The Canadian Insurance Services Regulatory Organization (CISRO) recently released for comment draft Principles of Conduct for Intermediaries (“Principles”). The Principles are aimed at safeguarding the fair treatment of customers by intermediaries in the life & health and property & casualty insurance sectors by requiring that they conduct their business in a transparent and honest manner. Insurers are responsible for the fair treatment of customers throughout the life cycle of the insurance product, while intermediaries have oversight responsibilities to ensure that their employees and representatives meet high standards of integrity and ethics. While acknowledging that each jurisdiction has its own regulatory approach for the conduct of business, the Principles envision minimum regulatory conduct standards that are common across Canada regarding the fair treatment of customers. The Principles are intended to tie in with the Guidance on Conduct of Insurance Business and Fair Treatment of Customers (FTC), issued by CISRO and the Canadian Council of Insurance Regulators (CCIR). The Principles also align with Insurance Core Principles (ICP) of the International Association of Insurance Supervisors’ (IAIS).
Who Are Intermediaries? Intermediary encompasses adjusters, individual agents, brokers, representatives and business entities that distribute insurance products and services, including managing general agencies and third party administrators.
Who Are Customers? Customers may include a policyholders (or certificate holders), prospective policyholders with whom an insurer or intermediary interacts, or other beneficiaries and claimants with a legitimate interest in the policy.
The Principles shape professional behaviour and conduct expectations for the fair treatment of customers:
- Compliance / Outcomes: Intermediaries must comply with all applicable laws, regulations, rules and regulatory codes to which they are subject to.
- Customers’ Interests: Intermediaries must place customers’ interests above their own, including when an intermediary is developing, marketing, distributing and servicing insurance products.
- Conflicts of Interest: Intermediaries must identify, disclose and manage any actual or potential conflict of interest pertaining to a transaction or recommendation. Intermediaries must avoid entering into agreements where conflicts of interests may obstruct the fair treatment of customers or cannot be managed.
- Advice: In order to comprehend and recognize customers’ unique needs, intermediaries must seek complete information from customers when providing them with advice.
- Disclosure: Customers must be provided with objective, complete, relevant and accurate information by intermediaries, so that customers may make informed decisions. Intermediaries must properly disclose relevant information to all necessary parties (including the insurer) and disclose information in a manner that is clear and comprehensible for customers.
- Product and Service Promotion: Intermediaries must ensure that products and services are endorsed in a clear and fair manner that is not misleading. Promotions should be easily understandable and disclose all necessary and relevant information.
- Claims, Complaints Handling, and Dispute Resolution: Intermediaries must handle claims, complaints and disputes in a timely and fair fashion.
- Protection of Personal and Confidential Information: Intermediaries must engage in necessary measures to protect personal and confidential information by: collecting only information that is necessary for the completion of the service or product provided; use and disclose information only for purposes and for the duration for which the customer has consented; and comply with all applicable privacy legislation for information management.
- Competence: Intermediaries must preserve an appropriate standard of professional knowledge to ensure the fair treatment of customers. Continuing education obligations must be met and duties must match the level of training and education provided. Intermediaries must not misrepresent their level of competence or conduct business beyond their threshold of professional knowledge and experience.
- Oversight: Intermediaries with contractual or regulatory oversight responsibilities are accountable for the conduct of any employee or third party involved in the distribution or servicing of insurance products. Policies and procedures, training and control mechanisms must be utilized by intermediaries in their oversight roles to ensure the fair treatment of customers.
CISRO is seeking feedback on the proposed Principles from a wide range of stakeholders, including the insurance industry and consumer advocates. Respondents should submit comments to cisro-ocra@fsrao.ca by July 9, 2021.
