Ontario to examine issue of credit unions selling insurance products online

IBAO Convention 2013 – The Ontario government will soon be taking a look at the issue of credit unions selling insurance products online, Premier Kathleen Wynne said during the Insurance Brokers Association of Ontario’s (IBAO) annual general meeting in downtown Toronto Wednesday.

“We’re going to look at the issue of online selling of insurance products in the credit union industry before the end of this year,” Wynne told assembled brokers and guests. “You’ve told us that that is a concern,” the premier said.

During a Q&A session following Wynne’s remarks, IBAO CEO Randy Carroll thanked the premier for listening to association views and concerns related to credit unions and online retailing and advertising of insurance.

“We work hard as an association from a federal perspective to make sure that we have a level playing field with banks and we appreciate your efforts to make sure we have that same level playing field with credit unions in the province,” Carroll said.

The issue has been on IBAO’s radar for some time. For example, in a September 2012 letter to the finance minister, Carroll noted that Regulation 237/09 of the Credit Unions and Caisses Populaires Act prohibits credit unions from selling, marketing or promoting unauthorized types of insurance.

As such, IBAO called on the provincial government to enact regulatory amendments to clarify that unauthorized products that are prohibited in the “bricks and mortar” world also apply to the online world.

IBAO believes the ministry “should merely harmonize regulations enacted by the federal government in March 2012 that clarify that online retailing of unauthorized insurance products is prohibited as was originally intended in bank branches.”

The letter followed another in February 2012 to Phillip Howell, superintendent and CEO of the Financial Services Commission of Ontario (FSCO). “Currently, Ontario credit unions are advertising insurance products and companies on their websites and providing direct links to facilitate consumer access,” it stated.

“Credit unions may only provide ‘authorized types of insurance’ to clients and are otherwise prohibited from underwriting, marketing or advising customers regarding any other insurance products or companies,” Carroll wrote. These provisions mirror sections within the federal Bank Act.

“The overriding policy purpose behind the clear distinction between banking and credit union functions and insurance operations and distribution is that the former are, primarily, wealth management services, while the latter is a risk management product. The competencies required to responsibly service these very different products are not at all similar,” he noted.

“IBAO is requesting that FSCO clarify whether current regulations prohibit credit union websites from linking to insurance products that are selling unauthorized products. If not, it is imperative that the regulations governing the credit union sector be amended (as they have in the banking sector) to reflect the significant impact of technology and ‘virtual’ transactions.”

When FSCO responded in a June 2012 letter that the existing law did not prohibit online retailing of unauthorized insurance products – something Carroll said the IBAO regarded as an ‘astounding conclusion’ – the September 2012 letter was sent to the finance minister.

.@Kathleen_Wynn Leader of Ontario Liberal Party, Premier of Ontario speaking @IBAOntario‘s #IBAOConvention13: https://t.co/LNpcLXt3pD

— Steve Wilson (@InsuranceMedia) October 23, 2013

Q&A session with @Kathleen_Wynn Premier of Ontario now @IBAOntario‘s #IBAOConvention13: https://t.co/R1cRUopAni

— Steve Wilson (@InsuranceMedia) October 23, 2013