March 11, 2016
Identification of Primary Insurer Upon Renewal
Beginning in the spring 2016, renewal applications will require non-sponsored life insurance agents to indicate the primary insurance company with whom the agent conducts or expects to conduct most of their business (primary insurer). This information will be used by the Financial Services Commission of Ontario (FSCO) for notification purposes, such as when an agent fails to maintain Errors and Omission (E&O) insurance, has not completed the requirements for continuing education (CE), or has suitability issues on a renewal application.
In addition to having an agent compliance system in place, the role of the primary insurer is to assist FSCO to resolve any outstanding agent compliance issues and, where possible, help and avoid the need for disciplinary action.
FSCO will provide insurers with the names of agents who have listed that insurer as their primary insurer.
Renewal Notification Enhancements – update your email address
Currently, FSCO sends all insurance agent renewal notices by mail 60 days prior to the expiry of the licence. Coming in 2016, FSCO's Licensing Link will be upgraded to provide insurance agent renewal notices by email 60 days before the licence expires. FSCO is considering sending a follow-up email seven days before the licence expires if no action has been taken to renew the licence. The notices will be copied to the sponsoring insurer, if applicable, or the agent's primary insurer.
FSCO is moving in an e-business direction and emailing the agent renewal notices is a more efficient way to provide timely and effective service while saving on postage and processing costs. As such, it is important that agents add and/or update their email address in Licensing Link so they can receive these renewal notices, as well as other important notices such as information about maintaining E&O insurance coverage, and continuing education requirements.
Agent Contact Information
When you are applying for an insurance agent licence or updating your contact information in Licensing Link, it is helpful to include a business telephone number to provide FSCO with more than one way of contacting you, if necessary. Agents have a statutory responsibility to ensure their contact information is current in Licencing Link at all times.
In December, FSCO reminded insurers that it's their responsibility to verify an agent's licence status before making commission payments. To ensure an agent's licence status remains active, it's important that agents maintain E&O insurance and complete the necessary continuing education, so that commissions can continue to be paid by insurers.
Insurers were informed that they can verify an agent's licence status on the Licensed Representatives Listing on Licensing Link.
FSCO wants to remind agents about the importance of selecting suitable insurance products that meet the needs of the client. Agents must also ensure they retain written documentation, including records of client discussions and emails, that clearly demonstrate how the product is suitable for the client.
As part of an Agent Best Practices Approach, agents should complete a written "Needs Analysis," for each client that includes:
- relevant disclosures
- product information
- updated "Know Your Client" information.
New Life Licence Qualification Program (LLQP) in Effect
As mentioned in the July 2015 Insurance Agents e-Newsletter, FSCO joined with Canada's other insurance regulators through the Canadian Insurance Services Regulatory Organizations (CISRO) to streamline and update the entry level qualification program for new life and accident and sickness (A&S) insurance agents. This initiative involved replacing the educational qualifications in different provinces with one common LLQP standard to be used across Canada.
The updated LLQP came into effect on January 1, 2016. Those applicants seeking life or A&S licences in Ontario can find information on approved course providers and booking an exam on FSCO's website.
New Exam Administrator for the LLQP in OntarioDurham College
was the successful bidder in the competitive procurement process to become the examination administrator for the LLQP in Ontario, effective January 1, 2016.
Insurance Act amendments life insurance (Part V) & accident and sickness (Part VII) Update
As indicated in the November 2015 Life Insurance Agents e-Newsletter, amendments were made to the Insurance Act - life insurance (Part V) and accident and sickness insurance (Part VII)
The changes, which will come into force on July 1, 2016, modernize provisions dealing with issuing a policy to:
- allow insureds and claimants easier access to documents
- provide more consumer flexibility and protection, including expanded grace periods for the reinstatement of certain types of policies
- harmonize the law with other jurisdictions
- A revised definition of insurable interest that includes non-natural persons (i.e. corporations) that can now have an insurable interest in the lives of directors, officers and company employees.
- The grace period for individual life insurance policies that have lapsed for non-payment can now have an additional 30 days to reinstate the contract by paying the overdue premium, subject to the life insured still being alive.
- If an insured fails to disclose or misrepresents a fact relating to insurability regarding additional coverage, an increase in insurance or any other change to the insurance, the contract will be rendered voidable by the insurance company – but only in relation to the addition, increase or change – subject to a two year limit.
- Individuals insured under a contract, but who are not the policyholder, can apply to the court to terminate or reduce the amount of insurance if they believe their life or health might be endangered by the insurance.
The changes include four new regulations in addition to the Insurance Act changes. The following regulations provide for transition measures and apply to new policies and persons becoming insured after the implementation date:
The following regulations prescribe confidential information for the purpose of a group insurance policy:
FSCO is committed to protecting consumers in the sectors it regulates, and will take enforcement action when required to increase compliance with legislation and regulations.
Since November 2015, FSCO issued 13 Administrative Monetary Penalties (AMPs) to insurance agents. All infractions resulted from failure to comply with the regulated standards of practice and licensing requirements, including soliciting business without a licence, failure to have valid errors and omissions insurance, failure to complete the continuing education requirement, and providing false or misleading information to the Superintendent. The average AMP was $1,528.00.
During this time period FSCO also ordered the Revocation of agent licence and denied applications for a licence by three agents.
To view all public enforcement notices, refer to FSCO's Enforcement Activities – Insurance Agents web page.