Jan. 20, 2020 — The NEW BRUNSWICK’s Financial and Consumer Services Commission, Insurance Division has released a consultation paper on the incidental selling of insurance.
The commission, known by the acronym FCNB, is proposing a restricted licensing regime for products that are sold by non-insurance businesses in conjunction with the sale of other products or provision of services.
These include products such as those offered by car dealers, banks, credit unions, mortgage brokers and retailers.
“For example, a consumer may obtain a loan to purchase a vehicle and the auto dealership may offer insurance that might pay off the balance of, or make payments on the loan in case of disability or death,” the agency said in the paper.
The FCNB has asked stakeholders to submit comments on the proposals in the consultation paper by Jan. 31.
The commission said that there has been a significant growth in the sale of insurance in these situations rather than by agents or brokers who are licensed under the New Brunswick Insurance Act.
“Incidental insurance sales already occur in the marketplace,” an FCNB spokesperson told Thompson’s.
“The proposals for a restricted insurance licence will clarify that these activities fall within FCNB’s authority and bring accountability for businesses that engage in these sales through licensing. We expect to receive feedback from representatives of brokers and insurers about any concerns that they may have.”
FCNB’s proposal is to regulate the incidental selling of insurance through a restricted licensing regime similar to those that have been adopted in Alberta, Manitoba and Saskatchewan.
It said the goal is to protect consumers by making sure the people selling incidental insurance are knowledgeable and accountable.
“The proposed restricted licensing framework will clarify that these sales are regulated and will enhance consumer protection by introducing market conduct rules for businesses and employees engaged in these sales,” the agency said.
“The proposals will also increase harmonization with other jurisdictions who have updated their legislation.”
The Insurance Brokers Association of New Brunswick is currently working on a response to the paper, its president Robert E. Kimball said.
“The IBANB is in favour of any changes that create a regulatory environment that ensures a level playing field for insurance intermediaries, and more importantly has consumer protection as the primary concern,” said Mr. Kimball, who is commercial manager at Pearson Insurance in Sussex, N.B.
“As the business environment evolves and insurance product types and availability become more and more complex — while at the same time being offered to consumers who often don’t fully understand what the products are — it is more and more important to make sure the individuals selling the products are properly trained and licensed to sell them,” he said.
“Without being properly trained, or licensed, there is risk of consumers being improperly advised as to what insurance products they may need and what is available in the marketplace.”
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