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RIBO warns brokers of Aeroplan “inducement”


November 6, 2006   by Canadian Underwriter


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In compliance with a recent ruling by the Registered Insurance Brokers of Ontario (RIBO), ING Canada is eliminating wording in its Aeroplan marketing materials that RIBO has determined to be an “inducement.”
ING Canada recently introduced an Aeroplan program that provides the offer of 500 air miles to consumers who purchase an ING policy as new business, or upon renewal of existing business and enrollment in the program.
The insurer referred its program to RIBO, a self-regulating body of Ontario’s brokers, in September 2006 to determine in advance whether aspects of its marketing materials might be ruled as an “inducement.” RIBO considered the matter at a meeting of its professional development committee on Oct. 17, 2006.
In a letter to Ontario brokers, posted on RIBO’s Web site, RIBO CEO Jeff Bear said “there is no problem with obtaining air miles based on the payment of premium dollars for insurance policies.
“Upon review, however, RIBO has consistently held that the addition or offer of “bonus” miles as a reward for purchasing a policy of insurance is considered to be an inducement.”
According to RIBO regulations, said Bear, “any payment, allowance or gift or any offer to pay, allow or give, directly or indirectly, any money or thing of value as an inducement to any prospective insured to insure, is a defined act of misconduct.”
RIBO’s professional development committee considered the matter on Oct. 17, 2006. “Subsequently,” Bear reported, “the entire council of RIBO considered the issue and decided that the ‘reward’ aspect or the ‘thank you for enrolling in the program’ aspect constituted an inducement. ING was notified of this decision along with Council’s reasoning later that same day.”
Three days after its decision, RIBO learned that marketing material including the phrase, a “500-point thank you for enrollment” (which RIBO had determined to be an inducement) had already been forwarded to Ontario brokers sometime the week prior to RIBO’s decision and its subsequent communication to ING.
RIBO contacted ING on Oct. 20. On that same day, Bear noted, “ING indicated to RIBO that, as part of their continued dealings with RIBO in good faith on this issue, it is their intention to immediately comply with the decision of the RIBO council and to take steps to remove the reward aspect of the program.”
According to Bear’s online posting, ING “anticipates it will take two weeks to change external Web sites and systems to eliminate the ‘500-point thank you for enrollment.'” ING also told RIBO it would take two weeks (after Oct. 20) to re-program their internal systems, and up to a month to amend and replace marketing materials.
In the meantime, Bear’s posting notes, “all brokers should be aware of their potential exposure to misconduct proceedings if RIBO receives any complaints regarding the use of an inducement to any prospective insured to insure, in this instance, through marketing the offer of reward points.”