Canadian Underwriter

Fee disclosure: Where national guidance meets provincial regulation

March 29, 2022   by David Gambrill

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If you are a broker concerned about fair dealing with consumers, must you disclose your premiums that are baked into their premium rates? Or only those fees separate and apart from your commissions?

In fine Canadian fashion, the answer depends on which province you’re in.

Canadian Council of Insurance Regulators (CCIR) and the Canadian Insurance Services Regulatory Organizations (CISRO) published its Guidance on Conduct of Insurance Business and Fair Treatment of Customers in September 2018.

“Such guidance describes, among other things, the expectations of CCIR and CISRO with respect to client disclosure obligations,” Dentons lawyers Derek Levinsky and Taschina Ashmeade write in an article in Mondaq. “It is expected that customers receive any information about key features of an insurance contract, including fees.”

CCIR and CISRO’s guidance is intended to apply to insurers and brokers across Canada. Its guidelines call for disclosures to consumers “to include information on key features (for example, conditions, exclusions, restrictions and fees) particularly with respect to the conclusion or performance of the insurance contract, including any adverse effect on the benefit payable under that contract.”

The thing is, disclosure requirements for commissions vary across provinces, as Levinsky and Ashmeade observe.

“For example, an agent or broker licensed in Manitoba would not be required to disclose receipt of a commission resulting from an insurance transaction,” the authors wrote. “Conversely, an agent or broker that completes an insurance transaction in Newfoundland would be required to disclose the receipt of a commission to the consumer in a prescribed form.”

Likewise, requirements for disclosing fees vary across provinces.

“They may be regarded as anything beyond the payment of premiums, such as administrative charges,” the authors wrote. “The applicable legislation in certain jurisdictions specifically defines and describes what is included in fees, commissions, and premiums. In addition, certain jurisdictions provide thresholds in connection with fee disclosure requirements; brokers and insurers must be aware of the disclosure requirements and nuances across the jurisdictions in which they conduct insurance business.”

In some jurisdictions, regulators assume “fees” and “premiums” are one and the same. In others, fees and premiums are considered to be exclusive of one another and brokers must fill out separate disclosure forms for each.

For example, the authors wrote, “the Insurance Act (Saskatchewan) indicates that a ‘fee’ does not include the premium payable pursuant to a contract of insurance, yet the Insurance Act (Yukon) provides that the definition of ‘premium’ includes administration fees, among others, paid for the administration or servicing of an insurance contract.”

While there may be confusion around what to disclose, when to disclose it (i.e., before or after the insurance contract) and how to disclose it, brokers are nonetheless expected to know their own provincial or territorial rules, the authors said.

“As licensed professionals, insurance agents and brokers must be knowledgeable of their disclosure obligations in connection with fees and commissions in the jurisdictions [in] which they conduct business, ensuring that they are avoiding unfair outcomes to customers and insureds.”


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