Are travel insurance products becoming too complicated to be sold directly to consumers over the Internet or through social media outlets?
According to Flavio Vani, president of Quebec’s financial advisors’ organization Association professionnelle des conseillers en services financiers (APCSF), if pending legislation (Bill 141) is enacted in the National Assembly later this year, as expected, all online purchases of insurance products offered in the province without the advice of a registered financial professional should carry warnings similar to those posted on cigarette packages.
In an interview for the Insurance and Investment Journal, Vani states that the APCSF has submitted a proposal to the Quebec government asserting that it wants direct sales of financial products to carry an explicit warning that online purchases of insurance products without the advice of a registered professional (who would first analyze the customer’s personal financial situation) “could have a significant impact on an individual and his family’s financial security.”
The APCSF further wants the warning to be buttressed by a recommendation from the Quebec regulator (Autorité des marchés financiers) emphasizing that it recommends the purchaser “consult a duly accredited financial professional” before purchase.
Bill 141 is designed to improve the framework of Quebec’s financial sector and strengthen consumer protections. It proposes significant and targeted amendments to 14 different laws alongside corresponding amendments to almost 50 other laws.
APCSF’s Vani warns that if Bill 141 is adopted as now constructed, it will lead to “an increase in the number of simplified insurance products via the Internet,” and this poses an “underrepresented threat to consumers.”
The article quoting Mr. Vani states his position that “Insurance products are not only complex in terms of legibility of contracts and guarantees, but also because of the regulatory environment, including taxation.”
The complexity and multiplicity of travel insurance products is also of concern to the Canadian Council of Insurance Regulators, which has itself urged Canadian travel insurers to enhance consumer protection and confidence in its products by reducing their complexity and ensuring that “customers are treated fairly both before a contract is entered into and through the point at which all obligations under a contract have been satisfied.”
In an issue paper provided to the travel insurance industry in 2016, the CCIR recommended the elimination of jargon in applications and questionnaires, standardization of legal and medical terminology, and clear explanation of limitations on benefits, with more transparency on underwriting procedures, more precise identification of appeals procedures, and “reduced … risk of sales which are not appropriate to customers’ needs.”
If you haven’t been paying too much attention to Bill 141, I suggest only excerpts, as it runs over 400 pages. But it is worth tracking as it does impact the distribution of financial products and services online. It also intends to abolish Quebec’s self-regulatory organizations for financial advisors—the Chambre de la sécurité financière and the Chambre de l’assurance de dommages (general insurance agents, brokers and adjusters)—and merge their functions into the Autorité des marchés financiers. This includes their roles in ethics control and training. Staff from the Chambres will be transferred to the AMF.
Stay with us and we’ll keep you posted as the bill proceeds through the National Assembly.
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