|Agents and Brokers: A Reminder Regarding Your Obligations to Advise||Agents and Brokers: A Reminder Regarding Your Obligations to Advise||http://chad.ca/en/members/professional-practice/toolbox/the-advisory-role/582/agents-and-brokers-a-reminder-regarding-your-obligations-to-advise||An insured completes a request for a quote online: must I ask all the questions in the form over again to confirm the information the insured entered? From now on, can I ask my assistant to collect a client’s personal information? Can she also offer advice on a specific endorsement?
These are just some of the questions and concerns that have arisen since the passage of Bill 141.1 While the wording of section 27 of the
Act respecting the distribution of financial products and services (ARDFPS) has been amended, the obligations to identify clients’ needs and appropriately advise them remain at the heart of this section:
Insurance representatives must
inquire into their clients’ situation to assess their needs. They must ensure to
appropriately advise their clients regarding matters that fall within the sectors in which they are authorized to act; if they can, they shall offer their clients a product that meets their needs.
Moreover, the Authority has issued a
providing clarification on this topic.
Personally Collecting Information No Longer Mandatory
Since June 13, 2018, it is no longer mandatory to personally collect information from clients. Information may be collected by a non-certified individual or through a computer-based tool, such as an online form.
However, in order to “inquire into [your] client’s situation,” it is your responsibility, as a broker or agent, to familiarize yourself with the information gathered and analyze it so as to ensure its authenticity and confirm that it is complete and accurate. To quote the Authority’s notice, “Representatives remain fully responsible for the collection of information and cannot transfer this responsibility to the persons they mandated.”
In fact, “taking into account the intervention of a third party that could affect the carrying out of his professional duties to the detriment of his client or the insured”2 is a breach of ethics, since your ultimate goal is to understand the needs and exact situation of the insured in order to act as a conscientious advisor.
Providing Advice: Serious Grounds for Complaint
Failure to explain, inform and advise
is the most frequent complaint of the 525 grounds for complaint noted by the Syndic’s Office in 2018. And this, despite the fact that as an agent or broker, you are responsible for providing your clients with the necessary information on the products you offer to help them make an informed choice.
In its notice, the Authority provides a non-exhaustive list of examples illustrating the concept of “insurance advice.” In particular, your role is to:
• recommend or compare a product, coverage or an endorsement;
• answer questions relating to a contract in force;
• give clients explanations about their situation or a product;
• help clients choose a product;
• submit or explain a quote to a client, etc.
In addition, before making a contract, you must “describe the proposed product to the client in relation to the needs identified and specify the nature of the coverage offered.”3
This obligation includes
explaining limits and exclusions
[article in French only] in order to help the insured properly understand the contents of the contract.
Notice regarding information collection and insurance advice
states that “the AMF intends to apply the law so that a firm ensures that persons who act on its behalf and who provide insurance advice to its clients are representatives. Consumers who contact a firm to obtain advice expect that advice to be provided by a representative, i.e., an insurance professional who has the required competencies and who must comply with professional development obligations and a code of ethics. The AMF also intends to apply the law so that representatives do not mandate non-certified persons to give their clients insurance advice.”
The Chambre de l’assurance de dommages (ChAD) would like to reiterate that an individual offering insurance products must always be a representative who is duly certified by the Autorité des marchés financiers (the Authority) and supervised by the ChAD.4
We must never forget that the purpose of the Act is to protect consumers; thanks to the expertise and wise advice you provide, you are the first line of defense in protecting insureds.
Answers to your questions
An insured completes a request for a quote online: must I ask all the questions in the form over again to confirm the information the insured entered?
As an agent or broker, it is your responsibility to analyze the information collected, ensure its reliability, and confirm that it is complete and accurate. This will allow you to “inquire into [your] clients’ situation,” identify their needs and properly advise them. In addition, the computer-based tool should be designed to meet the requirements of the Autorité des marchés financiers in this respect.
Is my assistant now allowed to collect personal information from a client?
A non-certified person may be mandated to collect a client’s personal information, however the information must be limited to purely factual information on the client’s situation. The person must do so in a manner that is impartial and unbiased in order to ensure that the information is reliable. For example, the person may not “inform a client that they have the option of disclosing certain information, give the client explanations, or make remarks that might influence the client.”
You remain responsible for the information collected. Furthermore, there must be no connection between this person’s remuneration and the fact that a sale was made.
Can a non-certified person who collects information offer practical advice, given that from now on, this act is not exclusively reserved for damage insurance representatives?
The information collected by a non-certified individual working in a firm must be limited to factual questions, for example, “What type of heating do you use?” Answer: Heating oil. In this case, the person cannot then ask, “Would you like an endorsement to cover heating oil leaks?”
Moreover, a non-certified person may not offer advice related to a product if they meet only one of the following three criteria: (1) offers insurance products, (2) is directly or indirectly remunerated by a firm or an insurer that is authorized to sell this product, and (3) is directly or indirectly remunerated by a firm or an insurer to which he or she refers clients.
* Examples drawn from the Notice regarding information collection and insurance advice, issued by the l’Autorité des marchés financiers.
Any questions? Feel free to contact us at firstname.lastname@example.org
1.An Act mainly to improve the regulation of the financial sector, the protection of deposits of money and the operation of financial institutions. This bill, which was passed on June 13, 2018, amends a number of sections of the ARDFPS, including section 27.
3.Section 28 of the ARDFPS.
4.With the exception of a few products already distributed without a representative, for example Q.P.F. no. 5.
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