31 January 2018 11:13
Alain Camirand, Michel Laurin, Denis Côté and Jean St-Gelais | Photo : Denis Méthot
At this time, an insurer cannot hold more than 20 % of the voting shares of a brokerage firm in Québec, and up to 50 % of the shares not voting. A parliamentary committee, theAlliance for a stronger brokerage fort has proposed the creation of the firm in damage insurance affiliated with an insurer, acting through affiliated dealers.
In this model, an insurer could hold 49 % of the voting shares of a brokerage firm, up to 80 % of its participating shares and 100% of its preferred shares.
The Corporation of the insurers direct de dommages du Québec (CADD) has expressed support for the limit of current ownership of 20 %. It is to be noted that some of its members have subsidiaries which engage in the brokerage.
«Legal mechanism very clear.»
«The ownership limit of 20 % of the firms is a legal mechanism very clear, which helps to ensure the independence of the broker, provided that its implementation is respected,» judge the Corporation.
«This is 20 % of the voting shares, 50 % shares non-voting shares or loans, in all cases, the most important is that these business relationships do not come to guide or influence a relationship the broker has with its customer,» said Jean St-Gelais, president and chief executive officer of La Capitale financial Group. If the Authority finds that a broker is 95 % or more of its business and more with the same insurer for the past five years, there has been a problem. «
Michel Laurin | Photo : Denis Méthot
Agency for a broker that focuses
Mr. St-Gelais added that with the competition that can be found in the field of damage insurance in Quebec, a broker-dealer should not have to come to this as it concentrates the vast majority of its volume from a single insurer.
For Michel Laurin, president of the CADD, but also chief operating officer ofiA Auto and home, a broker that concentrates 95 % of its business with the same insurer for the past five years should be called the agent. The CADD wishes, therefore, a better framing of the term «broker» and believes that the rule of 20 % of the right to property is a basic and must be supplemented with other mechanisms to avoid possible conflicts of interest.
Against the idea of the affiliated broker
The CADD was expressed adverse to the suggestion made by theAlliance for a brokerage harder to create a third designation of business, the broker-dealer affiliate, which would be in addition to that of the independent agent and insurance broker.
«A third nomenclature could further add to the confusion, thought Michel Laurin. Our position is that the term broker is reserved for independent intermediary. Put broker and affiliate in the same expression could create a lot more confusion. «
Carlos J. Leitão | Photo : Denis Méthot
Ensure the absence of undue influence
The minister of finance Carlos J. Leitão is returned to the load on the same subject a little later and asked him how he saw the fact that brokerage firms important had a high concentration of their portfolio to an insurer and what could the government do to change the thing, including adapting the rules of property.
«This is to ensure mechanisms are sufficient that there is no undue influence and that the consumer, when dealing with a broker, to receive the service for which it expects, that is to say, a shopping service that is broad enough,» responded the president of the CADD.
«Maybe with time, in some places, the dealer will end up with a certain amount of risk with the same insurer, which may be legitimate. But it is not necessary that this concentration may have been caused by mechanisms of influence of the insurer by the broker. It is this that is important. «