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In late February, the Québec insurance industry
regulator, the Autorité des marches financiers (AMF),
released a consultation paper concerning the online distribution of
insurance products in Quebec. As
we discussed in an Insurance Law Update earlier this year, a
committee of the Canadian Council of Insurance Regulators (CCIR)
also released a paper on the same subject a few months ago. The
CCIR committee was chaired by the AMF, and while similar issues are
considered in both publications, the AMF's consultation is
intended to take into account the particular features of
Quebec's regulatory landscape.
Much like the CCIR paper, the AMF's review found four main
activities currently being carried out by insurance providers
online, namely: (i) communicating information to consumers; (ii)
offering a quote, (which for most providers, represents the end of
the online distribution process); (iii) concluding the insurance
contract online; and (iv) providing advice. The AMF paper also
considers the advantages and risks for consumers of distributing
insurance products online. The risks identified include concerns
with respect to: (i) the information imbalance between consumers
and insurers; (ii) the fallibility of computer systems; and (iii)
information security and fraud.
According to the AMF, the current legislative framework permits
only the dissemination of insurance information online, and does
not allow for actual online transactions. The AMF came to this
conclusion after considering Quebec's regulatory regime,
notably the Civil Code of Québec (including the provisions
relating to the exchange of consents and formation of insurance
contracts), An Act to establish a legal framework for
information technology and An Act respecting the distribution of
financial products and services.
The paper proposes that Québec regulations be adapted to
allow for the development of online insurance offerings.
Specifically, the proposals would require that: (i) certain
information be present on a provider's website, including a
statement of AMF registration and information on filing a consumer
complaint; (ii) stakeholders have input in determining the role of
certified representatives in online insurance offerings; (iii)
certain information, including main product features, coverage, and
product exclusions and limitations, be brought to the
consumer's attention before the completion of the application;
(iv) providers ensure that consumers have read each individual item
of essential information (although the steps that would have to be
taken to satisfy this requirement are not provided); (v) the
information provided to consumers before they complete an
application be written in clear and simple language; (vi) providers
provide consumers with a summary of the information used to prepare
the quote and the essential information concerning the relevant
product before the contract is entered into; and (vii) all online
applications be followed with the contract documents sent to the
consumer on a durable medium via the internet or mail, at the
consumer's choice.
Where insurance is distributed other than through a representative,
the AMF's proposals would require a distributor's website
to contain relevant disclosure and information, as well as the
distribution guide. Distributors would also have to ensure that
consumers have read the distribution guide before purchasing
insurance products.
The AMF paper further considers issues surrounding social media and
online advertising. Specifically, providers would be prohibited
from placing advertising on websites where consumers complete
online insurance applications. Insurers and firms would also be
encouraged to adopt social media policies and procedures to be able
to monitor posted content and to ensure regulatory compliance.
Meanwhile, the AMF is also seeking specific stakeholder views on
the suitability of the existing regulatory framework to comparison
shopping websites.
Ultimately, the AMF intends its proposals to ensure compliance with
the current regulatory framework while mitigating the identified
risks. According to the AMF, its proposals would assist consumers
in making informed decisions while also being able to obtain advice
as required. Comments on the consultation paper are being accepted
until May 24, 2012, preferably by email.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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