Quebec puts the brakes on insurance brokerage's reform

The Quebec government presented two long-awaited bills (Bills 141 and 150) last fall to modernize the insurance industry.

A stricter modernization of the insurance industry

As discussed in a recent article, one of the key proposed legislation, Bill 150, is to require brokerage firms dealing in damage insurance to offer policies from at least four insurers who belong to different financial groups. It also requires them to disclose, on their website and in their communications with their clients, the name of the insurers for which they offer insurance products.

Under those proposed changes, Quebec’s financial institutions regulator, the AMF, could require firms to show that they had made every effort to obtain four offers. Failing that, the AMF would have to require that they change their registration to insurance agency and their representatives' licenses from brokers to agents. What’s more, they would have to enter into an exclusive contract with a single insurer and inform their clients of the change. In this way, Bill 150 is stricter than the actual law which provides for a vaguer requirement to offer "a range of products from several insurers"[1].

These new requirements were expected to become law sometime in 2018.

Shortage of time and consensus impedes broad reform

However, citing a busy legislative agenda and the upcoming parliamentary summer break, the government has announced that only those elements of Bill 150 for which there is a consensus will remain in the bill.

Considering that many stakeholders — such as brokerage firms associations, insurers and consumer groups — have voiced concerns that it was almost impossible to obtain such a high number of offers in certain insurance sectors, the National Assembly removed all the new requirements discussed above from Bill 150.

This means that prior legislation will endure at least until a new government is elected in the fall considering the upcoming October provincial elections. As a result, brokers will have more time to prepare for a possible reform and will still be generally seen as complying with their duties if they are able to offer products of more than one insurer and that best meet their clients' needs. In contrast, representatives of a firm selling the products of a single damage insurer and bound by an exclusive contract will still need to be licensed as agents rather than brokers.

While the government is putting the brakes on some of its contemplated reforms, study of Bill 141, on the other hand, is moving ahead for now and the government hopes to complete the legislative process before the end of the parliamentary session on June 15. That hasn’t prevented consumer groups from asking that the bill be completely withdrawn. They fear that a hasty adoption would be detrimental to consumers, as reported by Le Journal de l'assurance and Le Devoir. They want these matters to be more fully debated.

Under the circumstances, the adoption of a pared-down Bill 141 also seems likely.