Canadian insurance regulators have released consolidated national guidance setting expectations for how insurers and intermediaries should design, sell, and service individual variable insurance contracts.
The Canadian Council of Insurance Regulators (CCIR) and the Canadian Insurance Services Regulatory Organizations (CISRO) published the Segregated Funds Guidance on Nov. 19. The document covers individual variable insurance contracts (IVICs), which are life insurance contracts that allow investments in segregated funds.
Individual variable insurance contracts resemble mutual funds but include insurance features offering specific protections. According to the regulators, these include guaranteed coverage against certain investment risks upon the policyholder’s death or when the contract matures.
The guidance builds on prior work by the regulators, expanding on principles set out in their Fair Treatment of Customers Guidance and Incentive Management Guidance. It aims to address gaps in conduct standards related to the sale and servicing of IVICs.
“This is an important milestone that demonstrates our collective commitment to protect consumers and ensure they are treated fairly,” said Patrick Déry, chair of CCIR and superintendent of financial institutions at the Autorité des marchés financiers (AMF).
The guidance will be adopted across all provinces and territories in line with their local regulatory frameworks. Each jurisdiction will integrate the expectations through guidelines and regulations.
“Many insurance industry stakeholders and passionate consumer advocates contributed their insights and expertise to the development of this consolidated national guidance,” said Erica Hiemstra, vice-chair of CCIR, co-chair of the CCIR/CISRO Segregated Funds Working Group, and head of insurance conduct at the Financial Services Regulatory Authority of Ontario.
The AMF has endorsed the guidance and plans to integrate it into its regulatory framework, encouraging insurers and intermediaries operating in Quebec to proactively incorporate its expectations.
