. CLHIA refuses to comment on this issue.

Nonetheless, evidence of CLHIA disapproval was linked back to when the Alberta government drew up legislation to bring the LLQP in, but later decided not to carry through with it.

That raised a few eyebrows, since Alberta was one of the original instigators for the LLQP project, along with Ontario and British Colombia. The AIC was unaware of the modification of the LLQP regulation, says Ms. Abram.

LLQP will go on

David Barber says the LLQP can go through even in a non-legislated form.

Ms. Abram specifies the life council has declared the LLQP as acceptable, but is unable to bring in the restricted and transitional programs wanted by the industry without regulatory changes.

“All we can do is bring in the full program,” she says. “We will still be seeking regulatory changes to bring in the transitional programs that we agreed to along with the industry.” Since January 1, the previous exams are no longer accepted. Only the full LLQP will be accepted, and the transitional program that had actually been in place as an option since June 2002 will now not be.

Lowered grades

Further rumored evidence of the CLHIA’s influence on the LLQP was that the passing grade has been temporarily lowered.

In a CLHIA December notice, the association asked that the required passing grade be lowered from 60% to 50% for the first three months of implementation and that an educational consultant perform a review of the program during that time, reveals Mr. Barber.Both requests were accepted. An educational consultant has been engaged to analyze the program and its exam during that time to ensure the project mandate is met.

Asked for confirmation that the CLHIA had requested a lower passing grade, Leslie Byrnes, Vice-President of Distribution for the CLHIA says, “It has been a very complex issue. At this point the industry is onside with moving forward cautiously.” She adds, “the regulators agreed to an approach moving forward and we supported that.” She then invited further queries be directed to the regulators.

Ray Wold, the former Chair of the AIC, is puzzled why the CLHIA would have reservations, but confirms it did. He feels that as an association of insurance companies the group should be very supportive of the LLQP, especially since many insurers have dismantled their training departments and need a replacement to fill the gap.

Mr. Wold claims the CLHIA wrote a request asking that a guaranteed 60% to 65% of exam writers pass. The actual percentage of candidates passing was between 40% to 46%. The lower required passing grade was just another concession, he says.

Another AIC concern was the fact that, though Ms. Abram chaired the LLQP development committee, “when it came time to be represented on the implementation committee, really the final step, the Alberta government declined to be involved. That was our first indication that we had some problems in moving forward,” says Mr. Wold.

Besides the CLHIA hesitation towards the LLQP, the Canadian Association of Financial Institutes in Insurance (CAFII) and insurer Primerica Life have remained vocal in their objections.

In New Brunswick, the LLQP is still not fully set-up. The province is taking extra time creating a French version, in keeping with its Official Languages Act.