Longueuil, June 9, 2020 – The Regroupement des cabinets de courtage d’assurance du Québec (RCCAQ) has reviewed the report submitted on June 3 by the Autorité des marchés financiers (AMF) concerning insurance sales by auto dealerships. The reported data specifically concerning sales of replacement insurance (QPF No. 5) comes as no surprise to insurance brokers, who have been protesting this situation for a number of years.
The finding that consumers pay on average 62% more for replacement insurance via a dealership than via a certified representative is a source of grave concern for brokers. This figure is even more alarming when set alongside the fact that, each year, just under 70% of all replacement insurance policies are sold via the dealership distribution network.[1]
In the RCCAQ's view, this state of affairs must be addressed immediately with a view to giving consumers better information on the real value of the insurance products they purchase and making them aware that replacement insurance can be purchased more economically from other sources, e.g. insurance brokers, while also enjoying the benefits of professional advice.
"We have been condemning these practices for several years now. We welcomed the introduction of tighter oversight measures by the AMF back in June 2018 but there obviously remains much to be done to rectify this situation, which is clearly disadvantageous to consumers," said Éric Manseau, executive director of the RCCAQ. "The prices charged by auto dealerships in Quebec are exorbitant and consumers aren't necessarily able to make an informed insurance decision when they're purchasing or leasing a vehicle."
In its report, the AMF rightly focuses on the lack of transparency in the process, particularly when the replacement insurance premium is included in the vehicle financing amount. Even if the insurance policy is terminated, the consumer keeps on paying the same total monthly financing amount. Reimbursements of insurance premiums are carried out by reducing the term of the financing agreement, which the RCCAQ strongly opposes.
"Insurance products sold by auto dealerships are available from brokers at a lower cost and with much greater transparency," noted Mr. Manseau. "We voiced our concerns in this regard to Quebec's Consumer Protection Office (OPC) in conjunction with the review of the Consumer Protection Act and put forward a list of potential solutions designed to help consumers navigate the situation. So we will keep on raising this matter with various government bodies as we continue to work collaboratively on consumer support initiatives."
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[1] Excerpt from the AMF's 2018 Annual Report on Financial Institutions: "The replacement insurance market is largely dominated by insurers using the no-representative distribution model, in this case, auto dealerships. In fact, the latter group accounts for 69.2% of all policies sold over the past year and 78.4% of all written premiums" (unofficial translation).
