Consumers should be made aware of the importance of advice prior to purchasing insurance online, the Canadian Council of Insurance Regulators (CCIR) has recommended in a position paper.
Consumers should also “have access to a clear, straightforward and suitable level of advice at all times,” the CCIR said in its May 2012 position paper on electronic insurance sales. Insurance regulators have been consulting with the industry on how to regulate e-commerce insurance sales since January 2012.
But exactly how this advice should be transmitted to consumers during the process of purchasing insurance online is still open to interpretation.
“I think the CCIR has captured the consumer protection piece and are making sure that consumers aren’t making decisions related to coverage that are detrimental to them,” said Randy Carroll, CEO of the Insurance Brokers Association of Ontario (IBAO). “We must make sure that professional advice is still captured within the electronic transaction. I think that is [in the CCIR position paper] very clearly.
“How that happens is a little vague. I think we will try to drill down to bring some clarity to what we think would be proper process. It’s been left for interpretation.”
Leaving it open may not be such a bad thing, Carroll adds, since this will give brokers time to consider how best to communicate the importance of the advice to consumers during the online purchasing process. The IBAO will be presenting a follow-up submission to the CCIR by July 26, 2013.
“I think that, to ensure consumer protection, a licensed individual should somehow be involved in insurance transactions,” said Bryan Yetman of First Durham Insurance & Financial. “Offering proper advice and guidance is more than just an auto reply or link to a website.
“I am not saying it has to be done in person or even by phone and would expect technology to play a role, but automating our way out of the equation could create problems for consumers.”
Peter DaSilva, president and chief operating officer of Cornerstone Insurance Brokers, said one way to ensure consumers recognize the importance of advice is to take the following four steps:
• Focus on the simplest and least complex types of insurance to provide electronically.
• Provide clear warnings and notice that advice is often needed. Consumers can get advice and answers to any questions they might have by contacting brokers through phone, email, online chat function or in person.
• Provide advice in both verbal and written form, online and offline. This includes FAQs and accessibility to brokers through extended hours – i.e. 8 a.m. to 8 p.m., and Saturdays – in order to cover off the need for direct advice for as large a group of customers as possible.
• Design "stop" questions that push a customer to advice as the transaction starts to become more complex. For example, asking questions such as “are you using the vehicle for commercial purposes?”
Overall, brokers support the CCIR’s basic conclusions about requiring access to advice.
“We see no difference between a ‘real world’ marketplace and the virtual world,” the Insurance Brokers Association of Canada (IBAC) told Insurance Business in response to the CCIR position paper. “Advice is critical in the real world, as it is in the virtual world.
“The advisory benefits and need for professional consumer-focused advice do not disappear simply because someone goes onto their computer. Consumers are still buying a complex product that protects large assets. Insurance is a very complicated product where the advice of an expert is always required.”
