Voluntary Codes and Consumer Protection in the Insurance Industry

Author

Susan Lott

Organization

Public Interest Advocacy Centre (PIAC)

Published

2006

Summary

This report examines how consumers are protected in their dealings with insurance companies and the intermediaries who sell insurance products in Canada known as insurance agents or brokers. It analyzes the existing regulatory regime and recently adopted voluntary codes and measures in the insurance industry to assess their effectiveness in protecting consumers in their purchase of insurance and dealings with insurance intermediaries. The federal and provincial governments have powers over the incorporation of insurance companies and the insurance contract. Provincial governments have the power to license insurance intermediaries, but the relationships of agents or brokers to insurance companies is regulated by the industry itself and governed by voluntary codes of conduct and practice. Voluntary codes were introduced in late 2004 by the insurance industry to outline the rights and responsibilities between the insurer and the consumer. They also specifically address the issue of the compensation relationships between intermediaries and insurance companies. The report examines the level of consumer awareness of these relationships and the codes put in place to outline consumer rights and responsibilities in relation to intermediaries and the insurance contract. The findings of a national telephone survey are that Canadians are generally unaware of the codes, which outline consumer rights and responsibilities, and of the industry's commitment to disclosure of the financial relationships with intermediaries. The report also makes recommendations.

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OCA Funded Research
This research received funding support through the Office of Consumer Affairs' Contributions Program.

Contact information

Source: Consumer Policy Research Database