Canadian Underwriter
News

RIBO cautions against negative option billing


June 6, 2006   by Canadian Underwriter


Print this page Share

Registered Insurance Brokers of Ontario (RIBO) has issued a warning in its Spring 2006 bulletin about insurers’ use of negative option billing or marketing.
Reprinting an excerpt of a similar warning issued in 2000, RIBO noted the “Financial Services Commission of Ontario (FSCO) is concerned about the use of negative option billing (also known as negative option marketing) as a marketing practice by insurance companies, whereby consumers are charged for a new product or service before they have consented.”
FSCO does not support negative option billing, RIBO noted. “Insurers are asked to refrain from engaging in this practice.”
In the property and casualty insurance sector, consumers benefit from the automatic renewal of their policies, RIBO observes. “However, consumers may not be aware when a change has been made to their policy and that there is an additional charge, particularly where consumers pay by automatic monthly premium installments.”
According to RIBO, FSCO recognizes certain insurance contracts have provisions that allow the insurer to adjust the coverage and the resulting premium on renewal such as inflation protection, for example. “These types of contractual provisions are acceptable,” RIBO notes, although consumers must be made aware of this kind of agreement at the point of sale.
“FSCO continues to stress the need for improved disclosure and consumer information by the insurance industry,” RIBO’s newsletter reads. “Insurers, agents and brokers are encouraged to actively sell insurance coverage by clearly explaining the benefits and costs to consumers. Consumers have a right to make an informed decision.”


Print this page Share

Have your say:

Your email address will not be published. Required fields are marked *

*