The Insurance Act (the ‘new Act’) received its final reading in the Legislature and is awaiting official proclamation, expected to occur in early 2019. The next few months will be spent finalizing the necessary regulations, as well as The Insurance Amendment Act, which will be concurrently brought into force.
One notable change that has prompted concern is a broadened definition of insurance agent. IBAS has met with the Financial and Consumer Affairs Authority (FCAA) as well as the General Insurance Council of Saskatchewan (GICS) several times over past months to discuss the potential implications of this revision — particularly as they pertain to motor license issuers (MLIs) and the sale of extended auto coverage. Through these meetings, all parties have agreed that:
- What industry currently sees as acceptable issuer activity with respect to recommending extension auto in general terms, which has been the norm in many broker offices, may not match GICS’s current interpretation of what is allowed by unlicensed individuals under the Saskatchewan Insurance Act (the ‘old Act’);
- It would be positive if more Saskatchewan motorists had additional liability insurance;
- Consumer access to information about extension auto coverage during the issuing process is important;
- It is desirable to avoid changes that increase costs to consumers or reduce access to issuing services;
- Regulatory practices must be defensible across different lines of business, so expanding the activities that do not require licensing may affect GICS’s ability to restrict activities in other areas, unless there are clear and valid distinctions between issuers and other non-licensed individuals; and
- Although fully licensed agents performing issuing activities may be the ideal system, we need to work within the constraints of our current system and business realities.
Three possible solutions were discussed to potentially address the issue:
- Issue an interpretation of the Act;
- Create an exemption in the regulations; or
- Require a new type of restricted licence for issuers, building on the current referral by SGI to GICS for criminal record checks for all issuers.
It is IBAS’s position that the line between issuing and licensed insurance advice must be drawn or defined. IBAS believes:
- It is essential that issuers have the ability to recommend customers talk to licensed brokers;
- Unlicensed issuers should not be allowed to recommend any particular coverage; and
- Licensed and under the oversight of GICS, brokerages should be able to establish brokerage-wide policies and recommendations for clients, and their staff should be able to communicate those policies — by handing out brochures, displaying signage, or verbally directing customers to printed or electronic materials that clearly outline the brokerage position.
After several weeks of discussion, on June 27, 2018, GICS informed IBAS that it concurred with the association’s policy position, as outlined above.
To help clarify what activities and statements are permitted by issuers, GICS and IBAS have jointly agreed upon a set of examples, outlined in this chart.
If you require additional information, please contact IBAS CEO Derek Lothian at firstname.lastname@example.org.