Online Distribution Of Insurance: A New Framework For Québec

Article by Catherine Jenner, Stuart Carruthers, Fabian Firas Bargout and Andrew S. Cunningham

On June 13, 2019, the main provisions of the new Québec Insurers Act and amendments to the Act respecting the distribution of financial products and services (“Financial Products Act”) came into force. Among other things, these provisions set out the regulatory requirements for insurers and insurance intermediaries selling insurance online in Québec (online insurance has been sold in Québec for many years, but without formal regulation).1

The finalized Regulation respecting Alternative Distribution Methods (“Online Insurance Regulation”) sets out details of the new obligations on insurers and insurance intermediaries. The draft regulation (“Draft Regulation”) that was published in 2018 has undergone a number of changes in response to industry comments.

Insurers and insurance intermediaries have until June 2020 to comply with certain of their new obligations as set out below.

Framework for the Sale of Online Insurance

The Online Insurance Regulation regulates:

  • online offers of insurance by intermediaries and insurers registered as a firm under the Financial Products Act (intermediaries and such registered insurers, collectively, “Firms”) without the intermediary of a natural person; and
  • offers of insurance through a distributor.

The finalized regulation (taken together with the AMF’s commentary on it) excludes non-transactional websites, such as most websites that facilitate comparison shopping, unless, in consideration of a commission or any other remuneration, such websites redirect users to a Firm’s website to conclude an insurance policy. [s. 2; Financial Products Act, s. 71, para. 3] This exception was absent from the Draft Regulation.

Disclosures to the AMF

Initially, Firms must disclose certain information about their website and the products offered on it to Québec’s insurance regulator, the Autorité des marchés financiers (“AMF”). [s. 4] Firms are also required to make annual disclosures with respect to the:

  • Amount of premium written;
  • Number of policies issued;
  • Number of financial plans prepared;
  • Number of claims settled; and
  • How often clients cancelled their policies within the 10-day period provided for by s. 64 of the Insurers Act. [s. 5]

Disclosures to clients

The final Online Insurance Regulation makes several changes to a Firm’s disclosure obligations, including:

  • Firms are required to ensure that the means to interact with one of its representatives (e.g., a chatbox) is visible at all times [s. 8, para. 1]; and
  • Firms are required to inform the client about his/her right of rescission or cancellation and the procedures for exercising it after the conclusion of the contract, not before. [s. 12, paras 1(3), 2]

Website

The Online Insurance Regulation also contains provisions relating to the design, operation and monitoring of Firms’ websites. The Regulation makes the following notable changes:

  • The scope of a Firm’s confidentiality and security obligations is broadened with respect to the storage of clients’ information as well as its collection, use, and delivery; [s. 13, para. 3]
  • Firms are required to interrupt offers of insurance of persons that are likely replacing other contracts where the replacement cannot proceed through the website in accordance with s. 22 of the Regulation respecting the pursuit of activities as a representative; and [s. 14, para. 2]
  • Firms are required to suspend proposals for insurance of persons where no representative can immediately interact with a client who has asked to interact with a representative and where there is a risk that the client, despite the information that the Firm sent to him or her, is unable to make an informed decision. [s. 14, para. 3]

Related advertising permitted

In a significant change from the Draft Regulation, the finalized Online Insurance Regulation does not prohibit advertising when the client is in the process of completing his application, unless it is “unrelated to the product or service”. While the AMF had previously argued for an outright prohibition, the government appears to have accepted industry submissions that related advertising could provide valuable information to a customer. [s. 18(1)]

Offers Through a Distributor

With respect to the distribution method of offering insurance, the Online Insurance Regulation modifies the obligations of both insurers and distributors.

Medical/lifestyle information

With respect to the collection by distributors of a client’s medical or lifestyle-related personal information, the finalized Online Insurance Regulation requires the distributor to deliver a notice of specific consent to the client, but only if the distributor wishes to use the information for purposes other than those for which it was collected. [s. 25] The Draft Regulation included a broader notice requirement.

