Agent-free online insurance sales given greenlight in Quebec

By Alain Thériault | April 21 2015 09:00AM

Consumers will not have to get advice from a representative before buying an insurance product on the web, says Quebec’s financial markets regulator, the Autorité des marchés financiers (AMF). It announced this decision in a report published on April 2.It took almost three years for the AMF to draw its conclusions based on 20 briefs received during its consultation on online insurance distribution. Its report presents these conclusions in the form of 11 guidelines that will serve as the basis for regulation of this distribution method.

The second guideline has the biggest impact on the industry. It permits providers (insurance distributors) to conclude transactions online. This implies that agent involvement is not needed in online insurance transactions.


All the same, providers must meet certain conditions if they wish to sell their products online without a representative, the regulator notes. Consumers must be able to contact a representative if they wish. The provider must also inform the consumer that it is important to get advice from a representative. Adequate self-assessment tools must also be offered to consumers.

Consumers who buy an insurance product without an advisor’s involvement should have the right to cancel the purchase within a certain period, the AMF recommends. In addition, consumers will enter and transmit their data themselves; no non-certified third-party is involved.

In its report, the AMF underlines that insurance representatives can ensure optimal compliance with obligations that it calls indispensable in insurance distribution via the Internet. For one, an analysis must be done to clearly identify the client’s insurance needs, and the product selected must meet the needs identified. Consumers must be given sufficient information to make a clear and informed decision. They must be able to access advice adapted to the complexity of the product and to their level of knowledge of the insurance sector.

morisset_louis_articleThe AMF does not plan to dictate to consumers what means to choose when purchasing an insurance product. The priority is that they receive appropriate advice. Consumers may choose, for their own personal reasons, not to do business with a representative, although they have been informed of the importance of doing so, the regulator writes.

“We present 11 guidelines that aim for a fair balance between orderly development of e-commerce in insurance and public protection,” says AMF CEO Louis Morisset. “It is up to the government to decide whether regulatory amendments must be made to give these guidelines full effect.”

Support for advisor involvement is far from unanimous. Nine briefs, most submitted by the distribution network and self-regulatory bodies, insist that advisors are crucial. Some fear that online sales without representatives will create two classes of insured: those who receive advice and those who do not. Others think that consumers must be protected from themselves.

In the other camp, briefs mainly written by insurers and financial institutions argue that consumers need not consult a representative if they can obtain all the advice they need to make an informed decision online.

Other guidelines

The AMF report also recommends that the provider give the consumer specific information before concluding the contract, such as the provider’s name and contact information, registration with the AMF and how to file a complaint.

The regulator will also ask for other disclosures before concluding a transaction, such as the types of consumers that the product targets and their characteristics, total premiums and expenses, and the name of the insurers with which the representative deals, if applicable.

Furthermore, the AMF recommends that the provider disclose information to consumers in steps and that it ask the consumers whether they have read and understood the information. The regulator also suggests that the information provided to consumers before, during and after the purchase of an insurance product online be written in clear and simple language.

The AMF report states that providers must offer consumers a summary of the information used in the application, along with essential product information. It must then transmit the contract documents to the consumer via the Internet or by regular mail, as the consumer wishes. The provider must ensure that clients’ personal information remains secure at all times, and that it is equipped with reliable and secure systems.

Policy on the use of social media

Sites where insurance is distributed online without a representative must contain disclosures and information required by the Act Respecting the Distribution of Financial Products and Services, and the distributor must make its distribution guide available on the site. It could thus ensure that the consumer has consulted it.

In addition, the provider’s website must not contain any ads on the pages where consumers complete an insurance application. Advertising is permitted during the needs analysis step or after the contract is concluded.

The AMF also recommends that providers adopt policies regarding social media. They must also control the content that they or their representative transmit on social media as part of their insurance offer.

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