CLHIA applauds Nova Scotia’s move to ban life settlementsBy The IJ Staff | March 13 2020 01:10PM
The Canadian Life and Health Insurance Association (CLHIA) is applauding the Government of Nova Scotia for passing Bill 128, which amends the Insurance Act to prohibit life settlements.
In a statement issued March 12, the association, which represents insurance companies, said insurers have been urging governments to take steps to protect policy holders from exploitation. Life settlements, which the CLHIA calls “life insurance trafficking”, results in vulnerable persons, “very often seniors losing the full value of their insurance policies to unregulated third parties who offer cash payments at rates below the face value of the policy,” says the association.
Stephen Frank, CLHIA’s President and CEO, said, “Nova Scotia's legislation will protect vulnerable consumers while ensuring that life insurance continues to fulfil its purpose of providing financial protection to individuals and their loved ones…Our industry has been vocal in our concerns that life settlements pose a very real and significant risk for fraud and abuses of consumers.”
With the government’s bill receiving Royal Assent this week, Nova Scotia became the eighth Canadian province to prohibit life settlements.
Clarification of premium for life insurance definition
The CLHIA also noted that Nova Scotia’s Insurance Act amendments also clarify the definition of premium for life insurance, which reinforces the separation of insurance and banking in Canada. It is the second jurisdiction after New Brunswick to clarify the definition of premiums for life insurance, says the association, adding that Alberta has also introduced legislation.
“It’s becoming increasingly clear that legislators across the country are committed to protecting Canada’s longstanding public policy, which differentiates insurance contracts from deposit-taking accounts,” said Frank. “We will continue to work jointly with all remaining provinces to help them clarify their rules where necessary to enshrine this important principle.”