Re: New Brunswick Licensing Framework for Other-than-Life Insurance Agents and Brokers Discussion Paper

Transcription

1 October 31, 2013 Financial and Consumer Services Commission P. O. Box 6000 Kings Place King Street Fredericton, NB E3B 5H8 Re: New Brunswick Licensing Framework for Other-than-Life Insurance Agents and Brokers Discussion Paper TD Insurance ( TDI ) is pleased to participate in the New Brunswick Licensing Framework for Other-than-Life Insurance Agents and Brokers Discussion Paper. TDI s comments as set out in this document reflect our desire to improve the current licensing process in New Brunswick. About TDI With roots going back to 1949, TD Insurance ( TDI ) is a member of TD Bank Group ( TDBG ), the second largest financial service organization in Canada. The wide range of TD Insurance products help protect clients from the accidents of life including auto, home, commercial insurance, as well as life and health insurance. In New Brunswick, TD has 16 branches where it offers credit protection. TDI is the largest direct response insurer in Canada and the second national largest auto and home insurer, with more than 2.1 million policies and more than $2.6 billion in written premiums as of December TDI employs more than 4,000 people across Canada, with offices in New Brunswick, Nova Scotia, Ontario, Alberta, and Québec. Our office in New Brunswick is located in Saint John where 475 employees work to serve several jurisdictions, such as Ontario and Western Canada. Three hundred of these employees are multijurisdictional licensed insurance representatives providing sales and service. TDI conducts its business across a variety of jurisdictions, and we would be pleased to draw upon our expertise and share our experience in operating with a variety of models. Interjurisdictional licensing is a key component of our business model in New Brunswick, and an efficient system will be essential to our continued growth and a better customer and employee experience. Introduction Over the past several years, TDI has had various meetings, discussions and communications with the Premier of New Brunswick, the Minister of Justice and Consumer Affairs and the New Brunswick Superintendent s Office regarding opportunities to improve the current licensing 1

2 process in New Brunswick. TDI appreciates the Financial and Consumer Services Commission s involvement and dedication to improving the current licensing process in New Brunswick. At TDI, we believe that the key drivers for any licensing reform in New Brunswick should be: 1. Harmonization - The implementation of measures that could contribute to the harmonization with the other provinces and territories. Harmonized requirements and processes streamlines the experience of licensing across jurisdictions and reduces the possibility of non-compliance due to regulatory complexity. 2. Efficiency - Reduce the regulatory burden without impacting the consumer protection by streamlining and automating process requirements and addressing any unnecessary red tape. Require a detailed impact analysis of any new licensing requirement to ensure any additional costs are justified. 3. Effectiveness - The improvement of the licensing services processes (i.e., timeliness; documentation requirements; communication regulator-insurer etc.) to reflect customer service mandates and risk based principles. 4. Flexibility Utilize a variety of different resources and methods to achieve regulatory objectives, for example the recognition of the training and monitoring implemented by large direct insurers. 5. Communication - Technological advances provide opportunities to increase the effectiveness of the communication process among the agent, insurance corporate office and the licensing regulator by providing information such as license status, issues with a license, steps to solve the issue, and timelines. We are pleased to see that several of the issues raised for discussion in the paper help address some of the key concerns TDI has previously identified: Resident to Non-resident Licensing Due to the close geographic proximity and our growing presence in the Atlantic Provinces, there are frequent instances when TDI employees transfer between our Saint John and Halifax offices. While switching from a resident to a non-resident license is a purely administrative task, in many cases we have been faced with longer than expected delays, which ultimately impact our service levels to our New Brunswick customers. TDI was pleased to see that this issue was addressed at Issue 1 Levels and Types of Licenses, and we fully support the Insurance Division s recommendation to eliminate the distinction between non-residents and residents. This step will help reduce the regulatory burden without impacting consumer protection. In terms of level of licenses and corresponding educational requirement for each level of license, we would recommend the removal of licence levels. We do not find the distinction between the current levels to be particularly relevant from an operation or customer perspective. 2

