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On May 31, 2017, the Canadian Council of Insurance Regulators (the “CCIR”) released its Travel Health Insurance Products Position Paper (the “Position Paper”) in which CCIR makes recommendations to the insurance industry in response to stakeholder and consumer comments received through the consultation process conducted in 2016.

The CCIR is an inter-jurisdictional association of Canadian insurance regulators and their mandate is to facilitate and promote an efficient insurance regulatory system that serves the public interest. As a consumer protection association, the overarching concern of the CCIR is the fair and consistent treatment of consumers and, accordingly, the CCIR’s recommendations in the Position Paper are focused on improving consumer confidence in the travel health insurance (“THI”) marketplace.

CCIR’s recommendations set out in the Position Paper can be summarized as follows:

1. Simplification of Product Offerings. CCIR recommends that insurers simplify their product offerings in order to reduce the risk of sales of inappropriate THI policies to consumers. CCIR believes that insurers can amalgamate the various coverages and policy documents that are presented to consumers by (a) limiting the number of bundles and product options presented to consumers and (b) by making THI products and related materials more targeted to the specialized needs of consumers so that consumers are better able to understand the THI options that are available to them.

2. Simplification of Disclosure. CCIR recommends that consumer facing disclosure be succinct and made upfront, made specific to one plan, regime or option, and should draw consumers’ attention to information that is relevant to the decision to purchase THI products, such as exclusions and restrictions on claims. CCIR expects that insurers will publish disclosure documents and related policy specimens through the sales channels used for pre-purchase consultation, and without the obligation for the customer to close the transaction. Insurers should promote the availability of this information in their promotional and advertising material and, in particular, CCIR recommends that insurers provide a one page summary of the relevant information to the consumer prior to purchase and that the consumer has access to the policy contract itself.

3. Standardization of Terminology and Definitions. CCIR believes that creating and implementing standardized definitions and terms in the THI space will improve consumers’ understanding of medical questionnaires and the related exclusions and restrictions of coverage. Consistent, standardized terminology and terms will not only allow consumers to compare products, it will assist insurers in the training and education of sellers and their intermediaries. CCIR recommends that the industry produce a list of all the terms that should be included in the standardization and establish general rules regarding the use of defined terms and expressions.

4. Control and Oversight Over Distribution Channels and Third-Party Providers. As insurers are ultimately responsible for ensuring that individuals selling their products have sufficient knowledge and expertise to be able to adequately explain the product to consumers, insurers must have effective controls in place and oversight over all their distribution channels regardless of the type of sales channel. Such oversight includes the collection and monitoring of data. CCIR recommends insurers develop a method of testing the effectiveness of its disclosure in promoting consumers’ understanding of the coverage applicable to them.

CCIR expressed concern about consumer reports of difficulty identifying insurers in cases where third party service providers were used. Insurers must provide consumers with all relevant disclosure, including who the insurer is, before, during and after the point of sale. CCIR reminds stakeholders that, in addition to the requirements of the Office of the Superintendent of Financial Institutions’ Guideline B-10, CCIR’s expectations regarding the use of third party service providers and related disclosure are set out in its 2012 position paper titled “Strengthening the Life MGA Distribution Channel”.

When an insurer outsources claims handling functions to a third-party service provider, the insurer must have oversight and control mechanisms in place to ensure that the third party is acting in accordance with the insurer’s documented claims handling processes and procedures. The insurer must also monitor the third party to ensure it is not engaging in any behavior that may result in unfair treatment of the consumer.

5. Eligibility Assessments. CCIR reports that, in 2014, 95% of the applicants for THI products were automatically accepted. CCIR believes that this high rate of acceptance indicates that consumers do not have an adequate understanding of the eligibility and suitability requirements for THI products. CCIR recommends improving the application and screening process so that consumers’ eligibility for a particular THI product is properly assessed in light of each consumers’ distinct needs. In particular, CCIR recommends that “insurers prominently inform consumers before purchase that the insurers will use the information collected during the application process to assess the eligibility for any claims made”.

6. Education. CCIR recommends improving education and training of sellers so that sellers of THI products are better able to explain key terms to consumers, including conditions and exclusions, the definition and impact of pre-existing medical conditions, and the consequences of any inaccurate information or misrepresentation made during the application process. Insurers should also prepare sellers so they are able to explain to consumers who, when, and where to go for guidance related to their policy or claim. CCIR further recommends that the industry educate consumers in respect of the different coverage options, and the many exceptions and limitations that can apply.

7. Complaints and Claims Management. Based on consumer feedback received during the consultation process, CCIR believes consumers perception is that insurer’s complaint processes are not clearly disclosed. CCIR recommends, among other measures, that insurers make their internal processes for timely complaint management and dispute resolution publicly available. These processes should include detailed directions for initiating a complaint, contact details, and the options available in the event disputes remain unresolved.

The CCIR will continue to monitor the industry’s progress in respect of its recommendations set out in the Position Paper. CCIR made its expectation clear that insurers put in place tools and processes to measure and evaluate the effectiveness of initiatives undertaken in response to the recommendations in the Position Paper.

Regulations governing the demutualization of federal property and casualty mutual insurance companies in Canada came into force on July 1, 2015 as . On January 14, 2016, the Office of the Superintendent of Financial Institutions (“OSFI”) released a Guide for property and casualty mutual insurance companies that have both mutual and non-mutual policyholders, which describes the relevant regulatory requirements for demutualization and sets out the information that must be provided to OSFI at each phase of the demutualization process. Click here to view the Guide.

