7 February, 2018 10:53
Patrick Déry, Louis Morisset, Philippe Lebel, and Frédéric Pérodeau | Photo : Denis Méthot
Thefinancial markets Authority puts himself on the side of the minister of Finance, Carlos J. Leitão, who refuses to prohibit the resale of life insurance contracts. The regulator also considers that the broker advised the client at the time of purchase should also be the advisor again at his redemption.
Bill 150 proposes, through an amendment to the civil Code of Quebec, to introduce a clause in a life insurance contract limiting the right of the contract holder to assign its police during the first two years if such assignment is made in favour of a transferee who has no interest in the life of the insured, a third-party investor, such as a company, for example.
After this two-year period, the transfer would be possible, but the insurer would have a period of 30 days after the redemption if he wishes to cancel the policy by paying the transferee the amount it has paid to acquire it.
Abuse in the United States
Last week, a parliamentary committee, thecanadian Association of insurance companies of persons (CLHIA) had launched an alarm signal about the market of the redemption has given rise to many abuses in the United States.
A very large number of u.s. States have had to regulate this practice known as STOLI. The CLHIA agreed that the market is still weak in Quebec, but said he was concerned of possible drifts in the future if he were to take the magnitude.
Reduce the possibilities for transfer will decrease the value
As did a week ago the minister Leitão and the Federation of the age d’or du Québec (FADOQ), the Authority considers that a policy of life insurance may be validly used as a tool of savings or investment. For this reason, it considers that the fact to reduce the possibilities of the transfer could result in the decrease of the value of this personal assets.
It wants to so that the consumer can avail of this financial product as he wishes. The regulator believes that the adviser would have a role to play for those who want to dispose of.
«For us, it would be important to tell consumers when awareness campaigns well to surround himself with appropriate advisors. To the question of whether the insurance advisor is an advisor is appropriate, the answer is yes, of course, said Philippe Lebel, director-general of legal affairs, during an exchange with parliamentarians. The insurance advisor will be able to advise his client during the purchase and during the redemption «.
The Authority says it is, however, fully in agreement with the intention of the government to reduce, if not eliminate, the enthusiasm of disposals of life insurance policies purely for speculative made at the expense of the consumer, especially if he is vulnerable.
In addition to the prohibitions legislative, the Authority has indicated that it intends to conduct information campaigns and awareness-raising so that people are well informed of their rights in terms of assignment of life insurance policies and the operation of the new provisions foreseen in the draft law. It encourages people already interested in this type of transactions well-informed and to the need to consult with a certified representative, who is required by his code of ethics to advise the client to the best of its interests.
The Authority also expects to complete the future legislative framework for the dissemination of good practices for insurers and representatives involved in these transactions.
For now, the Authority says it does not have a flood of complaints from this market. If ever some see it as a windfall to be exploited, she said to the elect that it could be the first to recommend the government to enhance the supervision of this market.