By RCCAQ

When it tabled its budget in March, the Quebec government announced that it intended to look into the issue of group insurance. This ties in with the government-authorized pilot project touching on taxi transportation services, in particular Uber.

Seeing as group insurance products are not very well known, we asked André Bois of the law firm Tremblay Bois Mignault Lemay to discuss them with us.

How would you define group insurance?

The easiest way to understand this product is to compare it with group plans for life, health and disability insurance offered by companies to employees. In these cases, the employers enter into a framework contract with an insurer to provide their employees with personal insurance coverage. Employees then subscribe to the insurance and are covered in accordance with the terms negotiated by their employer.

Are any such products currently available in Quebec?

Quebec's Civil Code regulates group insurance products, although there are no specific provisions for property and casualty insurance. Consequently, the only products available are highly specific, such as auto insurance offered under credit card programs for short-term vehicle rentals. In those cases, the credit card companies enter into a framework contract with an insurer to provide auto insurance coverage for their cardholders.

How do these products work?

Take, for example, personal group insurance offered by certain employers. The insurer offers the employees comprehensive coverage based on the average risk profile of the potential insureds. In other words, the insurer calculates that the typical profile of this company's employees represents a given level of risk and sets the premium based on the average risk per individual.

The P&C group insurance product works in much the same way and is also based on determining an average risk profile for the individuals covered by the policy.

How are these products distributed?

If authorized to under the Civil Code, auto dealers or financial institutions could offer this product to their clients. For example, a bank could sign a framework contract with an insurer and then offer its mortgage clients the chance to take out home insurance sold by the bank.

The main feature of group insurance is that it offers the same protections and the same coverage to everyone. It doesn't matter whether or not some homes are located in high-risk areas or whether or not they have a wood stove or whether or not they're near a hydrant, etc., all of the insureds would receive the same coverage.

In addition, as a product distributor with no insurance specialists on staff, a bank might decide to limit the scope of information gathered on the homes to be insured. Needless to say, the bank's advisors wouldn't necessarily be in a position to warn clients about potential coverage exceptions.

Consequently, it could happen that the insured property has a specific feature making it ineligible for coverage. For example, a specific type of incident might not be covered, even though the initial information gathered made no mention of this exclusion.

Another potential risk when taking out bank-offered P&C group insurance is that the insureds may not take the time to read the contract and may not be aware that a restriction applies to their situation. If they think they're covered, they wouldn't take out any supplementary insurance and they might not be covered in the event of an incident.

Do you see this as a new threat for insurance brokers?

It could lead to the appearance of new distributors of P&C products on the market. It's definitely an issue that should be monitored closely.

I'm particularly concerned about first-time home or vehicle buyers who might not yet have a relationship with a broker. They may be more likely to end up with a product that's not right for them and that could leave them without adequate coverage in the event of an incident. That's what we should be primarily concerned about.