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Online insurance sales: conditions evolving

By Andrea Lubeck | May 23 2019 09:30AM

Photo: Freepik

The broad outlines of Quebec’s Regulation respecting Alternative Distribution Methods are the same as those presented in the draft regulation published in October, but some changes have been sparked by the consultation.

The regulation, which governs the sale of insurance products online and distribution without a representative, was published on May 15 by Quebec regulator, the Autorité des marchés financiers (AMF). It results from several sections of An Act mainly to improve the regulation of the financial sector, the protection of deposits of money and the operation of financial institutions, better known as Bill 141. Adopted on June 13, 2018, the Act notably amends the Act respecting the distribution of financial products and services, the Act respecting insurance, and the Civil Code of Québec.

When the AMF published the draft regulation, it also launched a consultation on online insurance sales. Industry stakeholders responded by submitting briefs to the regulator.

An often heard request was to defer the effective date of the regulation to June 13, 2020. The AMF did not act on this suggestion.

Citing a competitiveness issue, many stakeholders also objected to the obligation to make a specimen of a policy and of riders for each product sold online available to all. This obligation has in fact remained in the regulation.

One of the most noteworthy changes since the draft regulation is that the term “platform” has been replaced by “digital space.” This change results from the comments expressed by stakeholders.

The notion of type of clientele has disappeared. Firms that sell insurance products online were initially required to indicate the type of clientele that the digital space targets. Some stakeholders argued that presenting this information was not relevant.

New features

The AMF added the obligation for a firm to suspend online sales activities when no representatives are available to interact immediately with a client who so requests. Firms must also interrupt the sale when a life and health insurance contract is likely to replace another contract and the firm cannot proceed with the replacement through its digital space.

In addition, the regulation sets no limit on products, as several stakeholders requested. This means it will be possible to buy both P&C and life and health insurance products online.

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