Supervision and inspection

The AMF intends to focus its supervisory efforts, with respect to section 83.1 of the Act respecting the distribution of financial products and services This link will open in a new window on the disclosures that must be made on the firm's website and, regarding "written communications with clients", on the firm's written communications through which it invites a given person to purchase personal-lines automobile or home insurance products.

Where to make these disclosures?

• On its website.
• In written communications by which the firm invites personal-lines insurance clients to purchase automobile or home insurance products:
  • Examples of communications covered:
    • Any written solicitation addressed personally to a prospective customer;
  • Examples of communications not covered:
    • Unaddressed mass solicitation;
    • Renewal letter addressed to a personal-lines automobile insurance customer inviting him to purchase a home insurance product;
    • A simple communication to set up an appointment, whether via social media, text message or any other means;
    • E-mail correspondence following an initial solicitation e-mail in which the disclosure was made.

What to disclose?

For the damage insurance brokerage firm that offers automobile and home insurance products directly to the public:

1. On its website: Names of the insurers for which it offers these insurance products:
   • All insurers (and not banners or wholesalers) are covered, including both "general" and "sub-standard" insurers.
     • A firm does not have to disclose the names of all the insurers to which it may have access, for example through a banner, but only those for which it offers products.
2. In written communications by which the firm invites personal-lines insurance clients to purchase automobile or home insurance products (or those sent directly by a third party, such as an insurer, wholesaler, etc., on behalf of or jointly with the firm): The name of at least 3 of these insurers, and how to obtain a complete list of them.
3. On its website AND in its in written communications by which the firm invites personal-lines insurance clients to purchase automobile or home insurance products: The name of any insurer to which more than 60% of automobile or home insurance premiums are paid.
   
   Home insurance, for the purposes of the Regulation respecting damage insurance brokerage, is defined as insurance covering only property and civil liability related to the primary residence owned or rented by the insured (it is not necessary to disclose the exact percentage of volume placed with this insurer).

For all brokerage firms

1. On its website AND in written communications by which the firm invites the public to purchase damage insurance products : the name of the financial institution, financial group or related legal entity that holds an interest in shares issued by the firm representing more than 20% of the firm's equity capital.
   • Shares that do not carry the right to vote or the right to receive a share of the firm’s remaining property on liquidation must be excluded from the calculation of equity capital. These shares are usually referred to as “preferred” shares. Example: "Our firm has financial ties with insurer ABC Inc.

1- Disclose the name of the insurer to which more than 60% of premiums are paid

Under Section 2 of the Regulation respecting damage insurance brokerage, a broker who offers a personal-lines automobile or home (primary residence) insurance products directly to the public must, before inquiring into the client’s situation in accordance with the first paragraph of section 27 of the Act respecting the distribution of financial products and services (chapter D-9.2), disclose to the client the name of any insurer with which the aggregate of risks placed represents 60% or more of the total volume of risks placed in personal-lines damage insurance by him as an independent representative or by the firm or the independent partnership on behalf of whom he is acting, calculated on the value basis of written premiums annualized as at 31 December of each year, as well as this percentage.

There are several ways to comply with this disclosure obligation. For example, in the AMF’s view, a firm could disclose this information in its telephone greeting.

If the broker communicates with the client in a way other than by telephone (in writing, in person, etc.), and, as a result, that the client does not hear the disclosure in the telephone message, the broker must ensure that the disclosure is made verbally or in writing.

A broker who makes this disclosure is exempted from the following obligations:

1. the obligation, under section 4.8 This link will open in a new window of the Regulation respecting information to be provided to consumers, to disclose the business relationship referred to in the second paragraph of section 4.10 This link will open in a new window of the Regulation; and
2. the obligation, under section 4.13 This link will open in a new window of the Regulation, to confirm in writing the disclosure referred to in subparagraph 1.

2- Disclose the three types of business relationships (section 26 of the Distribution Act and sections 4.8 to 4.13 of the Regulation respecting information to be provided to consumers)

1. Ownership interests: any direct or indirect interest held by an insurer in the ownership of a firm or held by a firm in the ownership of an insurer;
2. Financing: where an insurer that is a financial institution, a financial group or a legal person related to the financial institution or financial group grants a benefit by lending a sum of money or granting any other form of financing to a firm, its executive officers, directors or shareholders (or other legal persons for which these executive officers, directors or shareholders are also executive officers, directors, shareholders or partners)
3. Concentration: when 60% or more of the risks in personal-lines insurance are placed with a single insurer or insurers that are members of the same financial group. Does not have to be disclosed to commercial-lines insurance clients.