3 As the largest direct insurer in Canada, we currently have rigorous training, monitoring and oversight procedures in place that comply with the current regulations in each province. Removal of level of licenses would enable us to put even more of our focus on our customers needs and products we offer. We are pleased to provide our recommendations to question 1.4: Which activities by staff of a brokerage or an agency should not require the individual to hold a licence? Currently, our insurance agents provide the following types of services: sale of insurance products; advice on products and on specific policy; and administrative services. While we fully support having licensed agents perform all activities that involve the sale of insurance product and advice, we recommend that some activities involving the administration of a policy could be performed by non-licensed agents. These are purely administrative activities that do not involve specific advice to the consumer on his/her policy. The majority of these activities are an administration follow-up to a prior conversation with a licensed agent. Additionally, customers who require more specific information on their policy than can properly be provided by administration staff are directed to speak with a licensed agent. We believe that by carefully differentiating between activities that require an individual to hold a licence and those that do not, we ensure proper protection of our consumers while also providing faster and more efficient service. For example, the following activities considered to be administrative in nature could be performed by non-licensed agents: Confirmation of Insurance agent provides confirmation of insurance to the policyholder Processing client communication such as mailing of letters Payment renewal renewal of one-time payment policy License Renewals Large direct insurers have implemented strict training and on-sight monitoring and supervision processes of all insurance activities and license holders within an operation. While we fully support the FCSC s mandate to regularly monitor an individual s eligibility to have his or her license renewed to ensure consumer protection, we believe that more flexible examples from other jurisdictions also achieve this goal, such as the continuous licensing system implemented by British Columbia. According to the Council Chair, The introduction of a continuous licensing model in British Columbia has demonstrated that insurance licensees are capable of operating in a regulatory model that places the responsibility on licensees to manage their regulatory filings in accordance with Council Rules. The success of the continuous licensing model has resulted in reduced regulation for licensees, and this has allowed Council to streamline its administrative processes and reduce operating costs, which have been passed on to licensees through reductions in filing fees. ~ Donald Swanlund, Council Chair, January In response to Question 4.1 (What improvements could be made to increase the efficiency of the renewal process while ensuring a regular review of license holders?), TDI would recommend that, as an interim step, New Brunswick consider increasing the renewal period from the current two years to three years. 3

4 Trust Accounts Section 364 of the New Brunswick Insurance Act requires all life and other-than-life agents and brokers to hold a trust account. This requirement is only relevant for business models where agents/brokers process cash payments. This condition has been waived for our agents, so long as they sign a sworn affidavit witnessed by the Commissioner of Oath stating that they do not accept cash. TDI fully supports the recommendation under Issue 6 Trust Accounts to amend the Act so that the trust account requirements apply only to agents and brokers who receive trust funds, removing thus additional red tape. Additional Recommendations for Consideration TDI is very pleased to see that the above recommendations were made, which we believe will help improve the current licensing process; however, we believe additional recommendations could be included, making the process more efficient and effective. Harmonization TDI would also like to stress the importance of harmonization among the Atlantic Provinces for companies that are active in multiple jurisdictions. Harmonized procedures across provinces are important to provide consistent service to Atlantic consumers and enhance efficiency. There is a great deal of movement across provincial boundaries in this region, and provincial differences are difficult to explain to customers and agents, and increasingly difficult for governments to justify. We would like to stress how pleased we are with the removal of the requirement for notarized renewals. Additionally, we believe that removal of the notarization for new applications would help us provide an even more consistent service by harmonizing with Nova Scotia, Newfoundland and Ontario. We would also like to recommend addressing some of the additional major issues for our centres and agents: Renewal dates - New Brunswick is the only province where licenses are renewed quarterly Communication with the Sponsor Include the Sponsor in any communication with the agent in order to expedite receipt of required information and resolve issues. Update the NB website to reflect whether renewals have been received and/or processed. Currently we have to wait until the day after the expiry date to be able to confirm whether the application was successful or not. If there was a problem with the application and we find out after the expiry date, the licensee is no longer licensed at that time and unable to assist customers. 4

