The Canadian Life and Health Insurance Association (CLHIA) says that it should be possible to sell all kinds of products over the Internet without involving a licensed advisor. For the association, it is only natural that this kind of distribution channel should emerge for insurance, since it builds on the regulatory work that has already been undertaken both in Canada and around the world.CLHIA welcomes the recent report published by the Quebec financial services regulator, the Autorité des marchés financiers (AMF), and its proposed guidelines for selling insurance online. The AMF’s second guideline, which recommends that it be possible to sell insurance online without involving an agent, is certainly in the spirit of the times. “We understand that this may shake things up in the field, but the importance of electronic commerce calls for an evolution that must be faced,” says Yves Millette, CLHIA’s senior vice-president for Quebec.
He insists, however, that the advisor’s role is not any less significant. “In our view, this guideline is important not because it allows for a sale without the involvement of a representative, but due to the fact that it outlines specifically all the information that the insurer must provide to the consumer in order to do it. I believe that this possibility should exist for all products,” says Millette. It seems reasonable to him that a client should be able to handle things himself if he wishes, and could eventually obtain advice from an agent if he feels the need to do so.
In his opinion, the AMF’s guideline is in accordance with international regulations. Among other things, he points to Insurance Core Principles (ICP) 18 and 19 adopted in 2011 by the International Association of Insurance Supervisors (IAIS). These principles address the fair treatment of consumers and Millette says they have served, to some extent, as the basis of the AMF’s report. “Guideline 2 is an application of the AMF’s policy on sound business practices,” says Millette. The policy, which came into force in June 2013, also deals with the fair treatment of consumers.
Millette points out that in Quebec a precedent exists for selling financial products over the Internet without involving an advisor. “The Quebec government had already accepted this position with voluntary retirement savings plans (VRSPs). Section 42 of the Act on VRSPs stipulates that they can be sold to the client without the presence of a representative,” he notes. The Act came into force in July 2014.
Despite CLHIA’s enthusiasm, the association remains unsatisfied with certain aspects of the AMF’s recommendations, including the guidelines on agent involvement. “We want to analyze its scope, to determine at which point the insurer must involve a representative during the sales process,” says Millette.
In addition, Millette wants to know if an intermediary may have his own website to sell insurance products. “The insurer remains liable. When we do not control distribution, we must make certain that the intermediary does not get us into trouble,” he concludes.
AMF’s guidelines for online sales build on work done by CCIR
The report submitted by Quebec’s financial services regulator, the Autorité des marchés financiers (AMF), on selling insurance over the internet is the logical result of work conducted by the Canadian Council of Insurance Regulators (CCIR), says the organization’s new chair.
In an interview with The Insurance and Investment Journal, CCIR chair and AMF superintendent of solvency Patrick Déry explained that the Quebec regulator’s recently proposed guidelines are consistent with policies that the CCIR outlined in 2013.
“The CCIR’s position paper on electronic commerce in insurance products gave general guidance on the correct approach for Internet sales,” says Déry. “The report [on selling insurance online] published in early April by Eric Stevenson, superintendent of client services and distribution oversight at the AMF, is consistent with the CCIR approach. It is adapted to the reality of Quebec’s Act respecting the distribution of financial products and services.” Déry also indicated that Quebec’s Minister of Finance Carlos Leitão is expected to table revisions to this Act and a report on its administration in the near future.
Every other province can decide how to adapt the CCIR policy in its own way, respecting the common guidelines laid out in the national report, explains Déry. This is in keeping with the principle of harmonization, a concept to which the CCIR is committed. Déry did not wish to make further comments about what other provinces may do, but he did point out that the CCIR’s committee on electronic commerce is always on the lookout for new products or trends that may emerge on the Internet.