When?

• Before offering a product; and
• When a broker places a risk with an insurer, he must confirm in writing, when the policy is issued, the disclosure he has made regarding his business ties with this insurer. He must also disclose in writing, at policy renewal, these business relationships as well as those established during the past year (he must also do so verbally if he has verbal communication with his client).

How?

By using the mandatory expressions set out in Schedule 4 of the Regulation respecting information to be provided to consumers This link will open in a new window, i.e.:

For ownership or financing relationships:

• “Our firm has a financial relationship with the insurer ABC Inc.”;
• “The insurer ABC Inc. has granted a loan or financing to our firm.”; or
• “Our firm is owned in part by the insurer ABC Inc.” or “Our firm owns part of the insurer ABC Inc.”.

For concentration relationships:

• “Our firm does business primarily with the insurer ABC Inc.” or “ABC Inc. is our firm’s principal insurer.”.

Where to make these disclosures?

• On its website.
• In written communications by which the agency invites personal-lines insurance clients to purchase automobile or home insurance products (or those sent directly by a third party, such as an insurer on behalf of or jointly with the agency):
  • Examples of communications covered:
    • Any written solicitation addressed personally to a prospective customer;
  • Examples of communications not covered:
    • Unaddressed mass solicitation;
    • Renewal letter addressed to a personal-lines automobile insurance customer inviting him to purchase a home insurance product;
    • A simple communication to set up an appointment, whether via social media, text message or any other means;
    • E-mail correspondence following an initial solicitation e-mail in which the disclosure was made.

What to disclose?

• Name of the insurer with which it has an exclusive contract, and
• Products covered by the contractThe products covered by the contract, which must be disclosed, correspond to the classes of insurance in the Regulation under the Act respecting insurance This link will open in a new window.

What?

• The fact that the firm on whose behalf he is acting is an insurer or has an exclusive contract with a single insurer (section 32 of the Distribution Act); and
• The business relationship that he, or the agency on whose behalf he is acting, has with the insurer with whom he is about to place a risk (verbally before placing the risk). This must also be confirmed in writing when the policy is issued or renewed (sections 4.9 and 4.13 of the Regulation respecting information to be provided to consumers).

How?

By using the mandatory expressions set out in Schedule 4 of the Regulation respecting information to be provided to consumers, i.e.:

For ownership or financing relationships:

• “Our firm has a financial relationship with the insurer ABC Inc.”;
• “The insurer ABC Inc. has granted a loan or financing to our firm.”; or
• “Our firm is owned in part by the insurer ABC Inc.” or “Our firm owns part of the insurer ABC Inc.”.

For concentration relationships:

• “I am an agent for the insurer ABC Inc. and I propose only products offered by that insurer.”.

A damage insurance brokerage firm (registered under section 75 of the Distribution Act) may present itself using one of the following titles:

• Damage insurance brokerage firm, or;
• Firm in damage insurance (section 11 of the Regulation), or;
• Financial services firm, if it is registered in at least two sectors governed by the Distribution Act or if it is also registered as a dealer in group savings plans or a dealer in scholarship plans (section 13 of the Regulation).

A damage insurance firm registered in other sectors governed by the Distribution Act must, if it uses the title of Damage Insurance brokerage firm or Damage Insurance Firm, as applicable, use one of the following titles:

• Firm in the insurance of persons;
• Firm in the group insurance of persons;
• Firm in claims adjustment;
• Firm in financial planning;
• Financial services firm, if it is registered in at least two sectors (section 13 of the Regulation);
• Firm in the brokerage of financial services, if it satisfies the conditions prescribed in at least two of the following provisions: those in the third paragraph of section 75 of the Distribution Act and those in sections 14.2 to 14.5 of the Regulation (section 14.6 of the Regulation).

A damage insurance agency must present itself using the following title:

• Damage insurance agency (this title is mandatory at all times)

A damage insurance agency that is also registered in other sectors governed by the Distribution Act must use the title Damage insurance agency, and must, in addition, as applicable, use one of the following titles:

• Firm in the insurance of persons;
• Firm in the group insurance of persons;
• Firm in claims adjustment;
• Firm in financial planning;
• Financial services firm, if it is registered in at least two sectors or if it is also registered as a dealer in group savings plans or a dealer in scholarship plans (section 13 of the Regulation).

An independent representative in damage insurance presents himself or herself using the following title:

• Damage insurance broker, independent representative

An independent representative in damage insurance registered in other sectors governed by the Distribution Act also use the other title(s) associated with the sector(s) or sector class(es) in which they are authorized to practice.