Which Acts Are Reserved for Agents and Brokers?
Although certain acts may be performed by non-certified persons within the context of offering an insurance product, agents and brokers must remain vigilant since you are the professionals responsible for any act carried out by a non-certified person.
In the final analysis, it is your responsibility to “describe the proposed product to the client in relation to the needs identified and specify the nature of the coverage offered.” [1] Furthermore, you must “indicate clearly to the client any particular exclusion of coverage, if any, having regard to the needs identified and provide the client with the required explanations regarding such exclusions.”[2]
This article is a response to your questions on this issue: it provides clarification regarding your obligations, and the limits on acts that may be delegated to non-certified persons.
- Collecting personal information
- Filling in an Insurance application form
- Changing an address or modifying a contract
- Answering a client’s technical or administrative questions
- Describing an insurance product
- Verifying the insurance contract before sending it to the insured
Collecting personal information
Since June 2018, you are no longer required to personally collect information from your client; a non-certified person may do so, or the client may provide the information himself by filling out an online form or interacting with a chatbot. However, since it is up to certified individuals alone to “inquire into their clients’ situation,” [3] it is your responsibility, as agents and brokers, to properly analyze the information you have been given to ensure that it is complete, accurate and up to date so that you may effectively advise your client.
If a non-certified person assists you in collecting information on your client, the information must be collected in a neutral, unbiased manner. Thus, a non-certified person must never give their opinion on the relevancy of disclosing certain information or “give the client explanations, or make remarks that might influence the client.”[4]
For example, if the person asks the client what type of heating he uses and the answer is “fuel oil,” the non-certified person cannot go on to say, “Do you want the endorsement covering fuel oil spills?” [5]In automobile insurance, a non-certified person could not ask the client whether she would like to purchase an endorsement for replacement cost. With respect to credit ratings, the non-certified person could ask for consent to obtain the credit score, but could not provide any further information on the reasons for this request, nor any explanations regarding the consequences if the insured refuses to do so. As soon as a question comes up, an agent or broker must take over the discussion.
Information that includes any advice or clarification on the appropriateness of a product is not factual information; providing such information is an act reserved for certified individuals. When necessary, ensure that the non-certified person refrains from performing such acts and that they transfer any enquiries to you. Lastly, this person’s compensation cannot be tied to whether or not a sale was made.
| Your responsibility | What a non-certified person may do |
|---|---|
|
Analyze the information submitted to you and ensure that it is complete, accurate and up to date in order to validate the insured’s needs. You are responsible for the information collected, even if you do not collect it yourself. |
Collect factual information on a client. For example: address, consent to obtain a credit score, information on the vehicle to be insured, characteristics of the building to be insured, age of the water heater. Attention: This person’s compensation cannot be tied to whether or not a sale was made. |
Filling in an Insurance application form
Since non-certified persons are authorized to collect a client’s information within the context of offering insurance products, they may also fill in insurance application forms. However, the same conditions as those connected with information collection apply: in other words, non-certified persons must limit themselves to completing the sections of the form requiring factual information and refrain from offering any advice. Lastly, they must transfer the enquiry to you if, for example, the client wants more information or if the insurer’s system generates a note requesting further information (for instance, in a case where the water heater is too old to be covered by the insurance contract).
If the act of filling in an insurance application form is delegated to a non-certified person, it is your responsibility, as an agent or broker, to analyze the information you have been given to make sure it is complete, accurate and up to date, and to advise your client on the coverage required.
| Your responsibility | What a non-certified person may do |
|---|---|
|
Analyze the information submitted to you and make sure that it is complete, accurate and up to date in order to validate the insured’s needs. Appropriately advise clients and, if possible, offer a product that meets their needs. |
Complete the sections of the insurance application form requiring factual information. For example: address, consent to obtain a credit score, information on the vehicle to be insured, characteristics of the building to be insured, age of the water heater. |
Changing an address or modifying a contract
The agent or broker must document all changes to the client’s situation during the term of the contract or at renewal time since such changes could affect coverage.
A change of address, adding a driver, or removing certain coverages are all examples of changes that only you can make since it is your responsibility to analyze the consequences of these changes on your client’s needs, where appropriate. If certain coverage in the contract needs to be revised, you must advise your client appropriately and explain to them that if there is an aggravation of risk, you will have to disclose it to the insurer.
Do not forget to note in the client file what was discussed, any advice offered and decisions made by the insured. Moreover, if the insured asks to make changes in coverage to the contract, you can use this model letter to document them.
| Your responsibility | Non-certified persons are prohibited from carrying out this act |
|---|---|
| Analyze whether the changes to your client’s situation will change his needs. If it is necessary to modify any coverage in the contract, you must advise your client appropriately and explain to him that if there is an aggravation of risk, you will have to disclose it to the insurer. | Only agents and brokers may make changes to a contract. |
Answering a client’s technical or administrative questions
| Your responsibility | What a non-certified person may do |
|---|---|
| Perform actions related to the administration of the client’s file, in accordance with your code of ethics. |
Perform actions related to the administration of the client’s file. For example: send a copy of a contact to the insured, confirm the amount of their monthly direct debit payment, re-set their password to access their on-line account. |
Describing an insurance product
It is the agent’s or broker’s responsibility to describe the product. You must, “before making an insurance contract, describe the proposed product to the client in relation to the needs identified and specify the nature of the coverage offered”.[6] You must also indicate and clearly explain to the client any particular exclusion of coverage having regard to the needs identified.
Although accompanied by a warning, the Autorité des marchés financiers (the Authority) nevertheless makes an exception that allows a non-certified person to provide the description of an insurance product’s main features: cold calling (solicitation). For instance, “a call centre agent could approach clients and briefly describe an insurance product in order to determine their interest in the product. Clients could then be transferred to a certified representative who would do a needs assessment and offer the product.” [7]The Authority nevertheless warns against this practice, in order to avoid having “the non-certified person […] perform an act that extends beyond what he or she may perform.”[8]
In cases where a client has been recommended to you after a non-certified person described a product to him, make sure that you analyze his needs, explain the coverage and the exclusions, and confirm the product that is most suitable for him before describing it to him.
| Your responsibility | What a non-certified person may do |
|---|---|
|
Before concluding a contract, describe the proposed product in relation to the needs identified and explain the coverage offered. Indicate and explain any exclusions of coverage in the contract. |
Non-certified persons are prohibited from performing this act, except when making cold calls. In such situations, a non-certified person may describe the main features of the insurance product and then transfer the client to an agent or broker who does the needs analysis and offers the product. |
Verifying the insurance contract before sending it to the insured
A non-certified person cannot review the contract issued by the insurer before sending it to the insured. You are responsible for verifying that the insurance contract issued is error-free and that it reflects your discussions with the insured and his wishes.
Furthermore, if you are responsible for entering the information directly into the insurer’s system, make sure to review all the information before issuing the contract.
| Your responsibility | Non-certified persons are prohibited from carrying out this act |
|---|---|
|
Verify that the insurance contract issued is error-free and that it reflects your discussions with the insured and the insured’s wishes. If you are responsible for entering the information directly into the insurer’s system, make sure to review all the information before issuing the contract. |
Only agents and brokers may verify whether the insurance contract is suitable. |
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