Damage insurance brokerage firm
Under section 75 of the Distribution Act, a firm must meet the following conditions in order to be registered as a damage insurance brokerage firm:
- It is not an insurer;
- Its capital must comply with section 150 of the Distribution Act and no financial institution, financial group or legal person related thereto may hold:
- an interest allowing it to exercise more than 20% of the voting rights attached to the shares issued by the firm; or
- an interest representing more than 50% of the value of the firm’s equity capitalEquity capital generally refers to the funds permanently invested in the business by the shareholders. It is increased or decreased by earnings or losses accumulated from year to year that have not been distributed to the shareholders. Under sections 83.1 and 150 of the Distribution Act, a firm’s equity capital must exclude shares that do not carry the right to vote or the right to receive a share of the firm’s remaining property on liquidation (usually referred to as “preferred” shares). This is a general definition and other characteristics may apply, depending on your situation. Please discuss this matter with your accountant or legal counsel..
- Its representatives are damage insurance brokers who comply with section 6 of the Distribution Act and, where they offer personal-lines automobile insurance and personal-lines home insurance directly to the public, section 38 of the Distribution Act.
- Where a firm acts without the intermediary of a natural person (through a digital space), it complies with sections 6 and 38 of the Distribution Act.
A firm that does not meet these conditions may not be registered as a damage insurance brokerage firm. It must be registered as a damage insurance agency and meet all the criteria related to this title.
Damage insurance agency
An agency must meet the following conditions in order to be registered as a damage insurance agency:
- The natural persons through which it pursues its activities are damage insurance agents;
- Is an insurer or is bound by an exclusive contract with a single insurer.
An independent representative or independent partnership may not register as an agency. They must qualify based on the conditions for the title of damage insurance brokerage firm that are applicable to them.End of the warning
Damage insurance agent
Under section 5 of the Distribution Act, a damage insurance agent is a natural person who offers damage insurance products directly to the public on behalf of a firm that:
- is an insurer; or
- is bound by an exclusive contract with a single damage insurer.
An agent offers damage insurance products directly to the public only.
A representative cannot simultaneously be an agent and a broker.End of the warning
Damage insurance broker
Under section 6 of the Distribution Act, a damage insurance broker is an individual who offers a range of damage insurance products from several insurers directly to the public. A broker may also offer damage insurance products from one or more insurers to a firm, an independent representative or an independent partnership.
As stated in section 38 of the Distribution Act, damage insurance brokers who offer insurance products directly to the public must, each time they offer an insurance product belonging to a class determined by regulation of the AMF, i.e., automobile insurance or home insurance (section 1 of the Regulation respecting damage insurance brokerage) to a client who is a natural person, be able to obtain quotes from at least three insurers that do not belong to the same financial group, within the meaning assigned to that expression by section 147 of the Distribution Act.
Damage insurance sector
The damage insurance sector consists of two classes:
- Personal-lines damage insurance: This class is limited to products pertaining to property and civil liability that are intended to meet the personal, family or household needs of a natural person or an independent worker at his residence or pertaining to residential buildings containing not more than six dwellings.
- Commercial-lines damage insurance: This class is limited to products pertaining to damage insurance for commercial businesses, including in respect of independent workers.