5 Electronic Licensing System Most jurisdictions have developed, or are in the process of developing, online electronic license and license renewal systems. We have had very positive experience working with the Alberta Insurance Council s (AIC) electronic system. Manitoba is the latest province to move to an electronic system. There is a considerable difference in the licensing timeframes for jurisdictions who are not using electronic systems. Besides the cost saving and better consumer and agent experience benefits, harmonization with the provinces that have an online electronic license system will have an immediate positive impact on our operations, and most importantly on our customers who will be able to receive faster and better service. Inter-jurisdictional licensing is a key component of our business model in New Brunswick, and an efficient system will be essential to our continued growth. While this new online component in New Brunswick is a small step in the right direction, we do urge you to consider moving to a fully electronic licensing system in order to improve the efficiency of the system for all stakeholders. These systems also have increased functionality for monitoring, tracking and reporting on agents and applications. An electronic system would also help reduce the timeframe to process applications for a license. These systems do not allow applicants to submit an application with missing information, thus eliminating the need for the regulators to review and address incomplete applications. Education Requirements for Claims Adjusters The lack of harmonization of course requirements for claims adjustor licensing across the Atlantic Provinces creates operational compliance and capacity issues for our Atlantic operations. Provinces have different rules, timelines and certified insurance professional (CIP) course requirements for adjuster licensing. Those requirements are more stringent in New Brunswick than neighbouring Atlantic Provinces, including Nova Scotia. In New Brunswick, the adjuster licenses are segmented by levels (Level 1, 2, 3 and 4) as well as by line of business or type of claim to be handled (i.e., Property Damage; Accident Benefits; Bodily Injury and Auto Property Damage) and this adds complexity to the management of adjuster licenses. Each business line also has slightly different CIP course requirements. The legislation in this province also includes tight timelines for completing courses and obtaining the next level of license. Should an adjuster not be able to meet this timeline, his or her license could be suspended. Criminal Record Check We understand the importance of a criminal check as it relates to consumer protection, however, the added administrative burden created by the necessity for multiple criminal checks for a non-resident New Brunswick license only leads to additional costs and increased delays, which ultimately negatively impact the consumers. TDI orders a criminal check on every employee at the time of hiring. Due to the close geographic proximity between our Atlantic offices, there are frequent instances when a TDI employee transfers between our Saint John and Halifax office. When that happens, a second criminal check is ordered when the agent/broker applies for their resident Nova Scotia license 5

6 due to an inter-provincial move; and a third one is ordered for the non-resident license in New Brunswick. At TDI, we believe that the requirement for a third criminal check should be eliminated as New Brunswick could rely on the resident license criminal check. Removing this third criminal check requirement would contribute to a better customer experience, and also to a better employee experience. There have been instances where we have had several trained employees licensed in Nova Scotia, who were unable to assist New Brunswick customers waiting in the telephone queue due to delays in licensing related to this requirement. Licensing Conditions At TDI, we encounter difficulty when certain conditions are applied to licenses, such as those with an alternate employment in the military. We do understand that conditions are put in place to protect the consumers interests, but we suggest that certain conditions could be revisited based on the insurance company and individual agent situations, while taking under consideration the impact on the agent and the consumer in terms of timeliness and customer experience. Institutions such as TDI, who place considerable importance on managing regulatory and compliance risk, take significant measures to abide by these conditions, which impact operations and customer service. TDI has experienced situations where specific conditions were applied to prevent circumstances that are not applicable to our business model and/or to the agent s activity. While we fully support having certain conditions put in place for the consumers protection, we recommend that specific circumstances (e.g. business model of the insurance company) be taken under consideration prior to applying the condition. We believe that, in doing so, the consumer is protected, and the agent is fully capable of effectively and efficiently performing his/her daily activities. Conclusion TDI appreciates the opportunity to provide its comments to the New Brunswick Licensing Framework for Other-than-Life Insurance Agents and Brokers Discussion Paper. TDI believes our comments and recommendations set out in this document reflect our desire to improve the current licensing process in New Brunswick. We would appreciate the opportunity to continue to work with you to improve the efficiency in the application process as well as streamlining the requirements with those of other provinces. Please let us know if we can be of any further assistance as you move forward in the review process. Sincerely, Catherine Décarie AVP, Client Services TD Insurance 6