CCIR releases issues paper on electronic commerce

February 27, 2012
On February 6, the Electronic Commerce Committee (ECC) of the Canadian Council of Insurance Regulators (CCIR) released an issues paper relating to the sale of insurance products in the modern age of electronic commerce. The paper summarizes the current uses of electronic media in marketing, distributing and servicing insurance products and outlines issues which may be of concern to regulators or may be inhibiting the use and growth of various media, particularly because most current insurance legislation was enacted many decades ago.

The paper is intended to stimulate debate about the issues noted in the paper and launch a process of consultation on those issues, as well as to educate and to build a common understanding of the topic and issues for both regulators and stakeholders.

The ECC recognizes that social media have begun to play an important role in consumer choices, although that is not a focus of the paper (but stakeholders wishing to comment on social media's role in insurance distribution are invited to do so).

According to the paper, four main activities are currently undertaken on websites in connection with the distribution of insurance: (i) information is provided to consumers; (ii) in some cases quotes are offered; (iii) in some cases, the ability to conclude insurance contracts online is offered; and (iv) insurance representatives are made available behind-the-scenes to provide advice to consumers. The paper also notes that Canada currently does not have any regulatory or oversight framework specific to the distribution of insurance products online.

Thus, the CCIR is particularly interested in obtaining feedback regarding how to best achieve consumer protection goals in the context of electronic commerce. Specifically, the CCIR seeks to ensure that consumers:

  • have access to additional information/advice from a licensed intermediary. Examples provided of ways to achieve this goal include enabling consumers who visit a provider's website to contact a licensed intermediary at any time and/or having the insurance application reviewed to ensure that the product in question suits the consumer's needs;
  • know they are dealing with a regulated entity. This could be addressed by including certain information about the provider on the provider's website;
  • have and understand the necessary information about the products in question. The paper suggests that providers could draw the consumer's attention to certain product information before the purchase is completed;
  • have the opportunity to review the accuracy of the information they provide;
  • are aware of the terms and conditions of the products in question;
  • can rely on the transaction; and
  • enjoy security of their personal information.

The paper also considers the need to address electronic forms and communications. The CCIR specifically questions whether current legislation which requires that beneficiary designations be made only in writing should be changed. According the CCIR, such restrictions sometimes result in a consumer's estate being designated as the beneficiary by default in cases where a beneficiary is designated in an electronic application.

Comments on the paper are being accepted until April 27, 2012 and, the CCIR notes, electronic submissions would be preferred.

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