By Christopher Johnson

The adoption of Bill 141 was finalized on June 13 by Quebec’s National Assembly. This marks the end of over three years of work involving all insurance sector stakeholders. First and foremost, I would like to thank our members for their commitment, support and concrete actions throughout this process. Large numbers of members mobilized in every region of the province. I would also like to thank the board members for their involvement, availability and support.

Our work on this issue, however, is far from over. We must get ready to roll up our sleeves again to ensure that the sector has a strong voice while the provisions that will soon be governing brokerage firms are implemented.

A necessary review

The Bill 188 review was essential. During the process, we mobilized and clearly set out our positions aimed at defending brokers’ interests and protecting consumers. Some measures in Bill 141 do not go far enough, in our view, particularly as regards online insurance sales. This new legal framework, however, does establish various benchmarks that will enable us to continue our lobbying efforts in the regulatory area, in addition to removing a legal grey area that did not properly reflect new market realities.

Key aspects of the new legislation

The most noteworthy aspect of the new legislation is the elimination of the requirement to provide quotes from four different insurers, as initially proposed in Bill 150. In this regard, we welcome the openness of Quebec’s lawmakers and particularly that of the government, which remained attuned and sensitive to the sector’s concerns throughout the review. The amendment that was finally adopted, which will require each firm to have three distribution agreements in place in the personal lines, reflects market realities and emphasizes the importance of offering consumers a variety of choices. Another encouraging thing about this measure is that our lobbying efforts paid off: commercial insurance will not be subject to this new requirement.

As regards brokerage firm ownership, maintaining the guidelines in the AMF’s 2007 staff notice will ensure stability for firms that based their business model on these principles. It should be noted that the initial proposal in Bill 150 sparked fears that a major step backwards was about to be taken in this regard. Instead, a financial institution may now hold an ownership stake valued at up to 50% of the value of the brokerage firm’s equity, provided that the shares making up the 50% do not represent more than 20% of the voting rights.[i]  

Not everything in this legislation, however, is entirely to our satisfaction. To take one example, online insurance sales will be permitted without requiring a certified representative to be involved in the transaction. Nonetheless, a number of amendments do take a step in the right direction. Requiring insurers to inform consumers that they have the option of speaking to a representative (who must be certified) will end up raising consumers’ awareness while encouraging them to seek advice.

Our work here is not finished either because the AMF will be able to issue guidelines setting out which insurance products can or cannot be sold online without a certified representative. We will thus be continuing our discussions with the AMF in this regard.

Finally, as regards oversight of our profession and the RCCAQ’s proposal to create a “one-stop shop”, our lawmakers decided to go a different route. The goal now is to engage constructively with both regulatory organizations (AMF + CHAD) to ensure that the oversight process for insurance representatives is as efficient as it can possibly be.

What comes next?

In our view, the new legal framework provides a number of benchmarks that will enable firms to develop and that will serve as the starting point for an inclusive discussion on the future role of insurance brokers. Of course, we will continue to work with the AMF with a view to providing effective benchmarks within the regulations accompanying the new law, e.g. determining which insurance products can be sold online without a certified representative, defining which product categories are subject to the “three distribution agreements” requirement and clarifying the new disclosure rules.

In the meantime, we will be focused on rolling out a series of forward-looking initiatives aimed at promoting the insurance brokerage sector and showcasing the value added that professional brokers deliver to consumers.

[i] In this case, equity does not include the value of any preferred shares.