Life Insurance Company e-Newsletter #1

September 4, 2015

  

Update on Regulatory Activities

 
With the publication of this newsletter, the Financial Services Commission of Ontario (FSCO) has now begun to communicate with insurance companies directly through e-newsletters on recent and upcoming activities in the Licensing and Market Conduct Division. The newsletters will be issued by FSCO periodically and will highlight legislative amendments and provide updates on regulatory activities and emerging issues/topics. This will ensure that insurance companies have a clear understanding of FSCO’s expectations about their role/responsibilities in ensuring compliance with the law.
 

Updating Errors and Omissions Insurance through Licensing Link

 
A new function has been added to Licensing Link: Online Insurance Licensing System. It allows life insurance agents to update their current errors and omissions (E&O) insurance information directly. This new function will include email notification to life insurance agents advising them that, according to FSCO’s records, their E&O insurance policy is about to expire.
 
The email notifications will be issued by Licensing Link to agents 30 days before the E&O insurance policy is scheduled to expire. Further email notifications will be sent when it expires and when it is 30 days past due. If the agent does not update their E&O information through Licensing Link, FSCO may post a comment to this effect on its public registry while enforcement action is considered.  
 
A reporting feature was added to Licensing Link to allow a sponsoring insurer to download a list of its licensed agents, including FSCO’s record of the E&O expiry date for each agent. The new data available to insurers on Licensing Link will allow insurers to determine if FSCO has accurate and current E&O information from their agents. FSCO expects insurers will take appropriate action to ensure their agents are in compliance with the legal requirement to maintain E&O insurance as part of the insurers’ supervisory duties under section 12 of Ontario Regulation 347/04 - Agents.
 
For more information, see:
 

Inactive Agents Can Surrender Their Licenses

 
As part of the 2014 Product Suitability Review, FSCO requested 1,300 agents to complete a questionnaire on life insurance product suitability. There were a number of agents who did not return the survey. FSCO determined that some of the non-responding agents were not conducting insurance business, thought their licence was inactive, or otherwise unaware of their obligations as a licensee.
 
An agent's licence remains in force until it expires or the Superintendent has granted approval to surrender their licence. An agent who wants to surrender his or her licence must complete the Application for the Surrender of an Insurance Agent Licence. Conditions may be imposed on the surrender. Here’s a list of frequently asked questions on this surrender process. 
 
Agents who are not actively conducting insurance business always have the option to request a surrender of their licence, which will end the obligations to maintain E&O insurance and to complete continuing education requirements. FSCO expects insurers to provide agents with the necessary information on how to properly surrender their FSCO licence when they become aware that any of their sponsored licensed agents no longer wish to conduct insurance business.
 

On-Site Reviews of Life Insurance Agents

 
As a result of the findings from the 2014 Product Suitability Review, FSCO is conducting on-site examinations of life insurance agents to verify compliance with the Insurance Act and related regulation (Ontario Regulation 347/04). The examinations will take into consideration agent assessments of product suitability as well as the confirmation of valid E&O insurance and the completion of continuing education (CE) credits.
 
In keeping with FSCO’s progressive approach to enforcement, FSCO may apply different regulatory tools depending on the examination findings to achieve a desired regulatory outcome. The type of regulatory action taken will be proportionate to the findings and may include Administrative Monetary Penalties and/or licence suspension-revocation. For more information about FSCO’s regulatory actions, see: How FSCO Monitors, Investigates and Where Warranted Takes Enforcement Actions on the Sectors it Regulates.
 
FSCO’s analysis of the examination findings may include the level of oversight of agent activities by insurers. This information will inform the development of a life insurer compliance examination program. More information about this program will be provided in the future.
 

Life Licence Qualification Program (LLQP) Update

 
FSCO continues to work with other members of the Canadian Insurance Services Regulatory Organizations (CISRO) on the harmonized LLQP - on track for implementation on
January 1, 2016.
 
CISRO educational experts have been working closely with industry subject matter experts to ensure the LLQP course content is up-to-date with enhancements about consumer protection and covers the material new life insurance agents need to know to have the required level of financial literacy to advise consumers.
 
The harmonized LLQP will remain an entry level program. It will continue enabling qualified individuals to obtain licences to work as life insurance agents. The pre-licence course and the examination will have similar proficiency standards to the current LLQP and will be comparable in length and level of difficulty. The fee for the course will remain affordable. It will also make it easier for life insurance agents to work in other Canadian provinces.
 
The harmonized LLQP was modified and will continue to be modified in response to stakeholder feedback. CISRO continues to hold quarterly meetings with stakeholders and organize individual meetings upon request. You are encouraged to provide input. Regular updates are published on the CISRO website [New Window].