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Rule of 20 % : the RCCAQ offers tests of independence


Hubert Roy

28 June 2017 13:30

Photo : Freepik

The Regroupement des cabinets de courtage d’assurance du Québec (RCCAQ) has another solution that the abolition or the maintenance of the rule of 20 %. The union of brokers is proposing to establish tests of independence for the brokerage firms.

This is what emerges from the memory that the Collection was deposited at the ministère des Finances du Québec in the framework of the consultation on the shareholding that can have an insurer in a brokerage firm. The RCCAQ has unveiled the content of the insurance Journal, immediately after you have shared to its members.

Three benefits

The Collection asserts in its brief that three benefits would result from the independence tests established that it wishes to see carried out by thefinancial markets Authority. The first is that these tests would protect the consumers by assuring them that they are dealing with a broker.

The second advantage put forward by the RCCAQ is that it would ensure the independence of the brokerage firms. Third advantage : the latter would have the flexibility to choose the business model that they intend to focus on.

Control of law and control of fact

The RCCAQ stresses that the tax Law already includes mechanisms that allow the establishment of the independence tests requested. This model is established on two principles : the control of law and control of fact. The control law comes to measure the degree of influence that a holder of shares exercises on the board of directors of a company.

As regards control, it can take into account elements such as the terms of an agreement between shareholders that affect the control and can address issues such as economic dependency, financial, operational, and decision-making daily. Or even the existence of a large debt payable on demand or under certain conditions.

Two contracts with agencies

In his memory, the RCCAQ has made another bold statement. The union of brokers recommends that the government require that each brokerage firm has, at any time of insurance contracts with at least two insurance companies of the individuals. The Grouping made the same request to the insurance companies.

For the RCCAQ, this solution would undermine the fact that there are fewer insurers in the market. As well, require firms to maintain two contracts, agency, personal insurance and business insurance would ensure a balance in terms of concentration.

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