Both managing general agents (MGAs) and Quebec’s life insurance self-regulatory organization, the Chambre de la Sécurité financière (CSF), are concerned about guidelines that would allow life insurance to be sold over the Internet without the involvement of a licensed agent.On April 2, the provincial financial services regulator, the Autorité des marchés financiers (AMF), released its proposed guidelines for selling insurance over the Internet in Quebec. Provided certain conditions are met, consumers will be able to bypass licensed advisors when they buy coverage online.
Neither MGAs nor the CSF are satisfied with the new rules. In interviews with The Insurance and Investment Journal, Michel Kirouac, vice-president and general manager of Groupe Cloutier, and Marie Elaine Farley, acting CEO of the Chambre, outlined some of their concerns.
Kirouac suggests that allowing insurance to be sold without an advisor diminishes the importance of the profession. Furthermore, he believes the new guidelines will create an imbalance between the obligations of the traditional representative, who meets with clients in person, and those who work over the internet. Editor’s note: During the interview, Kirouac underlined that he was speaking on behalf of his managing general agency. He is also a board member of MGA association CAILBA. The Insurance and Investment Journal requested an interview with CAILBA. The association preferred that Kirouac comment on this subject.
“When an advisor meets with a client face to face, he is under several obligations laid out in Quebec regulation,” explains Kirouac. An advisor must conduct a financial needs analysis, and is also obliged to follow certain guidelines that govern disclosure and policy replacement.
Under the AMF’s guidelines, however, clients must only be provided with self-assessment tools, made aware of the importance of obtaining advice, and be told that they can have access to an agent should they need one. “If I’m Michel Kirouac behind a website, I can sell without incurring the obligations outlined under the law,” he says. “I believe that the AMF has opened the door too wide.”
As for Marie Elaine Farley, she finds it difficult to imagine how insurers will provide adequate self-assessment tools for insurance products. If consumers do not understand some of the more complex elements contained in contracts, such as clauses governing pre-existing conditions, they could end up believing they have coverage to which they are not actually entitled. On the other hand, if insurers limit their online offering to basic commodity products, then she says consumers lose out because they will not be able to obtain adequate coverage.
“We are not against technological advances in insurance distribution, but the importance of advice must be kept in mind,” comments Farley. “Only a licensed representative can provide the expert advice that ensures people’s financial security.” She says it is now up to the Quebec government to take the lead and initiate a good discussion with all the stakeholders.