On April 2, 2015, the Autorité des marchés financiers (AMF), the regulatory body responsible for enforcing the legislative framework applicable to the financial sector in Quebec, released a report entitled Internet Insurance Offerings in Québec: Presentation of Consultation Findings and Orientations (Report).
This Report follows a consultation held by the AMF in 2012 through which it sought comments from financial sector participants and consumers on certain proposed measures in respect of Internet insurance offerings in Quebec to adapt the requirements of the current insurance distribution regime to the realities of electronic commerce. The Report’s release also follows the publication in 2013 by the Canadian Council of Insurance Regulators (CCIR) of a position paper on similar issues entitled Electronic Commerce in Insurance Products. The CCIR’s report was generally favourable to the online sale of insurance products so long as there is access to advice when desired. Other than brokers, the recommendations of the CCIR report were generally accepted among the industry stakeholders.
The Report presents the findings of the AMF’s consultation and the resulting recommendations. The recommendations also generally take into consideration the views expressed by the CCIR in the position paper referenced above. The recommendations presented in the Report are meant to propose industry practices to follow in respect of online insurance product distribution that take into account both the current requirements of the insurance distribution regulatory regime and the need to protect the public. The recommendations of this Report have been well-received by the industry, other than brokers, particularly the recommendation allowing the sale of online insurance products without a licensed individual agent or broker (representative) being necessarily involved. It is expected that the Quebec government will take the AMF’s cue and propose amendments to the Act respecting the distribution of financial products and services and its regulations.
The AMF issued the following 11 recommendations to insurance providers selling online insurance products:
Orientation 1: To provide certain key information, including whether the insurance provider is registered with the AMF, on the insurance provider’s website at the appropriate moments during an insurance sale transaction.
Orientation 2: To allow the sale of online insurance products without the intervention of a licensed representative provided that: (1) the online service provider is able to offer the consumer the necessary tools to properly assess his needs and make an informed decision; (2) the consumer has access to a licensed representative at any step of the sales process; and (3) a cancellation right be available to the consumer for a reasonable period of time after completing the purchase of the online insurance product.
Orientation 3: To disclose certain information regarding the insurance product to the consumer, including the exclusions and limitations, in a timely manner during the online sales process and before the contract is entered into.
Orientation 4: To disclose information to the consumer using a “step-by-step” approach by regrouping information by subject matter and to confirm that the consumer has read and fully understands each individual item of essential information required to provide valid consent to the purchase of the insurance product. Note that this recommendation equally applies to the content of the distribution guide for a distributor selling online insurance products via the regime of distribution without a representative (Orientation 9).
Orientation 5: To ensure that the information made available to the consumer before, during and after the online sale of the insurance product be in clear and simple language so as not to mislead the consumer.
Orientation 6: To give the consumer a summary of the information used to prepare the insurance quote and any other essential information concerning the insurance product before the transaction is completed.
Orientation 7: To send the contract documents to the consumer when the transaction is completed in either electronic or paper form, at the consumer’s choice, as well as a paper copy upon the request of the consumer at any time thereafter.
Orientation 8: To adopt policies and procedures addressing the reliability and security of the provider’s systems and practices to ensure that the consumer’s personal information is secure at all times.
Orientation 9: For insurance products being sold online by a distributor via the regime of distribution without a representative, to make the distribution guide available on the distributor’s website via a link to the website of the insurer whose product is being offered, and to provide the disclosures and information required under the regime of distribution without a representative on the distributor’s website.
Orientation 10: To prohibit the placement of any form of advertisement on the website pages where the consumer completes an online application.
Orientation 11: To adopt social media policies and procedures to monitor the content being posted online, including content posted by the insurance provider’s representatives, and its compliance with regulations.
During the consultation process, the AMF also sought the views of stakeholders in respect of comparison shopping websites. The views expressed were unanimous: comparison websites should be the subject to the same regulatory oversight as other industry members. In the Report, the AMF takes the position that comparison shopping websites must be duly registered as insurance brokers (firms) and implies that the website operators must be registered as individual brokers (representatives).