Auto dealer’s replacement guarantee deemed an insurance product

The Autorité des marchés financiers (AMF) considers a motor vehicle replacement guarantee offered by car dealers to be an insurance product subject to AMF oversight.
“Motor vehicle replacement guarantees must therefore be issued by insurers, whose regulatory framework — administered by the AMF — gives consumers better protection against the risks of insolvency,” the AMF says in a bulletin on its Web site.
“Consumers will now be able to contact the AMF to ask for information about motor vehicle replacement guarantees, file a complaint and benefit from mediation services.”
AMF said its oversight over guarantees would cause contracts to be standardized, thus clarifying the roles and responsibilities of each party involved.
Quebec brokers have been urging the AMF to consider motor vehicle replacement guarantees — available at point of sale from car dealers — to be insurance products, so that only those licensed to sell insurance can offer the product.
Brokers have expressed concern that consumers buying the guarantees at point of sale would not benefit from consulting with an insurance broker or agent to discuss other available insurance products, some of which have a wider scope than the guarantees offered by car dealers.
Mindful of the impact its position might have on the current sales network for replacement guarantees, the AMF said it “considers it advisable to provide the main network stakeholders with a 12-month time period to carry out the changes needed for compliance with the Act respecting the distribution of financial products and services.
“During this period, the AMF will work with the main stakeholders to ensure a harmonious transition and the protection of consumers’ interests.”