Quebec insurance brokers voice concerns over consumer protection

Illegal business practices – including those involving automobile dealerships that disparage products offered by brokers and sell replace insurance – are among the challenges the insurance brokerage profession in Quebec must address.

Challenges related to consumer protection, changes in consumer behaviour and illegal business practices were among the main issues up for discussion at the Regroupement des cabinets de courtage d’assurance du Québec’s (RCCAQ) annual convention in Quebec City this week.

“The insurance market is changing. The problem is that new channels of distribution such as the Internet do not ensure that customers understand products in the same way as when dealing with a broker,” Jean Bilodeau, president of the RCCAQ, notes in a statement. “Nor do they guarantee consumer protection through mechanisms established by the Autorité des marchés financiers (AMF),” Bilodeau continues.

The RCCAQ cites what is currently happening with some car dealerships. Some dealers disparage the products offered by brokers, as well as sell replacement insurance, which can be as much as 66% more expensive than that sold by brokers — notably because this amount is added to the vehicle’s financing, which can span up to six years, the statement notes.

Further, the RCCAQ argues, some dealers threaten to increase the interest rate for financing the vehicle if the customer does not purchase their replacement insurance. “In some instances, the dealers overstep their rights by undertaking activities exclusive to insurance brokers, such as collecting information with a view to obtaining a quote,” the statement adds.

The RCCAQ is working with the AMF to ensure that these sorts of illegal business practices are eliminated.

Noting that insurance is a complex product, consumers are encouraged to seek advice to ensure their assets are adequately covered. Brokers can help manage the risks related to property damage by advising customers, the RCCAQ notes.

People who purchase a policy directly online can make mistakes when filling out their application, and it is only when making a claim that they find out their coverage is inadequate, the statement adds.

One positive has been action taken regarding tax harmonization in Quebec. “The RCCAQ wishes to acknowledge the work done by Finance Minister Nicolas Marceau to mitigate the impact of sales tax harmonization on brokerage firms,” the statement notes. “The RCCAQ would also like to reiterate that efforts to find a long-term solution beyond 2015 must continue.”