“You should never consider buying the insurance that you want unless you have bought ALL the insurance that you need!” Richard Proteau
The power of words…we forget it too often. Words define how we perceive reality and these perceptions ultimately define what the reality is. This is why I pay particular attention to which words are used.
I’ve found that the wrong words can be an impediment to any meaningful discussion destroying any chances of implementing positive changes. This is particularly true in the financial industry. When reviewing what people are writing and saying I see such expression such as:
1. Insurance advisor: Well this beast does not exist. When an intermediary is portraying himself as an insurance advisor while selling insurance, he is breaking the law in all provinces because only agents or representatives are allowed to sell insurance.
2. Life broker: In most provinces, the use of the term broker in life insurance is prohibited or restricted. But this term is being used indiscriminately with judges using this term when the Insurance Act of the province prohibits it. In all provinces except Alberta, only agents or representatives can sell more than ONE insurer.
3. Independent broker or independent agent: I’ m trying to understand how an agent can be independent which means he would be able to act outside of the authority conferred by his principal whether it is the insurance company or the client.
Do not confuse autonomy (which is the right for an agent to enter into an agency agreement with as many insurers as they want and with the insurers they select) with independence.
When you add the lack of uniformity across provincial laws regarding who can sell an insurance policy, advancing the cause of consumers becomes impossible. For example, under the Insurance Act of Newfoundland, an agent cannot be a physical person. The physical person selling the insurance is a representative. However most insurers would sign an “agent contract” with an insurance representative of Newfoundland. Since a contract provision must adhere to the law, what is the legality of these contracts?
What if a client moves from one province to another province? Who can service the insurance policy? The answer is far from being obvious and will be the subject of a future text.
This raises the question whether or not the regulation of the life insurance business should fall under federal jurisdiction ensuring the uniformity necessary to protect consumer.
Until then we have tabled the information necessary for consumers to know who they are dealing with at FSCA