Canadian Underwriter

Canadian regulators working on rules for online insurance sales

June 20, 2013   by Canadian Underwriter

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Many of Canada’s insurance regulations pre-date electronic commerce, so the Canadian Council of Insurance Regulators is inviting recommendations from stakeholders, with the aim of bringing the rules into the 21st century. 

Canadian regulators publish recommendations for online insurance sales

CCIR last month published a position paper, dubbed Electronic Commerce in Insurance Products and is looking for feedback by July 26.

The CCIR’s electronic commerce committee recommends, among other things, that “comparison shopping” websites be prohibited from providing advice or posting insurance applications unless they are operated by companies who are properly licenced.

Websites that compare “available coverage options” should be held  “to the same obligations” as other insurance entities, CCIR stated in the paper.

The position paper published May 23 is not the official policy of any government agency but is based on feedback CCIR received from a January 2012 position paper written by its Electronic Commerce Committee. In response to the 2012 paper, CCIR received 25 submissions from organizations representing carriers, direct writers, agents and brokers.

“No consumer groups were heard from, though their input was requested,” CCIR stated in its May position paper. CCIR added that while Canada has laws governing electronic commerce, none of those apply “specifically to insurance products.”

“As well, much of the insurance legislation currently in place in Canada was developed long before electronic transactions were contemplated.”

CCIR’s members include the federal Office of the Superintendent of Financial Institutions (OSFI) plus the agencies that regulate insurance in each Canadian province and territory. It suggested in its electronic commerce paper that when shopping online, a consumer may not know whether a service provider is actually registered with one of the regulators that CCIR represents.

Therefore, the paper recommends, those distributing insurance online should be required to make all of their corporate information “directly and permanently accessible” on their websites. This would include their legal name, address, phone number, registration number with the applicable insurance regulator plus information on how consumers can file a complaint. CCIR also recommends online insurance providers be required to provide a link to the website of their corresponding regulator.

Another recommendation, if implemented, would require online insurance providers to “draw to the consumer’s attention” seven categories of information in “clear and simple language,” including:

  • the type of consumer for whom the product is intended;
  • the main characteristics of the product;
  • options and coverage;
  • exclusions and limitations;
  • total premium and other charges, including taxes;
  • the consumer’s right to cancel, along with the duration of the cancellation period and the procedure for cancellation; and
  • any time limit on the validity of the information provided.

CCIR suggested in the paper that using the Internet to buy insurance “has the potential to put the consumers’ personal information at risk,” through various breaches such as identity theft or leaking of personal information. It also suggested it can facilitate money laundering.

“In compliance with applicable laws, providers offering insurance products online have the responsibility to make sue that consumer’s personal information is secure,” the paper recommends.

The paper also recommends that rules applying to ethics, advertising, suitability and file record-keeping apply when insurers and their representatives use social media.

“In the realm of social media, the barrier between consumers and professionals is thin and the ‘social component’ clouds the issue by establishing a relationship of trust,” CCIR wrote in the paper. “Some providers could take advantage of the consumer’s vulnerability, and that often leads to issues of conflict of interest and disclosure, in particular.”

Comments can be submitted by e-mail to or by regular mail to the CCIR Secretariat, 5160 Yonge Street, 17th floor, Toronto, Ontario, M2N 6L9. CCIR prefers electronic submissions.

The comments will be reviewed by the CCIR’s electronic commerce committee, after which ECC plans to present “final recommendations” to CCIR.

“Each jurisdiction will consider the recommendations and evaluate the circumstances in its own jurisdiction to determine what changes, if any, are necessary to implement them.”

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1 Comment » for Canadian regulators working on rules for online insurance sales
  1. Frank Cain says:

    In the above, information to be made available to consumers is “any time limit on the validity of the information provided”. Anyone familiar with the OAP 1 Ontario Automobile Policy booklet will realize that in the Statutory Conditions, there is a limit on the time a policyholder can bring suit against his insurer. This is only one of the key features of the policy wording that consumers should be aware of. In fact, they should be aware of the entire booklet wording. But, in the process of sending out new “policies” and renewals to clients, they are not because the booklet is very infrequently, if ever, sent with the declaration pages that constitute the new “policy” or renewal. The declaration (dec) pages being a synopsis of mainly the vehicle, coverage and premium. And after over a year of pleading with industry authorities to correct this situation, there has been no resolution. Now, you’re telling me that this information should not be missed in the source of information the consumer should be aware of?

    I suppose it depends on where you sit within the insurance community but it may interest you to know that for a standard business policy, I printed off 65 dec and wording pages the other day for a client’s building. I’ll repeat that figure so there’s no mistaking – 65 (sixty-five) pages as issued by the insurance company. The auto policy booklet contains 71 pages but as a booklet, is designed so that if needed, can fit in a jacket pocket.

    One question: What the hell’s wrong with this industry that it can get its head on straight? I would really like to know.

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