22 August 2017 07:00
The insurance broker that concentrates its business with an insurer who does not go to the market to find the best protection for his client is likely to find themselves in a conflict of interest.
In his memory occurs in the context of the consultation surrounding the rule of the 20 % shareholding that an insurer can have in a brokerage firm, the Regroupement des cabinets de courtage d’assurance du Québec (RCCAQ) has raised a number of sections of ethics and law, recalling that the commitment to impartiality of the broker was at the heart of the legislation. In the light of these articles, if a broker in a situation of concentration with one insurer and that does magasinerait not the protection of its customer in the market would be at risk of finding themselves in a situation of conflict of interest.
To Me, Andrew Wood, of the law firm Tremblay, Bois Migneault Lemay, is categorical. The articles of conduct that frame the practice in terms of damage insurance in Quebec stipulate that the broker has the duty to prioritise the client’s best interest, not that of the insurer, which has a dominant position in his cabinet. «There may be a problem if it does not magazine not,» says the one who has been the legal adviser of the RCCAQ for many years, in addition to participating in the writing of several laws in insurance over the years in Quebec.
Me Wood recalls the work carried out in 2005 by thefinancial markets Authority, which had given birth to a report that shed light on the links that existed between the insurers, with brokerage firms. Insurers had to pay fines in connection with breaches.
He recalls that the Authority was even went so far as to demand to see the contracts of employment of managers of firms to ensure that they were working in the best interest of the client and ensure that this officer is not vulnerable to pressure.
«There is a problem if the broker does magazine not. The way the market has evolved, a client who has suffered several accidents in the car could today find more advantageous conditions than at the time. He might even go for additional coverage. If the dealer does not test the market, he will not know it. The civil Code is clear to this effect, in a situation of dual mandate, the interest of the client must come first before everything. «
Conflict of loyalty
I Wood also goes further in its reasoning. If it is not in a conflict of interest, the broker who does magazine not may then find himself in a conflict of loyalty. The Supreme Court has also distinguished the difference between the two in the past. The conflict of interest may arise when a representative works for people with interests opposed to it. It is in conflict if it does not prioritize the interest of the client. As for the conflict of loyalty, the representative is at risk if it is aware of make a gesture as to not interfere with his relationship which has an influence on him.
«All of this concerns me ! «says Me Wood. And his reasoning is not limited to the damage insurance brokerage. He gives as example the case of an insurance advisor life who is in a relationship the exclusive agent for an insurer. If he sees that his client would be in need of protection by serious diseases, but that its insurer did not offer, he will have to get out of the market for the offer. Is it the fact that his insurer forbade him, he is at risk of being in a conflict of loyalty. «
ChAD and RCCAQ is pronounced
On the side of the Chamber of damage insurance, it is recalled that both staff and the brokers are subject to the same code of ethics and have the same obligations. «All the representatives, damage insurance must disclose to their customers the business relationships which bind the firm to insurers, they offer products, act as a consultant and conscientious and respect the rules concerning conflicts of interest. In practice, the interests of the client must prevail. Agents and brokers must offer a product that actually fits the needs of the client. If they cannot do so, they must advise «, said Joëlle Calce-Lafrenière, director of the communications department.
The RCCAQ, it was noted that the consultation had highlighted the willingness of the legislator to regulate the profession of broker so as to ensure the impartiality of the latter. «If questions of influence or conflict of interest in connection with the concentration of a cabinet prevented it from meeting its obligations vis-à-vis consumers, it would be up to regulatory authorities to devote all the necessary attention and apply appropriate measures to correct the situation,» said Typhaine Letertre, project manager, communications, to the RCCAQ.