Canada: Canadian insurance Regulators Provide Recommendations On Electronic Commerce

Last Updated: June 16 2013
Article by Carol Lyons

On May 23, 2013, the Canadian Council of Insurance Regulators (CCIR) issued a position paper entitled Position Paper: Electronic Commerce in Insurance Products and stakeholders have until July 26, 2013 to prepare submissions in response. The position paper is a follow up to an issues paper released in January 2012 by CCIR's Electronic Commerce Committee (ECC) entitled Electronic Commerce in Insurance Products. Twenty-five submissions were received as a result of the January 2012 issues paper, and the May 2013 position paper is ECC's communication back to stakeholders and recommendations to CCIR members1 on this topic.

The real driver for this exercise is the significant rise in Internet usage by insurance providers. This is borne out, with respect to auto insurance, by a 2013 Canadian Auto Insurance Satisfaction Study conducted by J.D. Power & Associates which revealed, among other things, that the percentage of Canadian auto insurance customers using non-traditional channels, such as an insurer's website, has increased by as much as seven percentage points from 2012, while customer interaction by means of call centres declined by one to four percentage points.2 According to the position paper, CCIR's concern is that customers should be afforded access to necessary information and protections, even when purchasing insurance by means of an electronic channel (e.g. over the Internet).

Consumer protection

The purpose of the position paper is to obtain stakeholders' views on the following seven consumer protection goals identified by CCIR:

1. Access to information/advice from a licensed advisor

The position paper notes that, even with increased Internet use, there is still a substantial information imbalance between the consumer and the insurer. The ECC's position is that online insurance providers – whether they are licensed agents, insurers or firms – should be responsible to ensure that consumers make informed decisions. Accordingly, the CCIR recommends that insurers should be required to:

  • provide consumers with the necessary information regarding the product that is being offered, in a timely and comprehensive way;
  • give the consumer access to suitable advice, depending upon the complexity of the product; and
  • educate the consumer as to the importance of obtaining suitable advice.

2. Knowledge as to whether the consumer is dealing with a regulated entity

Because information on the Internet derives from many countries and various sources, consumers are at risk of not knowing the proper identity of the insurance provider. The CCIR recommends that information about the insurance provider should be "easily, directly and permanently" accessible on the websites of all providers that distribute insurance products online, such as legal name, address, telephone and electronic contact information, a statement regarding the provider's registration status and information about how to file a complaint (including a link to the regulator's website).

3. Adequate access to product information

The position paper notes that consumers need to have access to a minimum amount of information about an insurance product and require sufficient disclosure in order to give them an understanding of the product and its associated costs, all in a "simple, clear and timely manner". The CCIR recommends that, when offering insurance products online, the insurance provider should draw the consumer's attention, before they purchase the product, to the following information, in clear and simple language:

  • type of consumer for whom the product is intended;
  • main characteristics of the product;
  • options and coverage provided;
  • exclusions and limitations;
  • total premium and taxes (or the basis for the calculation);
  • cancellation rights, details of duration of cancellation period and procedures for cancellation; and
  • any time limit on the validity of the information provided.

4. Opportunity to review and verify the consumer's own information

Since consumers themselves are the ones who complete online insurance applications without assistance, the CCIR recommends that online providers of insurance products should give the consumer a summary of the information submitted by them in the application process, before a contract is concluded, for verification purposes.

5. Access to terms and conditions of the insurance

The position paper notes that it is important that consumers have the ability to maintain a copy of the application and the insurance contract for reference purposes. The CCIR recommends that providers offering insurance products online should give the consumer a copy of the application and the insurance contract "in a form that enables reproduction and storing".

6. Ability to rely on the transaction being implemented

Because computer systems are not fail-safe, an attempted online insurance transaction could result in the actual placement not being carried out, information not being transmitted or even unauthorized alteration of a document. The CCIR recommends that online insurance providers should be responsible to use computer systems that are reliable. 

7. Security of consumers' personal information

Since internet use brings with it potential vulnerability to such risks as unauthorized disclosure of personal information, identity theft, fraud and money laundering, the CCIR recommends that online insurance providers should be responsible to ensure that the consumer's personal information is maintained securely.

Paper transactions

The position paper also reviews and makes recommendations regarding the issue of electronic beneficiary designations. Questions arising with respect to the validity of beneficiary designations are ultimately resolved by the courts, and admissibility and evidence play a role in the final determination. Insurers in Canada typically require beneficiary designations to be made in paper form and, where there is no written designation, insurers treat the insurance contract as having no designated beneficiary and, as a result, they pay the insurance proceeds to the estate. The position paper points out that this practice may in fact be contrary to the consumer's original intention and can result not only in delays, but in the insurance proceeds becoming taxable and subject to claims of creditors. Accordingly, the CCIR recommends that:

  • insurers should have effective systems in place by which they can offer consumers the option of designating and changing beneficiaries by electronic means;
  • electronic beneficiary designations should be followed up with confirmation in writing; and
  • any regulatory or best practices guidelines should address the evidentiary issues.

Termination by insurer

Generally speaking, notice of termination of an insurance contract by an insurer must be given by registered mail or personal delivery. The original CCIR issues paper queried whether insurers should be able to terminate by electronic means (e.g. with both parties' consent), but there was not a broad consensus to this approach. Therefore, the CCIR is not recommending any changes to existing paper termination requirements at the current time.

Comparison shopping

Websites that offer price comparisons are becoming increasingly popular. The position paper points out that providing comparisons of coverage options is similar to the advisory role of brokers and questions whether these sites could in fact be carrying on activities that require licensing. In addition, the manner in which these sites are remunerated, and their ownership structure or business relationships with the insurers, call into question their independence and raise disclosure issues. In the position paper, the CCIR notes that there should be a bright line between the simple act of comparison shopping and the transaction of insurance. Accordingly, the CCIR recommends that:

  • comparison shopping sites should not provide advice, hold themselves out as licensed insurers or representatives or post insurance applications (which could mislead consumers); and
  • regulators should survey these sites for enforcement purposes.

Social media

The position paper also addresses social media, due to the growing popularity of this medium. The CCIR notes that, since social media is a form of communication just like any other, current legislative and regulatory frameworks apply. As such, the rules relating to ethics, advertising, suitability of the product for the consumer and file record-keeping should be enforced when insurers and representatives use social media.


Existing insurance legislation and regulation has not kept in step with technological changes, such as the Internet as a means of shopping for, choosing and concluding purchases of insurance products. The CCIR's position paper addresses a number of issues that need to be resolved in order to ensure that changing methodologies for consumer/intermediary/insurer interaction are subject to appropriate licensing requirements and reasonable consumer protection measures. Because these methodologies for consumer interaction continue to evolve, it is necessary to adopt relevant legislative and regulatory requirements that will provide more certainty as to the boundary line between activities that should be restricted/regulated or require licensing and those that should not. As stated in the introduction, stakeholders have until July 26, 2013 to provide commentary on the CCIR's recommendations.

1 The CCIR members are the insurance regulators (typically the Superintendents) of each province/territory of Canada who are in a position to recommend legislative changes in their respective jurisdictions. A representative of the Office of the Superintendent of Financial Institutions is an associate member of CCIR.

2 Jeremy Bowler, J. D. Power & Associates, Channel Surfing, Canadian Underwriter May 2013, p.62

The foregoing provides only an overview. Readers are cautioned against making any decisions based on this material alone. Rather, a qualified lawyer should be consulted.

© Copyright 2013 McMillan LLP

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Carol Lyons
In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions