MaY | JUNE 2008
TAKING A LOOK AT COMPLIANCE...
Clarification Regarding Certain
Types of Mandatory Disclosure
for Agents and Brokers
Michèle Fournier, FPAA, C.I.B. | Damage Insurance Broker | Inspector
Insurance representatives, trainees
and grandfathered employees (“article
547s”) must all disclose certain
types of information to their clients.
Their obligations may be found in
the Act respecting the distribution
of financial products and services, in
its implementation regulations and
in the Code of ethics of insurance
representatives. During an inspection,
the ChAD inspector verifies whether
the firm and its representatives are
aware of their obligations and how
they fulfill them.
In this article, we will be discussing
three obligations: properly identifying
oneself, disclosing fees not included
in the premium and disclosing the
names of the insurers.
The Obligation to Identify Oneself1
Upon first meeting the insured, the
representative must identify himself,
giving his first and family names.
He must declare the title or titles he
is authorized to use as they appear
on the certificate delivered by the
Autorité des marchés financiers:
agent in damage insurance or broker
in damage insurance. Furthermore,
he must identify the firm on behalf
of which he pursues activities. This
obligation is very important. I am you
sure you agree that first impressions
count!
What about trainees and “article
547s”? A trainee must not forget
to introduce himself as such, while
an “article 547” must not use a title
that could lead clients to believe that
he holds a certificate. Although the
regulation does not specify which
title an “article 547” should use, he
is prevented from using titles such as
“customer service representative” or
“sales representative”. These titles
may cause confusion. Titles such
as clerk, employee or assistant are
preferable.
Titles used on business cards or in
professional correspondence must
also follow the above rules.
The Obligation to Disclose Fees
Not Included in the Premium2
The representative must disclose
all fees that are not included in the
premium such as professional fees
and inspection fees. He must also
ensure that he explains to the client
whether or not he will be reimbursed
should the policy be cancelled. The
invoice the client receives must
therefore list these fees separately
from the premium paid and, since
the client must be notified of these
fees before the policy comes into
force, it is important to ensure that he
receives his invoice on time. However,
fees exceeding $50 for personal lines
insurance and $250 for commercial
lines insurance must be disclosed
at the time the policy is written. A
detailed invoice must follow. In such
cases, to ensure transparency and
avoid taking the client by surprise,
we recommend that you verbally
Source : Regulation respecting the pursuit of activities as a representative (regulation number 2), articles10 to 12
Sources :Act respecting the distribution of financial products and services, article 17
Source : Regulation respecting information to be provided to consumers (regulation number 3), articles 4.2 to 4.4
2
Source : Code of ethics of insurance representatives, article 22
3
Sources :The Act respecting the distribution of financial products and services, article 31
2
Source : Regulation respecting information to be provided to consumers (regulation number 3), article 4.6
1
2
2
notify your client while conducting
the transaction, no matter what the
amount of the fees charged.
Obligation to Disclose the Names
of Insurers3
We would simply like to remind you of
the existence of this obligation. Do not
forget that if the client so requests,
the representative must disclose the
names of all the insurers with whom
he can place the client’s risk.
The above are only a few of the
obligations that the ChAD inspectors
will verify. There is also the obligation
to disclose business relationships, a
topic which I discuss in another article
in this issue of the ChADPresse.