January 31, 2018 13:30
Michel Paquet, Suzie Pellerin and François Cholette | Photo : Denis Méthot
Thecanadian Association of insurance companies of persons (CLHIA) in the fight against the assignment of a life insurance policy for speculative purposes. The Québec Finance minister, Carlos J. Leitão, however, has hinted that he did not prohibit it.
Even if this situation does not appear a problem in Quebec, it wants to avoid serious abuse, as live in the United States and have forced many States to legislate in this matter.
The measures in the bill insufficient
The CLHIA was pleased to see the ministry of Finance to announce its intention to amend the civil Code to regulate trade or traffic insurance, which is expressly prohibited by most canadian provinces. The Association considers, however, that the provisions in the bill 150 is not sufficient to ensure the protection of the consumer, and its more vulnerable clients.
A parliamentary committee on Tuesday in Quebec city, the CLHIA has urged the minister Carlos J. Leitão to act more effectively. The Association has even provided the model of the draft law on the assignment of life insurance policy to a third party and then adopted and promoted in the United States by the National Conference of Insurance Legislator.
These «practices» predatory «repurchase of police shall take one of three forms, described the CLHIA : (1) The regulation of insurance viaticum (Viatical Settlement) where the holder of a policy of which the insured is terminally ill can «sell» (in quotation marks in the text) to a developer in exchange for a sum of money.
2) The assignment of police to discount (Life Settlement) that generally targets the elderly. The proponent claims to offer the policyholder the option to «monetize» (between quotation marks in the text) in his lifetime the value of his insurance policy by offering an amount to become the irrevocable beneficiary to his or her death. This amount is less than the death benefit.
3) The insurance owned by a stranger (STOLI). The sponsor has subscribed to a life insurance policy and offers an amount of money to the elderly or sick. «The concept of life insurance owned by a stranger is susceptible to fraud, supports the CLHIA, because the insurance is written only with the aim of producing a return on investment and not to fill a need for insurance. «
Carlos J. Leitão | Photo : Denis Méthot
Emerging market in Quebec
According to the CLHIA, there is currently an emerging market in Quebec whose sole purpose is to speculate on the imminent death. Suzie Pellerin, assistant vice-president, public and government affairs at the Association, said to the elected representatives of groups that are not regulated are attempting to develop a market for the transfer of life insurance policies for commercial or speculative.
«The benefit of the one who redeems the police depends on the speed with which the insured person dies : it dies soon after the purchase of the policy, the better the investment (redemption) in him will be valuable,» she said.
It is clear from the american examples that the purchase of police for speculative purposes, of vulnerable persons such as elderly, sick or having an urgent need of money has led to practices that are very aggressive. The CLHIA said the fear that the market in Quebec would lead to the harassment from the elders, and even facilitates the laundering of money.
The FADOQ also favourable to the assignment of fonts
However, the Federation of clubs of the age d’or du Québec (FADOQ) are in favour of the principle of the sale of his insurance policy in exchange for a sum of money, a factor which is said to be sensitive to the minister Leitão, who does not discourage this practice for people who want to benefit from it.
«We should be able to find a way to allow this activity when the initiative comes from the insured, he responded. I understand that issues of harassment or pressure sales involved. But when it is the consumer who has decided to do so, I think that we should find a way to enable it, otherwise, as said, the FADOQ, there is a risk of infantiliser the elderly. They can make decisions that are in their interest. How to frame this activity to eliminate the abuse and sales are under pressure ? For this, thefinancial markets Authority has a good role to play. «
The proposals of the CPOMA
The representatives of the CLHIA noted to the minister that there are other solutions that the sale of its life insurance policy, in particular in the form of loans or programs compassion offered by some insurers.
As the government does not intend to prohibit this practice, but appears to be open to better frame it, the Association believes that the solution lies between the current law and a specific law on the redemption of police. The proposed amendments to bill 150, which would have the effect of prohibiting the disposal of the police for consideration during the first two years of its entry into force. In the event of a transfer of the police to a third party, the insurer may, within 30 days of the transaction, to cancel this policy by paying to the purchaser the amount he has disbursed for the purchase of its first owner.