Regulator cautions brokers about sharing and storing client data

As the pandemic continues to plunge Canada’s property and casualty insurance industry deeper into the digital space, regulators are issuing ongoing reminders — and warnings — about how brokers are sharing and storing their clients’ personal data.

Most recently, Peter Blodgett, president of the Registered Insurance Brokers of Ontario (RIBO), the province’s broker regulator, issued a general caution to brokers about sharing their clients’ data with insurers.

“The digital world, and superficially digital commerce, places a high value on client information,” Blodgett notes in RIBO’s Fall 2020 bulletin. “Brokers are often under pressure from business partners to share information received from their clients. That information can be used for a variety of purposes, including targeted marketing efforts.

“It is important to remember that customer data received by brokers does not belong to the brokers, but to their clients who provide it. It must be safeguarded within the brokerage.”

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As for “safeguarding” data, in some extreme cases, brokers aren’t even retaining the data in their own systems, RIBO observed in its Spring 2020 bulletin. For example, the regulator reported examples of brokers simply punching their clients’ data into insurance company online portals without inputting the same information into their own broker management systems — to sometimes catastrophic effect.

In some disciplinary cases, RIBO observed, the broker did not have any documentation in the client files.

“We have observed that some brokers document all client files on the insurers’ system via portal entry rather than maintaining the file information and downloading the policy documentation into the brokerage’s Broker Management System.”

For example, the group said, all documentation can be lost due to:

• The insurer’s portal being down,
• Insurers changing the system,
• Losing the insurer contract, and
• Insurers purging old policy wordings.

During a recent inspection, RIBO reported it “was informed by a broker that the broker no longer had access to the information on the insurer’s portal. This was due to the insurer changing systems and, consequently, only newly inputted information being available to the broker.”

So the group wants to remind all brokers of the importance of keeping full file documentation within their own system. “Failure to maintain and have access to the file documentation may not only affect the brokers and clients, but may lead to a formal complaint against a broker.”

Feature image courtesy of iStock.ca/Laurence Dutton