On April 2, 2015, the Autorité des marchés financiers ("AMF") released Internet Insurance Offerings in Québec (the "Report"), outlining its recommendations for the online distribution of insurance. This Report will be of particular interest to price-shopping websites.
The Report is the result of a more than two year consultation process regarding the regulatory framework that should apply to the online distribution of insurance products in Québec and takes into account the findings of the Canadian Counsel of Insurance Regulators as described in their position paper, Electronic Commerce in Insurance Products, released in October 20131.
Price Shopping Websites Require Licensure
The AMF has made clear that websites comparing and offering quotes for insurance coverage from different insurers are exercising an advisory activity and must be registered with the AMF as insurance representatives. We note that the penalty for acting as an insurance representative without the appropriate license is the greater of $3,000 for each offence, double the profit realized or one fifth of the sums entrusted to or collected by the offender.2
In addition to addressing licensure, the Report also reminds businesses of other obligations related to doing business online:
- Ensure that consumers' personal information is secured and to adopt policies and procedures to make certain that their systems are secure and reliable at all times.
- Ensure there is no advertising on the web page(s) where consumers complete an online insurance application. Such advertising may only be displayed prior to or after the consumer completes the purchase.
- Ensure there are policies and procedures in place to allow monitoring of the content of the entity's online posts or publications as well as those of employees and representatives.
Recommendations Relating to the Online Purchase of Insurance
The Report makes the following recommendations:
- Information about the insurer must be easily accessible on its website.
- Insurers must provide consumers with appropriate online self‑assessment tools to assist consumers in making an informed decision.
- A certified representative must be available, if needed, to assist consumers in the purchasing process.
- Consumers must be provided with a right of rescission for a reasonable period following purchase.
- Material information must be brought to the consumers' attention during the purchasing process, including details about the insurance and its exclusions and limitations, the total premium and other fees and expenses (plus applicable taxes) that consumers will have to pay and, in the case of insurance distributed without representative (for example, travel insurance), the distribution guide.
- The information must be presented in a step by step approach, rather than in bulk and consumers will be required to confirm that they have read and fully understood each step.
- Information must be presented in plain language, avoiding the use of legalese.
- Prior to a contract being issued, an insurer must provide the consumer with a clear summary of the information relating to the insurance products to be purchased.
- Following the completion of any transaction online, an insurer must provide the consumer with copies of all contract documentation in electronic or hard copy (the choice is the consumer's).
While the recommendations will eventually be proposed as amendments to An Act respecting insurance and other legislation in Québec, as applicable, it is important to note that the AMF does not believe that insurance products sold online should be treated differently than insurance products sold through traditional channels. As such, we do not expect to see many changes to the current state of insurance regulation in Québec and entities are reminded that the current regulatory regime applies to online sales.
If you or your company requires licensure or advice on whether your existing online platform is compliant, please contact email@example.com.
2 Article 485 of An Act respecting the distribution of financial products and services (CQLR, c. D-9.2)