Quebec insurance brokers could be the test case for whether Canada’s provincial governments will require licensed brokers to be part of Internet insurance sales.
The province’s finance minister and regulator have each told brokers recently that new regulations on Internet insurance sales should be out sometime in 2013. Since then, the province’s brokers have heard nothing about the proposed new distribution law [Bill 188], and they are worried that brokers might get cut out of the loop in online insurance sales.
“The principle reason that we’re worried about it is that right now, in Bill 188, a consumer has to talk to a certified representative before he can purchase insurance, whether it be an agent or broker,” said Catherine Mainguy, outgoing president of the Regroupement des cabinets de courtage d’assurance (RCCAQ), the province’s broker association. “Our biggest concern is that if we get Internet distribution, we don’t know if the person is talking [or will be required to talk] to a certified representative.”
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Mainguy said the “fear” is well-grounded. The province’s insurance regulator, the Autorité des marchés financiers (AMF), held public consultations on Internet insurance sales in May 2012. Eighteen submissions were posted online; several disagree about whether a licensed insurance broker or agent should be consulted during an online insurance purchase.
The AMF did not tip its hand on which way it might go during a national insurance conference last year.
“On the Web, there is substantial information asymmetry between the consumer, who often knows little about insurance, and the insurer, who is a specialist in the subject,” AMF president and CEO Mario Albert said at the National Insurance Conference of Canada. “In conventional distribution channels, the intervention of a licenced representative narrows this information gap…
“With insurance distribution through the Internet, we need to ask ourselves if the role of the licensed representative needs to be maintained, rethought, or simply ignored.”
Albert noted two competing options under consideration:
• Insurers must have a certified representative available at all times in the event that a consumer wishes to ask specific questions during an online sale. (In this option, the consumer wouldn’t necessarily have to talk to a broker.)
• Each individual Internet application for insurance must be reviewed by a certified representative, such as a broker.
“Currently, there is clearly no consensus on a preferred approach,” Albert said.
Mainguy said brokers have no idea how the government might choose to proceed, but “we’re keeping an eye on it.”
The Canadian Council of Insurance Regulators (CCIR), an association of federal and provincial insurance regulators, says the number of Internet orders for goods and services in Canada increased by 35% between 2007 and 2009. The value of the orders increased 15%.
“More than three quarters of Canadians aged 16 years or more, i.e. 21.7 million people, used the Internet for personal ends during the year 2009,” the CCIR says. “Of those, 39% acquired a good or service by placing an order online. During that same year, the 95 million online orders carried out represented a value of approximately $15 billion.”