Ontario credit unions and caisses populaires will be prohibited from directly or indirectly promoting non-authorized insurance products such as home, auto, health and life insurance, on their websites as of January 1, 2016, pursuant to legislative amendments recently introduced by the Government of Ontario. The amendments to Ontario Regulation 237/09, also known as the General Regulation under the Credit Unions and Caisses Populaires Act, 1994, S.O. 1994, c. 11, will restrict the promotion of non-authorized types of insurance on-line, which Ontario credit unions and caisses populaires are already prevented from doing in-branch. The Regulation currently prevents credit unions and caisses populaires from selling and promoting insurance in their branches unless the insurance is of an authorized type, such as creditor, mortgage or travel insurance.

This announcement from the Ontario Government echoes the history of the amendments to the federal Bank Act, S.C. 1991, c. 46, which only prohibited in-branch promotion of non-authorized insurance products by deposit-taking financial institutions in Canada until 2012, when amendments to the Bank Act came into force that extended the prohibition generally to the banks’ websites as well. The Ontario government have reasoned that this amendment will bring Ontario’s credit unions and caisses populaires under a consumer protection framework that is consistent with that of federally-regulated institutions.

The Financial Services Commission of Ontario announced the amendments in a Bulletin dated October 2, 2015, which links the full text of the amendments. The amendments will come into force on January 1, 2016, on which date the websites of Ontario credit unions and caisses populaires are required to be compliant with the new prohibition.

The 2015 publication of Getting the Deal Through, is now available, and includes our updated summary guide to the regulation of insurance and reinsurance in Canada.   Click here for access to a pdf version of the Canadian chapter.

We also have a limited number of hard copies of this publication, which are available on request.

Reproduced with permission from Law Business Research Ltd. This article was first published in Getting the Deal Through: Insurance & Reinsurance 2015, (published in June 2015; contributing editors: William D Torchiana, Mark F Rosenberg and Marion Leydier, Sullivan & Cromwell LLP). For further information please visit www.gettingthedealthrough.com.

The Government of Saskatchewan has given its first reading to Bill 177: The Insurance Act. The new legislation will replace The Saskatchewan Insurance Act, which has not been revised substantially in several decades. Bill 177 aims to modernize the regulation of the insurance industry in the Province of Saskatchewan, improve consumer protection measures and increase harmonization with the insurance legislation of the other western provinces. The full text of Bill 177 can be viewed here.

The following excerpt from a Government of Saskatchewan press release provides more detail concerning the proposed legislation:

““A lot has changed in the industry since revisions were last made to the Act, especially when it comes to technology,” Justice Minister and Attorney General Gordon Wyant said.  “The new Act will give the insurance sector the flexibility it needs to evolve in a rapidly changing environment, strengthen consumer protection, and move toward harmonizing insurance legislation with Alberta and BC.”

Changes proposed in The Insurance Act include:

• Better protection for consumers through market conduct standards, which identify unfair practices;
• Streamlining the appeal process;
• Restructuring the Saskatchewan Insurance Councils and allowing them to conduct audits and investigations;
• Requiring insurance companies to recommend and screen those applying to be intermediaries as well as supervise them once approved;
• Updating licensing categories and requirements including licensing employees that sell insurance as insurer’s representatives, which requires the same level of training as insurance agents;
• Permitting insurance agents to adjust insurance claims to a prescribed amount; and
• Requiring insurers to point to specific clauses in a policy where there are limits on the amount payable.

Work to develop the new Act involved interprovincial comparisons and review of other provincial and national projects on insurance and financial services, but the model used in Alberta was deemed to best fit Saskatchewan’s needs.  Alberta’s legislation is similar to that in BC, meaning Saskatchewan will share similar insurance regulation with all provinces in the New West Partnership Trade Agreement.

A number of industry associations were consulted, including the Insurance Brokers Association of Saskatchewan and the Saskatchewan Insurance Councils and they have expressed their support for modernization of the Act.”

On January 1, 2015, certain amendments to Manitoba’s The Insurance Act came into force requiring incidental sellers of insurance to hold a restricted insurance agent’s license in Manitoba as of June 1, 2015. See Section 72 of the The Insurance Amendment Act  S.M. 2012, c. 29 (“Bill 27”) for full text of the amendments. These amendments in Bill 27 are the second instalment in a series of amendments that were proclaimed to come into force in three parts: on September 1, 2014, January 1, 2015 and March 1, 2015, and which bring Manitoba’s The Insurance Act closer in line with Alberta’s Insurance Act.

This second group of amendments implements a restricted insurance agent licensing regime similar to those in place in Alberta and Saskatchewan. In addition to the amendments to The Insurance Act, the Manitoba Insurance Agents and Adjusters Regulation was also amended to set out the particulars of the new licensing regime (see M.R. 215/2014 for the amendments to the regulation proclaimed in force on January 1, 2015). Under the new restricted agent licensing regime, incidental sellers of insurance are required to obtain a restricted insurance agent license from the Insurance Council of Manitoba. Incidental sellers of insurance that will require a restricted agent license include deposit-taking institutions, travel agencies, mortgage brokers and funeral directors and other specified entities that, in the course of selling certain goods or services to their customers or clients, offer certain classes of insurance that relate to those goods or services.

The Insurance Council of Manitoba has announced that it will begin accepting applications for restricted insurance agent licences on February 1, 2015, and has advised that applications must be received prior to April 30, 2015 to ensure they are issued prior to June 1, 2015. The Insurance Council of Manitoba issued a Notice in December 2014 with further information about the transition, which is available here.

In the issue of the Canada Gazette released today, the federal government published long-awaited draft regulations which will permit Canada’s federal property and casualty mutual insurance companies to demutualize.   The text of the draft regulations can be seen by clicking here.  Interested parties are invited to make representations concerning the proposed regulations within 30 days.

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