On May 9, 2024, Quebec's National Assembly adopted Bill 30, An Act to amend various provisions mainly with respect to the financial sector (Act). Among other things, the Act amends several provisions of the Act respecting the distribution of financial products and services (ADFPS) and the Insurers Act. In doing so, it addresses two major areas of concern:
- A chronic shortage in Quebec of claims adjusters for resolving claims, more specifically following the occurrence of extreme weather events such as floods, ice storms and forest fires, which cause damage to several insureds
- Issues of certain practices adopted by automobile dealers concerning the sale of replacement insurance
This bulletin specifically covers these two topics.
Claims Adjusters
In Quebec, claims adjusters are the only persons authorized to act in the claims adjustment sector. To be so authorized, a claims adjuster must hold a valid certificate issued by Quebec's securities commission, the Autorité des marchés financiers (AMF), pursuant to the ADFPS, which, along with the Implementation Directive of the Autorité des marchés financiers pertaining to the definition and exclusive activities of claims adjusters (Directive), sets out the activities that are exclusive to claims adjusters. This includes investigating claims, estimating damages, and negotiating claims settlements. In addition, claims adjusters have long since been obligated under the ADFPS to act solely in their sector and, therefore, could not carry out activities in any other sector.
However, on several occasions in recent years when major weather events caused significant damage, the AMF has had to take exceptional measures to temporarily relax the rules applicable to claims adjustment and allow certain persons to carry out, under specific conditions, the activities exclusive to claims adjusters. Taken pursuant to the Directive, these exceptional measures were intended to help industry stakeholders respond to the immediate needs of disaster victims and effectively address the significant volume of claims resulting from these events.
For example, following a major ice storm, the AMF announced on April 6, 2023, that it would authorize firms that were duly registered with the AMF in the claims adjustment sector to use, for a period of 60 days and under certain conditions, the services of supernumeraries who are not certified claims adjusters for activities exclusive to claims adjusters. On June 5, 2023, the AMF extended this exemption period by another 60 days, and then again on July 31, 2023, this time to November 5, 2023, as a result of numerous weather events that had occurred in Quebec over the summer, including floods.
Given the recurrence of these "exceptional measures" taken by the AMF (which has had to resort to this "exemption" mechanism provided for in the Directive five times in the past six years), the Government of Quebec decided that a lasting legislative solution was required. It proposed and subsequently adopted amendments in Bill 30 pertaining to the claims adjustment sector. Incorporating among other things certain elements of the Directive, these amendments are intended to address the chronic shortage of claims adjusters without compromising the protection of insured persons.
Financial sector participants will likely be impacted by the following two amendments to the ADFPS:
- Since May 9, 2024, claims adjusters are no longer required to be exclusively certified in the claims adjustment sector; for example, as of that date, a certified damage insurance representative may also be certified in the claims adjustment sector and practice as a claims adjuster
- As of May 9, 2025, persons that, through electronic means, handle high-volume, low-dollar-value claims listed in the ADFPS (i.e., an automobile claim arising out of a claim provided for by the Direct Compensation Agreement or from a glass breakage, or the settlement of a claim not exceeding C$5,000) will no longer be required to hold a claims adjuster certificate, provided that they carry out their functions under the supervision of a certified claims adjuster
Distribution Without a Representative of Replacement Insurance by Automobile Dealers
The ADFPS provides for two insurance product distribution regimes in Quebec:
- A general regime under which insurance products are distributed by duly certified representatives
- An exemption regime, titled "Distribution without a representative" (DWR), pursuant to which a person (i.e., a "distributor") whose activities are in a field other than insurance may offer, as an accessory and on behalf of an insurer, an insurance product related solely to goods sold by that distributor
Automobile dealers are among those authorized to offer insurance products through the DRW regime. Under the ADFPS, they may offer replacement insurance to customers who purchase or lease an automobile. Replacement insurance provides for the payment of an indemnity following the replacement of the insured vehicle in the event of a total loss or the replacement of damaged parts in the event of partial loss.
Over the years, the AMF has noted in its Insurer disclosure analysis reports various issues pertaining to replacement insurance offered by automobile dealers, including the following:
- The proportion of the remuneration paid to automobile dealers relative to the premiums paid by consumers is considerably greater than the proportion of the remuneration paid to firms offering replacement insurance and active consumer credit distributors for the sale of insurance products under the DWR regime
- There is a significant difference between premiums paid for replacement insurance purchased through an automobile dealer and those paid for identical products purchased through a firm
To address these recurring issues, the AMF has made various interventions with the stakeholders involved. It undertook several initiatives aimed at providing consumers with information and enhancing their awareness. It also monitored the activities of automobile dealers. In addition, the AMF carried out interventions with, and launched penal proceedings against, automobile dealers and business managers, among others, in connection with undue pressure and fraudulent tactics exercised or used to induce consumers to acquire insurance products.
Despite the AMF's numerous attempts to address these issues, certain dubious practices persisted. The Quebec government determined that a legislative solution was required. Pursuant to the Act, replacement insurance products can no longer be offered by a distributor under the DWR regime. Effective July 1, 2026, automobile and recreational vehicle dealers will no longer be authorized to distribute replacement insurance products. These products will only be offered and sold through certified damage insurance representatives.
Conclusion
The Act amends several financial sector statutes. The amendments discussed in this bulletin are clearly aligned with the objective of enhancing public protection and making Quebec's financial sector more efficient. It can be expected that the processing time for claims will decrease substantially with the adoption and deployment of these new measures. In addition, consumers who purchase or lease an automobile will still be able to purchase replacement insurance but will only be able to do so through the general insurance regime, which provides greater protection.
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