23 August, 2017 07:00
Photo : Freepik
The consultation on the rule of 20 % has also attracted the interest of insurers, who have taken a stance in the debate
CAA-Quebec, which distributes property and casualty insurance through its own office of insurance, also questioned the notion of conflict of interest in its submission filed in the context of the consultation of the rule of 20 %. According to CAA-Quebec, the current provision limiting the ownership of brokerage firms in damage insurance does not guarantee the objectivity of the broker and does not avoid conflicts of interest.
«The shareholders of a brokerage firm is one thing, but in fact what prevents an insurer from granting commissions contingency, to be the owner of the computer systems of a firm, or be the co-signer of a bank loan underwritten by one of the leaders in the firm of brokers in damage insurance ? All these other types of financial ties, unfortunately, is never disclosed to consumers, then they severely limit the objectivity of the brokers tied to a brokerage firm with very strong links with an insurer «, one can read in its brief filed in the course of the consultation.
CAA-Quebec adds a layer with respect to the commission contingency. «Some brokers position themselves currently in a situation of conflict of interests because of the insurers through brokers offer financial incentives when they place a large proportion of their business volume from the same insurer, thereby limiting their ability to really «shop» for their customers. The best known of these incentives is likely to the commission by contingency. «The agency is even proposing to abolish them.
For the Corporation of the insurers direct de dommages du Québec (CADD), the obligations relating to the disclosure of business ties between insurers and brokers remain rather limited and general in nature. «If a broker has an obligation to disclose participation that an insurer holds in the property of his firm, or the fact that it is a loan to an insurer, it is not obliged to disclose the content or the conditions which are attached to it,» says the organization in his memory.
The CADD also gives the example of the expressions Our firm has a financial relationship with the insurer, ABC, or even Our firm does business mostly with the insurer ABC. «They are very vague. They do no the consumer to really understand the relationship between the insurer and the broker, nor the independence of the board. «
The CADD also gives the example of a firm that focuses 90 % of its volume with a single insurer. The Corporation notes that it will comply with the act by declaring » that it is mainly the case with this one. «These current practices of disclosure do not allow the consumer to understand nor how or to what extent a firm or not to take an increased benefit to place the risk with such or such an insurer. «
For these reasons, the CADD is also proposing to put in place a monitoring framework of the trade agreements that have the potential to impair the independence of the board promulgated by the dealer.