On April 2, 2015, the Autorité des marchés financiers du Québec (the AMF) released a report titled Internet Insurance Offerings in Québec, through which it endorsed the online distribution of insurance products without requiring the intervention of a registered representative. This report followed a consultation launched by the AMF in 2012, which allowed them to gather viewpoints from different sector participants on the issues associated with insurance distribution via the internet.

In particular, the AMF consultation had the ultimate purpose of ensuring that the public remained protected, now that the internet has become an indispensable tool in the insurance domain.

The AMF analyzed the testimonies it had received, including those from different insurers and financial institutions, insurance representatives, self-regulatory organizations and consumer associations. It then identified eleven requirements for establishing the rules that insurers and online insurance distributors will have to follow. These requirements were also informed by a Canadian Council of Insurance Regulators paper titled Electronic Commerce in Insurance Products.

It must be stressed that one of the findings of studies conducted on this topic is that it would allow providers to reach a younger clientele, adults aged 18-32, whose insurance coverage often seems to be lacking.

Here are some details on the requirements that insurance providers wishing to participate in online distribution must follow:

1. The insurance provider must display certain identifying information on its website at the time of the transaction, including its legal name, address, and telephone and electronic contact information. What’s more, the insurance provider must mention its registration with the AMF and provide information on how a consumer can file a complaint against it.
2. The insurance provider will only be able to complete online transactions without participation by a representative if they can verify the consumer’s identity and have provided him or her with various tools. Accordingly, the insurance provider will have to allow consumers to clearly assess their own insurance needs, provide access to an insurance representative if needed during any step of the process, make consumers aware of the importance of obtaining advice from a certified insurance representative and establish a right to terminate the insurance contract purchased online within a reasonable amount of time following its signature.
3. The provider must make the consumer aware of the essential information pertaining to the insurance policy, in a timely fashion and before the contract is signed. This includes product features, the total premiums and fees that must be paid and a warning about the consequences of making false statements.
4. Disclosure of this essential information must occur “step-by-step” in order to ensure that the consumer understands and that his or her consent to purchase the coverage is valid. The consumer’s confirmation must be obtained to this effect.
5. The language used in each step of the transaction, whether before, during or after the online purchase of the insurance product, must be clear and simple so as not to mislead the consumer.
6. Before issuing the contract, the insurance provider must provide a summary of the information that was used to prepare the quote, as well as the essential information about the insurance product.
7. The contract documents must be sent to the consumer on a durable medium, via the internet or mail, at the consumer’s choice. The consumer must always be able to request a paper copy.
8. Insurance providers must ensure the security of consumers’ personal information at all times, in accordance with the applicable regulations, by adopting policies and procedures on the use of reliable and secure computer systems.
9. In keeping with Title VIII of the Act respecting the distribution of financial products and services, which pertains to distribution of insurance products without a representative, the distributer’s website must contain all of the information and disclosures required by the Act and must make its distribution guide available on its website via a link to the website of the insurer whose product is being offered.
10. The insurance provider must ensure that there is no advertising on the web pages where the consumer completes the insurance application.
11. Finally, the insurance provider must adopt social media policies and procedures in order to ensure control over the content transmitted and compliance with the regulations in effect.

The requirements selected by the AMF were generally well-received by many industry stakeholders, except for organizations composed of brokers and insurance advisors. The latter were primarily worried about a possible decrease in their client base and in the need for their advice.

It is true that certified insurance representatives may be called upon less often by consumers purchasing simple products. However, while all types of insurance products may be sold online, it is likely that advice from a certified insurance representative will remain essential for the purchase of more complex insurance products, such as commercial and professional policies.

The AMF has suggested that the government will have to decide if regulatory amendments are required in order to implement these requirements. However, an analysis of these requirements indicates that no modifications will need to be made to the Act respecting the distribution of financial products and services or the legislation, and that nothing prevents an insurer from immediately beginning to sell insurance via the internet after implementing these requirements.