On May 25, 2021, the Canadian Insurance Services Regulatory Organizations (“CISRO”) released its proposed Principles of Conduct for Intermediaries (“Principles”), which are designed to complement and supplement the Fair Treatment of Customers Guidance (“FTC Guidance”) released by the Canadian Council of Insurance Regulators (“CCIR”) and CISRO in 2018. The comment period closes July 9, 2021.
The Principles reflect minimum regulatory conduct standards that are common across Canada regarding the fair treatment of customers, while recognizing that each jurisdiction has its own regulatory approach for the conduct of business. Intermediaries should conduct their business, following the relevant Principles that apply, while ensuring compliance with all applicable laws, regulations, rules or regulatory codes within their respective jurisdiction. Any stricter or more specific requirements, rules or standards of conduct take priority over the Principles. The Principles also provide consumers with a clear statement of the minimum standards of conduct that apply to adjusters, agents, brokers and other intermediaries.
The Principles reinforce the fair treatment of customers as a core component of the intermediary business culture. This includes conducting business in an honest and transparent manner. Expectations for the conduct of insurance business may differ depending on the nature of the relationship to the customer (whether it is direct or indirect), the type of insurance provided and the distribution method. Intermediaries with oversight responsibilities must ensure that their employees and representatives meet high standards of ethics and integrity.
Intermediary is given broad meaning and will differ based on the applicable definitions within different jurisdictions across Canada. It encompasses adjusters, individual agents, brokers and representatives as well as business entities that distribute insurance products and services, including managing general agencies and third-party administrators. It also applies to all distribution methods, including the internet. The Principles apply to all intermediaries that are authorized to do business within any jurisdiction, whether licensed, registered or exempted from licensing or registration. In the Principles, customer refers to a policyholder (which itself, as the case may be, includes a certificate holder) or a prospective policyholder with whom an insurer or intermediary interacts, and includes, where relevant, other beneficiaries and claimants with a legitimate interest in the policy
The 10 fundamental duties of intermediaries, as set out in the proposed Principles, are as follows:
- Comply with all applicable laws, regulations, rules and codes;
- Put the customers' interests ahead of their own;
- Identify, disclose and manage conflicts of interest;
- Provide objective, accurate and thorough advice that is suitable to the circumstances disclosed by each customer;
- Disclose and explain information relevant to the customer's decision-making clearly and understandably;
- Disclose all necessary and appropriate information about product promotions;
- Handle claims, complaints and disputes in a timely and fair manner;
- Take appropriate measures to protect personal and confidential information, while collecting only such information as is necessary, using it solely for the purposes to which the customer has consented;
- Maintain an appropriate level of professional competence, including attendance at continuing education and training courses, while not acting outside one's areas of competence; and
- Provide appropriate oversight of employees and third-party contractors.
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