Disclosure to the AMF

Insurers must disclose to the AMF information that is similar to what must be disclosed in the case of online insurance (see above):

  • Amount of premium written;
  • Number of insurance policies and certificates issued;
  • Number of claims and amount of indemnities paid;
  • Number of rescissions and cancellations; and
  • Remuneration paid to distributors and third parties. [s. 21]

If an insurer removes a distributor from its distributors’ list, it must inform the AMF of the reason. [s. 20, para. 3] One other change from the Draft Regulation is that insurers will be given 30 days to disclose any changes in their initial disclosure. [s. 20, para. 2]

Disclosure to clients

The Online Insurance Regulation requires insurers to require distributors to deliver a product summary at the time they offer the product to clients, together with a fact sheet in a form prescribed by the Online Insurance Regulation. The fact sheet is a document prepared by the AMF that lists relevant consumer rights, whereas the summary is a concise document that is prepared by the insurer to explain its product, both broadly and through such specific information as the product coverage, exclusions, and limitations. [ss. 22, 28–29, Sched. 2] A summary and a specimen of an insurance product policy should be available on the insurer’s website if the product is offered by distributors. [s. 32]

Monitoring

As part of insurers’ obligation to supervise and monitor their distributors’ offering of products, insurers are required to adopt and implement procedures to supervise and train distributors and their representatives [s. 33]. These procedures may be helpful because insurers are liable for any acts of distributors or their representatives in connection with underwriting an insurance policy or enrolling a participant [Insurers Act s. 65].

Prohibitions

Finally, the Online Insurance Regulation establishes several prohibitions relating to how insurers pay distributors, including a prohibition on profit-sharing and bonuses. [s. 35(2)]

Next Steps: Effective Date and Transitional Provisions

The Online Insurance Regulation came into force on June 13, 2019, with the exception of certain provisions that will not take effect until June 13, 2020. These include the requirements:

  • to make readily accessible on their websites a specimen of the policy for each offered product and any available endorsement, if applicable;
  • to adopt and implement a procedure regarding the design, use, and maintenance of their websites and regarding the management and mitigation of risks; and
  • to adopt and implement procedures to supervise and train distributors and their representatives.

In addition, until June 13, 2020, the insurer’s new obligation to deliver a summary and a fact sheet to distributors is deemed to be satisfied by delivering to clients a distribution guide that was provided to the AMF before June 13, 2019 in accordance with the requirement that existed prior to the coming into force of the new regime.

Footnotes

1. The amendments also set out rules for offering financial planning and claims adjustment services online which will not be summarized here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Source: Mondaq

Ottawa criticizes Ontario for eliminating out-of-country health insurance

TORONTO — Eliminating out-of-country health insurance could jeopardize access to necessary medical care and become a hardship for some travellers, the federal health minister warned Wednesday in a letter to her Ontario counterpart.

Ginette Petitpas Taylor said the move announced by Premier Doug Ford’s Progressive Conservative government will hurt people who travel regularly to the United States.

“If all publicly financed reimbursement of out-of-country physician and hospital services is eliminated, private health insurance premiums for travellers will inevitably rise for all Ontario residents,” Petitpas Taylor said in her letter to Ontario Health Minister Christine Elliott. “Even modest increases could pose a hardship for some individuals.”

The program currently covers out-of-country in-patient services up to $400 per day for a higher level of care, such as intensive care, as well as up to $50 per day for emergency outpatient and doctor services.

In May, Elliott announced the decision to scrap the program following a six-day public consultation, saying it is very costly and does not provide value to taxpayers.

The change is expected to come into effect Oct. 1.

A spokesperson for Elliott confirmed Wednesday that the government intends to wind down the program and strongly encourages people to purchase travel health insurance.

“The program’s coverage is very limited with only five cents of every dollar claimed,” Travis Kann said in a statement. “With this limited coverage and low reimbursement rate, OHIP-eligible Ontarians who do not purchase private travel health insurance can be left with catastrophically large bills to pay.”

Elliott has said the province spends $2.8 million to administer approximately $9 million in claim payments through the program every year.

On Wednesday, Petitpas Taylor stressed that if Ontario moves ahead with its plan, it will be the first jurisdiction in the country to provide no coverage for emergency hospital and physician services received out of country.

The minister said this would be “inconsistent” with the Canada Health Act, which stipulates that all Canadians are entitled to continuing coverage of their provincial health plans when they are temporarily absent from home.

“Ontario’s approach will mean that Ontario residents will have to cover the costs of care out of pocket, should they require medical attention while travelling,” she said.

Opposition politicians have said ending the program will hurt frequent travellers. In April, NDP health critic France Gelinas wrote Petitpas Taylor and asked her to intervene and stop Ontario from eliminating the coverage.

“I am urging you to follow through on the prime minister’s commitment … where he affirmed the federal government’s responsibility to ensure provinces follow the requirements of the Canada Health Act,” she said.

The Canadian Snowbird Association has urged the government not to make the move and said it would not only impact seniors who travel south during the winter months, but also cross-border shoppers and anyone planning a family vacation.

