Canadian Underwriter

Insurance Council of B.C. concerned about “secondary” products

March 23, 2012   by Canadian Underwriter

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Automobile dealerships in British Columbia may face more stringent educational and licensing requirements in selling “secondary automobile insurance products,” according to the Insurance Council of British Columbia.

Dealerships in the province have been allowed to market secondary products, such as anti-theft insurance, under restricted general licences since 2009.

“As new and more complicated insurance products are developed for this niche market, council has concerns that continuing to issue restricted licences to dealerships on the above basis may not be in the best interests of the public,” the Insurance Council said in a statement. “Accordingly, council is reviewing the licensing requirements for this market.”

Currently, 140 dealerships in B.C. are licensed to sell secondary insurance products, including extended warranty premium refund insurance and vehicle replacement insurance. They are not permitted to market liability and vehicle damage coverage.

The dealerships do not require education or experience requirement, completion of a criminal record check or, in some cases, the maintenance of errors and omissions insurance — requirements that were waived by the regulator in 2009 due to “limited risk to the public” in this niche market.

Now, the Insurance Council is conducting a review of licensing/E&O requirements and education and experience qualifications.

It is asking for feedback from interested parties by May 15.

Brokers in Quebec have lobbied for the sale of secondary insurance products in auto dealerships only through qualified insurance representatives. In 2009, that province passed Bill 74, which defines and restricts the types of insurance that can be distributed without a certified representative or insurance broker.