In May 2011, the Insurance Council of Manitoba (“ICM”) issued a Proposed Regulatory Framework (“Framework”) on the regulation of the incidental sale of insurance (“ISI”). The complete text of the Framework may be accessed by CLICKING HERE.
Under the Framework, the ICM would issue restricted insurance agent licenses similar to those issued in Alberta and Saskatchewan (“Restricted Licences”). The Restricted Licences would enable licensees to sell ISI products.
The following organizations may be eligible for Restricted Licenses under the Framework:
- a deposit taking institution;
- a financing corporation;
- a mortgage broker;
- an operator of any of the following:
- a travel agency,
- an automobile dealership, a marine dealership, a recreational vehicle dealership, a farm implement dealership or a construction equipment dealership,
- a customs brokerage, or
- a freight forwarding business;
- a transportation company;
- a funeral services business;
- a real estate agency;
- a car and truck rental agency or business; and
- other enterprises or businesses upon approval of Manitoba’s Superintendent of Insurance (“Superintendent”).
The classes or types of insurance for which a Restricted License may be issued under the Framework include:
- creditor’s disability;
- creditor’s life;
- creditor’s loss of employment;
- creditor’s vehicle inventory;
- export credit;
- personal life (restricted basis);
- travel; and
- other classes or types that, in the opinion of the Superintendent, are similar to or contain significant features of any of the classes or types of insurance noted above.
The ICM will require persons applying for a Restricted Licence to:
- Obtain a written recommendation from an insurer licensed in Manitoba.
- Provide evidence that the business is registered with the Companies Office of the Government of Manitoba, unless it is exempt from this registration requirement.
- Designate an employee to be responsible for receiving notices and other documents.
- Implement certain policies and procedures that ensure employees who solicit or negotiate the ISI products are knowledgeable and competent with respect to the product and ensure compliance with such policies.
- Maintain and keep adequate records of all persons authorized by the Restricted Licence to act in the transaction of an ISI product.
- Provide evidence of a valid policy of errors and omissions insurance.
- Abide by disclosure obligations involving the provision of information to a consumer (including terms of commencement and termination of coverage) and how to make a claim.
Also, a Restricted Licensee must not:
- Participate in the transaction of insurance products other than the product authorized on the Restricted License.
- Allow an employee to participate in the transaction of an insurance product unless the seller is on record as authorized to sell the product and has been sufficiently trained to ensure knowledgeable advice is provided to the consumer.
- Allow an employee to inform the consumer that the consumer is required to purchase the insurance product.
- Allow any seller to advise the consumer that an insurance product must be purchased from the organization or through an insurer specified by the organization.
This Framework is comparable to the current regulatory framework in place in Alberta and Saskatchewan.
The ICM expects extended warranties to fall within the Framework, although it is not expressly mentioned at this time.
A timeline for the Framework’s implementation has not been determined. However, stakeholders should anticipate implementation as early as Fall 2011.