The Canadian Life and Health Insurance Association Inc. (CLHIA) is urging insurance regulators in a recent submission to the Canadian Council of Insurance Regulators (CCIR) to implement new requirements for life insurance advisors, including a mandatory needs analysis for every client.
CLHIA, in its response to the CCIR's 2017-20 strategic plan, expresses broad support for the CCIR's key priorities, which include enhancing consumer protection; working collaboratively with regulator partners to grow and leverage national regulatory capacity; and partnering with industry stakeholders to identify opportunities to increase regulatory and supervisory harmonization.
In particular, CLHIA lauds the CCIR's efforts to protect consumers by ensuring they have access to appropriate information and advice about life and health insurance. On that topic, CLHIA recommends that regulators implement a mandatory rule for insurance advisors to conduct a needs analysis for all clients and provide each client with a letter explaining why the products they recommend are appropriate.
"We believe an immediate opportunity exists for the industry and regulators to work together to ensure that consumers receive a needs analysis and ‘reason-why' letter when they buy life insurance," CLHIA's submission states.
CLHIA notes that the industry has already taken steps to implement these practices through updated reference materials, training, and communications with advisors.
In order to "provide the backstop needed to fully implement these best practices," CLHIA urges the CCIR to issue a "joint statement of expectation" with the Canadian Insurance Services Regulatory Organizations specifying that a needs analysis and "reason-why" letter should be a part of every life insurance sale.
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