AMF pours cold water on peer-to-peer risk sharingBy Andrew Rickard | April 22 2016 11:34AM
Quebec's financial services regulator, the Autorité des marchés financiers (AMF), has issued a statement warning people to be cautious about using peer-to-peer risk sharing platforms.
While the AMF says it is in favour of new financial technologies it also wants to remind consumers that offering insurance products or services, whether it be done online or in person, is a regulated activity.
Similar to insurance products
"Some platforms, which are gradually available in Quebec via the Internet or phone apps, allow participants to share certain risks related in particular to health, travel, events, cars, homes and job loss," reads the statement. "Based on information currently available, the AMF is of the opinion that products or services offered in this way are similar to insurance products. The AMF has yet to decide on the compliance of these products or services and the companies offering them. In the interim, it is asking consumers to be careful."
Consumers could be exposed to losses
The AMF goes on to warn that consumers who participate in pooled risk sharing programs could be exposed to losses if the pool has insufficient funds to pay claims. What's more, if a risk-sharing plan were to become insolvent, the AMF says losses would not be covered since only those who have purchased products through an AMF-licensed insurer are eligible for compensation.
"Before making a transaction via a peer-to-peer risk sharing platform, make sure that you check first with the AMF to ensure that the person or company you plan to deal with is licensed by the AMF," says the regulator.