July 12, 2017 13:30
For CAA-Quebec, the practice of insurance broker is hampered by many potential sources of conflicts of interest. One of them relates to the commission of contingency, that the automobile club proposes to abolish.
And this is just one of the proposals of CAA-Quebec, which has chosen to intervene in the discussion of the rule of 20 % because she owns a firm in damage insurance which distributes products of auto and home insurance to its members. The Journal of insurance also met with Suzanne Michaud, vice-president, insurance, CAA-Québec.
She points out that CAA-Quebec has always given the mission to intervene in the issues that affect the protection of consumers, in particular by the design of his list of the worst roads in Quebec. The automobile club has made in the recent consultation on travel insurance. Be involved in the consultation of the rule of the 20 % seemed appropriate for CAA-Québec, but also to make known to the minister of Finance of Québec, other issues that deserve his attention, » said Ms. Michaud in an interview.
A disclosure deficient
And in order to build his memory, CAA-Quebec has taken account of the conversations that agents hold with consumers when the latter ask for a quote. Ms. Michaud has she even listened to several recordings of conversations.
«We talk to them and you realize that they think that when they are dealing with a broker, they will receive multiple bids. They are astonished when they only have a single. In insurance, we know this reality that some of the dealers shop with a single insurer. Consumers do not know however not, » she said.
Ms. Michaud noted that it is mandatory for the agents working for a direct insurer to disclose that they offer exclusively the products of a company. This is also the case for the firm’s employees of CAA-Quebec, which only offers the products from Prysm, a subsidiary ofiA Auto and home. «We are the most transparent ! And it’s healthy to disclose ! Everything is more clear as well, » she said.
Ms. Michaud said, however, believe that there are still brokers who work with several insurers to get the best protection for their client. «We know, however, that many brokers have only two choices. An insurer with which they concentrate up to 90 % of their business, and another for the case of sub-standard if it cannot be placed in the primary insurer. The concept of shopping is not the same as that which the consumer expected. «
To solve the problem, CAA-Quebec provides that dealers who focus reveal from the outset of the game what proportion of their volume is placed in an insurer, but also to provide a list of insurers with which the broker magasinera. «It also means our customers get told by a dealer that they have access to all insurers. It is not true that they have access to Desjardins or in The Capital. Yet, many people have this perception, » she said.
A title to set
What title to give to the brokers who concentrate on ? CAA-Quebec does not believe that the regulatory authorities would allow them to carry a dual title. Ms. Michaud also points out that brokers have a deep attachment to the title of broker. With that in mind, CAA-Quebec has proposed the establishment of three securities, which would preserve the status of entrepreneurs of brokers in a situation of concentration.
The first category would be that of the insurance agents employed by an insurer or a firm of insurance and selling exclusively the products of one insurer.
The second is that of the insurance agents with the status of self-employed or established in business, and selling exclusively the insurance products of one insurer. The affiliates are autonomous and brokers concentrates would be in this category would have to appoint. CAA-Quebec has put forward the term general agent, since it exists in life, but being aware that these do not perform the same functions.
Finally comes the insurance brokers who have the status of self-employed or established in business, and selling the products of several insurance companies.
Invitation to revise upwards the commission based brokers
For CAA-Quebec, certain brokers place themselves in a situation of conflict of interests because of the insurers through brokers offer financial incentives when they place a large proportion of their volume of business with them, thereby limiting their ability to really shop for their customers. And the agency cites in the first place the commission of contingency, paid by the insurer to the broker at the end of the year, and which corresponds to a participation in its profits.
«It has become over the years an incentive to place a very large amount from an insurer in particular. The broker loses his independence, and in our opinion, » said Ms. Michaud.
It however proposes a solution to avoid this conflict of interest : to abolish the commission contingency. In return, the insurers brokerage should increase their commission-based insurance auto, which is 12.5 %, and home insurance, which is 20 %.
«The premiums have changed little in recent years. Their commissions have remained the same while the cost of living increases. There would be a place for brokers that it be reviewed. It would help to ensure the independence of brokers. Would there have been, however, an insurer who has the courage to raise the commission paid to dealers first ? «
4 submissions to
Another proposal of CAA-Quebec : independent dealers should submit four submissions to their customers. The organization is not the first to make this proposal. The insurer Aviva Canada has also done the same in his brief submitted to the ministère des Finances du Québec.
Ms. Michaud said that his organization came to this conclusion by questioning the members who call for them to get a quote. CAA-Quebec estimates that the people of 25 years and more shop from three insurers, while those aged 16 to 25 years of shopping with four insurers. «Even if the number of insurers that the brokerage has decreased in recent years, it is believed that the independent broker can present four bids to his client. «