To the attention of all insurance companies licensed to transact life insurance in Ontario
We are enclosing a copy of two regulations which introduce a new regulatory system and update the rules governing individual variable insurance contracts (VICs) relating to segregated funds in Ontario. These regulations appeared in The Ontario Gazette, dated May 3, 1997, as did the associated guidelines of the Canadian Life and Health Insurance Association.
Ontario Regulation 132/97 sets out the updated rules for VICs. Ontario Regulation 133/97 amends Ontario Regulation 677 which now applies only to VICs issued before July 1, 1997 by insurers that will no longer issue or sell such policies after that date.
The guidelines were developed by an industry committee in consultation with insurance regulators across Canada. They have been adopted by regulators as a national standard for ensuring that all Canadians have the same protection. This also facilitates inter-provincial trade by avoiding different standards for companies in each jurisdiction.
The Ontario regulations provide a level playing field for insurers by ensuring enforceability by the OIC of the industry guidelines. The regulations do not add any rules to those included in the industry guidelines.
The collaboration between the industry and the regulators has been key to the successful development of the harmonized standards that will be implemented in the various jurisdictions.
Enhancement of consumer protection and industry self-regulation
The new guidelines enhance protection for purchasers of VICs as well as provide for an industry-based monitoring system for compliance purposes.
Improved consumer disclosure requirements will give consumers better information about the product, the investment objectives of the segregated fund and its performance. As well, audited financial statements must be provided to contractholders. Contractholders will also have additional rights and options when segregated funds are terminated or partitioned.
Acting Superintendent of Insurance
May 14, 1997