Some in the insurance industry were disappointed that Quebec’s Ministry of Finance simply cut and pasted the regulators’ positions into its Report on the Application of the Act respecting the distribution of financial products and services. There was even greater disappointment that there was almost no mention of the valuable role that advice plays in the sale of insurance.
Not many people seem to have noticed, but to illustrate the cover of its report on the application of the Act, the Quebec government used a picture of a woman in front of her laptop holding a credit card in her hand. Is this the government’s vision for online life insurance sales? No one can say for certain at the moment, but people in the industry were expecting something more.
Marie Elaine Farley, CEO of the Chambre de la sécurité financière (Quebec’s life insurance agents’ self regulatory organization), laments that the report lacks concrete measures to promote the role of advice. “It adds value in terms of consumer protection. Several studies have also shown that advice adds value to investors’ portfolios,” she said in an interview with The Insurance and Investment Journal.
When it comes to online sales, the Chambre maintains that advice should play a fundamental role. “Financial products must be understood properly. We take the same kind of position with regard to distribution without a representative. We will reassert our arguments,” she comments.
At Quebec’s general insurance SRO, the Chambre de l’assurance de dommages, there are some who wonder why the Ministry did not go further and point out that, in its current form, the law itself is silent on the matter. “Online distribution is presented as a distribution method, not as a means of communication. What’s more, people are reacting to Internet distribution, but we do not find a word on the subject of telematics,” said CEO Maya Raic in an interview with The Insurance and Investment Journal.
Lack of knowledge
She also notes that the report does not highlight that the online world is where new players could enter the market. “I was surprised that there is not a word about future trends in the industry. This is not a very accurate view of general insurance. It shows a certain lack of knowledge about the industry,” she said.
At the Regroupement des cabinets de courtage d’assurance du Québec (RCCAQ), a provincial association of insurance brokerages, they are maintaining the position they expressed in April, namely that a licensed representative must take part in the transaction. “The importance of advice – this is our business and it is in our DNA. It is also found in our code of ethics as a means of ensuring good consumer protection,” said RCCAQ chairman Vincent Gaudreau when he spoke with The Insurance and Investment Journal.
Gaudreau adds that the RCCAQ is not against selling insurance over the Internet. “It would be useless to oppose it because it is a new communication channel that is bound to grow. However, does that justify cutting back on consumer protection by taking licensed representatives out of the picture? We do not think our request is unreasonable. Our position remains the same. All we want is for someone to keep an eye on the transaction,” he said.
Gaudreau notes that his office is already doing business online. However, a broker still goes over all of the applications that have been submitted, otherwise he says that the consumer would not be well served in many cases.
As for the association of Quebec direct property and casualty companies, the Corporation des assureurs de dommages directs du Québec (CADD), its president Michel Laurin says that, given the modernizing of the industry and consumer expectations, it is “totally in agreement” with Quebec's financial markets regulator, the AMF, on this position. He is, therefore, in favour of the government continuing along these lines.
with files from Serge Therrien and Mathieu Carbasse