British Columbia's Ministry of Finance is conducting a consultation on the adoption of its proposed restricted insurance agent licensing regime for incidental sellers of insurance. The proposal is similar to what is already in place in the other three western provinces (and, soon, in New Brunswick) but B.C. is signalling that it may consider including additional industries and additional flexibility in its regime. B.C. businesses that see opportunities in this area should therefore consider submitting comments, which are due on October 3, 2022.

The licensing of restricted insurance agents is provided for in s. 174.1 of B.C.'s Financial Institutions Amendment Act, 2019, which will be proclaimed in force once details of the restricted licence regime have been finalized. As described in the consultation paper, the B.C. consultation is focused on the regulations and rules that will accompany the legislation, and particularly on the following issues:

  • The classes of restricted licensees (i.e. the types of business that will be eligible for restricted licenses);
  • The classes of insurance that can be sold under a restricted licence; and
  • How this new regime will affect existing exemptions under the Insurance Licensing Exemptions Regulation.

Some of the topics raised in the consultation may be included in rules of the Insurance Council of BC or in both regulations and rules. The Insurance Council will be separately consulting regarding proposed rules.

Classes of Restricted Licensees

The B.C. Ministry of Finance is proposing a "restricted licence" regime under which certain classes of business may be granted insurance agent licences that are restricted to classes of insurance that are "incidental to the licensee's ordinary business".

Under the similar regimes in place in Alberta, Saskatchewan and Manitoba (and planned for New Brunswick), the classes of business for which restricted insurance licences can be issued include:

  • Deposit-taking institutions - credit protection, travel and life insurance;
  • Transportation companies - travel and cargo insurance;
  • Travel agencies - travel insurance;
  • Auto, RV, watercraft and other vehicular and equipment dealerships - credit protection, equipment warranty and guaranteed asset protection insurance;
  • Sales finance companies and mortgage brokers - credit protection insurance;
  • Customs brokers and freight forwarders - cargo insurance;
  • Funeral services businesses - funeral insurance;
  • Car (and other vehicle) rental agencies - rented vehicle insurance; and
  • Portable electronics sellers - portable electronics insurance.

While recognizing the importance of consistency among the provinces, the Ministry of Finance is not ruling out the possibility of excluding some of the above, or potentially of adding some or all of the following:

  • Storage companies - personal property policies;
  • Event companies and ticket sellers - event cancellation policies;
  • Leasing companies (personal property and office furniture) - damage protection and product warranty policies;
  • Leasing companies (equipment, vehicles, heavy machinery) - vehicle or product warranty policies;
  • Educational institutions - travel medical policies for out-of-province students; and
  • Tour operators and public carriers (airlines, bus companies, ferry companies) - trip interruption or cancellation policies.

The B.C. regime could end up differing from those of the other provinces in another important respect: the Ministry of Finance has stated that it is willing to consider the possibility of granting restricted licences to B.C. licensees to sell classes of insurance that are not incidental to their businesses. For this to happen, the Ministry would need to be convinced of the benefit to consumers.

Future of Existing ILER Exemptions

The Ministry of Finance is proposing that some existing exemptions under the Insurance Licensing Exemptions Regulation ("ILER") be partially or wholly repealed. If this occurs, companies that have had ILER exemptions for any of the following might need to obtain one of the new restricted licences:

  • Product warranty insurance;
  • Credit insurance (sold by credit institutions, mortgage brokers and others);
  • Vehicle warranty insurance (sold by motor vehicle dealers);
  • Travel insurance (sold by travel agents or transportation companies); and
  • Funeral services insurance (sold by funeral directors).

An example scenario for a partial repeal would be keeping an exemption for products under a certain value but requiring a restricted licence for coverage above that threshold.

Classes of Insurance

The Ministry of Finance is proposing to prescribe (permit) certain classes of insurance under the restrictive licensing regime (in addition to the classes of licensee discussed above). In so doing, they would be following the lead of the other provinces, but the Ministry of Finance is clear that it may not prescribe exactly the same classes of insurance. Moreover, some classes that are currently exempt under ILER could potentially be permitted under the restricted licence regime.

In addition to the above, the Ministry is considering including the following insurance classes in the restrictive licensing regime:

  • Personal effects property insurance (storage companies);
  • Purchase protection insurance (retailers, credit card companies);
  • Marine craft rental insurance (marine craft rental companies);
  • Damage protection insurance (personal property and office furniture leasing companies); and
  • Event cancellation insurance (event and ticket sales companies).

Consultation Questions

The Ministry of Finance is looking for input from interested parties, including (but not restricted to) industry views on questions such as the following:

  • Which businesses should and should not be prescribed as potential licensees?
  • Which classes of insurance should and should not be prescribed?
  • Which ILER exemptions, if any, should be repealed in favour of offering one of the new restricted insurance agent licences (and should the repeal be full or partial)?
  • When (if ever) should exceptions be made to the general expectation that restricted licensees will be restricted to classes of insurance that are incidental to their ordinary business?
  • Should there be any licence exemptions for low-value products?
  • Should there be a maximum value for insurance policies (or of certain types of insurance policy) sold by restricted insurance agent licensees?
  • Would a deferred sales model be advisable for any class of restricted agent (i.e., a model in which insurance could not be offered until a certain number of days after the primary purchase)?
  • Which rules should apply to the conduct of a restricted licensee's insurance business (e.g. with respect to disclosure, cooling off periods, commissions and fees, etc.)?

Please see the consultation paper for the complete list of questions on which comment is sought.

Next Steps

As noted above, the public consultation is ongoing, with comments due on or before October 3, 2022. The open and flexible approach of the Ministry of Finance indicates that industry submissions could have a significant impact on the eventual shape of the restricted licensing regime.

Originally published August 29, 2022

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