know about this British Columbia Conducts Consultation On Restricted Licensing Regime For Incidental Insurance Salesmen | Stikeman Elliott LLP
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British Columbia Ministry of Finance you are making a query on the adoption of his proposal for a restricted insurance agent licensing regime for incidental insurance salesmen. The proposal is similar to what already exists in the other three western provinces (and, soon, New Brunswick), but BC indicates that it may consider including additional industries and additional flexibility in its regime. Therefore, BC companies that see opportunities in this area should consider submitting comments, which are due October 3, 2022.
The granting of licenses to restricted insurance agents is provided for in art. BC 174.1 Financial Institutions Amendment Act, 2019, which will be proclaimed in force once the details of the restricted licensing regime have been finalized. As described in consultation documentThe BC consultation focuses on the norms and rules that will accompany the legislation, and in particular on the following issues:
- the restricted licensee classes (ie, the types of businesses that will be eligible for restricted licenses);
- the insurance classes that can be sold under a restricted license; Y
- How this new regime will affect existing exemptions under the Insurance Licensing Exemption Regulations.
Some of the issues raised in the consultation may be included in BC Insurance Council regulations or in rules and regulations. The Insurance Council will consult separately on the proposed rules.
Restricted Licensee Classes
British Columbia’s Ministry of Finance is proposing a “restricted license” regime under which certain business classes insurance agent licenses may be issued that are restricted to classes of insurance that are “incidental to the ordinary business of the licensee.”
Under similar regimes in place in Alberta, Saskatchewan, and Manitoba (and planned for New Brunswick), the classes of businesses for which restricted insurance licenses may be issued include:
- Deposit institutions: credit protection, travel and life insurance;
- Transport companies – travel and cargo insurance;
- Travel agencies – travel insurance;
- Automobile, RV, Boat, and Other Vehicle and Equipment Dealers: Credit Protection, Equipment Warranty, and Guaranteed Asset Protection Insurance;
- Sales finance companies and mortgage brokers – credit protection insurance;
- Customs brokers and freight forwarders – cargo insurance;
- Funeral service businesses – funeral insurance;
- Car (and other vehicle) rental agencies: rented vehicle insurance; Y
- Portable Electronic Device Sellers: Portable Electronic Device Insurance.
While acknowledging the importance of consistency across provinces, the Ministry of Finance does not rule out the possibility of excluding some of the above, or potentially adding some or all of the following:
- Storage companies – personal property policies;
- Event companies and ticket sellers: event cancellation policies;
- Leasing companies (movable property and office furniture) – product warranty and damage protection policies;
- Leasing companies (equipment, vehicles, heavy machinery) – vehicle or product warranty policies;
- Educational institutions: travel medical policies for students outside the province; Y
- Tour operators and public carriers (airlines, bus companies, ferry companies): trip interruption or cancellation policies.
BC’s regime could end up differentiating itself from other provinces in another important respect: the Ministry of Finance has stated that it is willing to consider granting restricted licenses to BC licensees to sell classes of insurance that are Noincidental to your business. For this to happen, the Ministry would have to be convinced of the benefit for consumers.
Future of existing ILER exemptions
The Ministry of Finance proposes that some of the existing exemptions under the Insurance Licensing Exemption Regulations (“ILER”) is partially or totally repealed. If this occurs, companies that have had ILER exemptions for any of the following may need to obtain one of the new restricted licences:
- product warranty insurance;
- credit insurance (sold by credit institutions, mortgage brokers and others);
- Vehicle warranty insurance (sold by motor vehicle dealers);
- Travel insurance (sold by travel agencies or transport companies); Y
- Funeral services insurance (sold by funeral directors).
An example scenario for a partial repeal would maintain an exemption for products below a certain value but would require a restricted license for coverage above that threshold.
The Ministry of Finance proposes to prescribe (allow) certain insurance classes under the restrictive licensing regime (in addition to the licensee classes discussed above). In doing so, they would be following the example of the other provinces, but the Ministry of Finance is clear that it cannot prescribe exactly the same types of insurance. Additionally, some classes that are currently exempt under ILER could potentially be permitted under the restricted license regime.
In addition to the above, the Ministry is considering including the following classes of insurance in the restrictive licensing regime:
- Personal effects property insurance (storage companies);
- Purchase protection insurance (retailers, credit card companies);
- boat rental insurance (boat rental companies);
- Damage protection insurance (movable property and office furniture leasing companies); Y
- Event cancellation insurance (event and ticket sales companies).
The Ministry of Finance is seeking input from stakeholders, including (but not limited to) industry views on questions such as the following:
- Which companies should and should not be prescribed as potential licensees?
- What kinds of insurance should and should not be prescribed?
- Which ILER exemptions, if any, should be repealed in favor of offering one of the new restricted insurance agent licenses (and should the repeal be in whole or in part)?
- When (if ever) should exceptions be made to the general expectation that restricted licensees will be restricted to classes of insurance that are incidental to their ordinary business?
- Should there be license exemptions for low-value products?
- Should there be a maximum value for insurance policies (or for certain types of insurance policies) sold by licensees of restricted insurance agents?
- Would a deferred sale model be advisable for any class of restricted agent (ie a model where insurance could not be offered until a certain number of days after the primary purchase)?
- What rules should apply to the conduct of a restricted licensee’s insurance business (for example, regarding disclosure, cooling-off periods, commissions and fees, etc.)?
please see the consultation document for the full list of questions on which comments are requested.
As noted above, public consultation is ongoing, with comments due on or before October 3, 2022. The open and flexible approach of the Ministry of Finance indicates that industry submissions could have a significant impact on the final form of the restricted licensing regime.