In 2013, the Quebec financial markets regulator, the Autorité des marchés financiers (AMF), expects to issue guidelines on the distribution of insurance over the Internet. However, the provincial regulator says it will wait to see the guidelines issued by the Canadian Council of Insurance Regulators (CCIR) before making a final commitment.
The AMF says that its approach in this area is consistent with that of the CCIR. In an interview, AMF spokesperson Sylvain Théberge said that the regulator is focusing on the work that the CCIR is currently doing on the issue. The CCIR is expected to publish a consultation paper in the first quarter of 2013. Mr. Théberge says that the AMF’s work will continue alongside the national regulator, and that it will make its guidelines available at some point in 2013.
The AMF and the CCIR electronic commerce committee launched a joint consultation on insurance distribution via the Internet, which took place between February and June. Several organizations submitted briefs to the two regulators, including amongst others the Canadian Life and Health Insurance Association (CLHIA), the Insurance Bureau of Canada (IBC), Advocis – The Financial Advisors Association of Canada, and the Canadian Association of Direct Relationship Insurers (CADRI). In Quebec, the two self regulatory organizations (SROs) governing life and general insurance brokers as well as the Regroupement des cabinets de courtage d’assurance du Québec (a coalition of Quebec P&C insurance brokerages) submitted memorandums to just the AMF.
The regulators will have to watch their step in this area, where viewpoints differ depending on where stakeholders are located in the supply chain. Carriers are generally in favor of a less restrictive regulatory framework while the distribution network has some reservations.
In its submission, Advocis warned regulators that consumers who buy insurance online do not have “access to appropriate, specific and suitable information from an individual who has a duty to act in the consumer‘s interests.” The association argues that guidelines should require the involvement of a licensed advisor at some point in the sales process.
As for the RCCAQ, it believes that the consumer will be more confident if they can do business on the Internet with certified representatives and distributors. “Insurance products are complex and the consumer must be protected, sometimes from himself,” commented the RCCAQ in its submission. In the same vein, the Chambre de l’assurance de dommages (the Quebec P&C SRO) and the Chambre de la Sécurité financière (the Quebec life insurance SRO) recommend a hybrid model where the certified representative plays a role.
As for the Insurance Bureau of Canada, it believes that the AMF should adapt the current regulations rather than create a new distribution model. Direct insurers under the CADRI banner are in favor of more consumer choice. In their members’ opinions, the regulations should focus on quality of the product, regardless of the method of distribution chosen by the consumer.
CLHIA concluded in its brief that electronic distribution is no more risky than any other for the consumer. In CLHIA’s opinion, the current regulatory framework and guidelines are adequate, and they meet the industry’s objectives of consumer protection and risk mitigation. The association also believes that access to an advisor is already common practice in this mode of distribution.
The AMF seems to be leaning in this direction. During the consultation, AMF CEO Mario Albert, already recommended flexible guidelines. The regulator would rather adapt its existing regulations to allow online insurance offerings to grow, while at the same time ensuring the protection of the public. “We have not yet determined the nature and extent of changes that could eventually be made to the current framework,” said Mr. Théberge.