In her 2018 report, auditor general Bonnie Lysyk said the Ministry of Health processed an average of 88,000 out-of-country claims per year over a five-year period and paid an average of $127 per claim.

Lysyk also noted the high administrative costs of the program, but said they arise because staff must check varying physician services fee rates and process claims manually. She recommended that the government seek ways to reduce administrative costs by adopting a single reimbursement rate for all health services obtained out-of-country.

She also recommended the government bolster efforts to inform Ontarians of the limit on reimbursement rates under the program and on the need to purchase private health insurance before travelling.

 

Judge rules employees can speak to media about human rights abuses; Allstate says it might appeal ruling

Read more

Linda Regner Dykeman to lead AGCS in Canada – Allianz Global

Allianz Global Corporate & Specialty SE  (AGCS) has appointed Linda Regner Dykeman as Chief Agent of Canada. Effective immediately, Dykeman will lead AGCS’ Canadian business operations, reporting to Bill Scaldaferri, AGCS President & CEO for North America.

Based in Toronto, she succeeds Ulrich Kadow, who served as Chief Agent of Canada for more than four years before moving into a new role as AGCS Global Head of Marine, effective July 1, 2019.

Since 2016, Dykeman has been the Head of MidCorp for AGCS Canada. During this time, she developed and executed the MidCorp strategy for Canada, and has overseen a strong and growing team of underwriters and managers. She has more than 25 years of commercial insurance and leadership experience. She first joined Allianz from Travelers Canada where she served as Head of Business Insurance, and also previously held the role of Senior Vice President, Specialty Insurance and National Business Development for Aviva Canada.

A successor to Dykeman as the Head of MidCorp for AGCS Canada will be announced in due time.

“Linda’s deep understanding of the Canadian market and her proven leadership skills in the MidCorp space make her a natural successor to Ulrich and someone I greatly look forward to working closely with,” said Scaldaferri. “Canada is and remains an area of great strategic importance for AGCS both within North America and globally.”

Summer Holiday Schedule for ILSTVNews Canada’s Source For Insurance Professionals

Summer Holiday Schedule for ILSTVNews Canada’s Source For Insurance Professionals

ILSTVNews Canada’s Source For Insurance Professionals is taking this coming summer off to spend time with loved ones, family and friends. For subscribers to the ILSTV Insurance Industry Newsletter, your daily dose of Canadian Insurance News returns to your inbox on Tuesday, Sept 10th.

But not to worry we have your insurance news covered.  I know if you haven’t already you’ll want to sign up for our weekly Canadian Insurance News to stay up-to-date while you enjoy your summer.   Follow this link to sign up for our Daily and Weekly Insurance Newsletter – ilstv.com

Stay safe and have a fabulous summer, everyone!

iA Financial Group extends its instant acceptance to up to $1M in individual life insurance

QUEBEC CITY, July 15, 2019 /CNW Telbec/ – Already a leader in instant acceptance with its EVO platform, iA Financial Group continues to innovate to make underwriting its individual life insurance products easier and quicker.

iA Financial Group today announced that medical requirements, like a blood profile, vital signs or urine test, will no longer be systematically required for clients 50 and under who buy up to one million dollars in life insurance.

This simplification to the underwriting process is possible thanks to technological advances, such as the use of predictive analytics models to evaluate applications. Going forward, advisors can confirm instant acceptance for most clients after completing a simple medical questionnaire.

“Constant innovation in our underwriting processes and instant acceptance at the point of sale consolidate our long-term relationship with our advisors and is a part of our commitment to make it quicker and easier to do business with us,” confirms Valérie Lelièvre, Vice-President, Business Solutions, Distribution and Marketing. “The news announced today calls on the newest technologies to offer our clients and advisors an unrivalled underwriting experience.”

About iA Financial Group
iA Financial Group is one of the largest insurance and wealth management groups in Canada, with operations in the United States. Founded in 1892, it is one of Canada’s largest public companies and is listed on the Toronto Stock Exchange under the ticker symbols IAG (common shares) and IAF (preferred shares).

iA Financial Group is a trademark and business name of iA Financial Corporation Inc. and Industrial Alliance Insurance and Financial Services Inc.

SOURCE Industrial Alliance Insurance and Financial Services Inc.

Related Links

www.iaah.ca

Subscribe To Our Newsletter

Join our mailing list to receive the latest news and updates from ILSTV

You have Successfully Subscribed!

Pin It on Pinterest