Driven by the regulatory trend of addressing market conduct risks, the Canadian Life and Health Insurance Association’s (CLHIA) Guideline G19, Compensation Disclosure in Group Benefits and Group Retirement Services, will come into effect on July 1, 2018 for new business, and Jan. 1, 2020 for renewals.
Under G19, insurers will disclose to plan sponsors, in a distinct written report, any form of direct, indirect or in-kind compensation that they have paid or provided to intermediaries. This CLHIA guideline will apply to insurers’ group retirement services and group benefits business, regardless of the form of distribution or compensation paid. This disclosure must be made at least annually. For new contracts, it must be made on or before the effective date of the contract.
The guideline reflects the fact that plan sponsors’ expectations are changing with respect to compensation disclosure, explained the CLHIA in a message to industry stakeholders, which invited advisors to a series of G19 information sessions across Canada, from Jan. 31 to Feb. 14. "The guideline will strengthen the industry’s practices around compensation disclosure and will contribute to a customer-focused distribution system," the CLHIA stated.
The CLHIA says the new guideline is also a response to the fact that regulators increasingly expect insurers to proactively identify and address market conduct risks, rather than waiting for regulation to show way.
No force of law
CLHIA guidelines do not have the force of law, but are intended to prescribe an acceptable approach to various aspects of the life and health insurance business, specified the association. Guidelines are approved after extensive consultation with CLHIA members, as well as notification of the industry's regulators. “All CLHIA members are expected to conform to Guidelines,” says the statement.