The insurance industry is calling on the government of Quebec to take action against speculative trading in life insurance policies, among other recommendations for the next provincial budget.
The Canadian Life and Health Insurance Association (CLHIA) said in its pre-budget submission that trading in life policies — such as viatical settlements, life settlements and stranger-owned insurance — should be prohibited.
The association reported that speculative trading is on the rise in the province, and that such practices target vulnerable consumers, such as people with an urgent need for money.
“This phenomenon is gaining ground in Quebec,” the CLHIA stated in its submission. “Indeed, unregulated groups are working to develop a market around the trafficking of life insurance policies for commercial or speculative purposes.”
The practice creates unsavoury arrangements, the CLHIA stated.
“The policy buyer’s profit depends on how quickly the insured dies: the sooner the person dies after the purchase of the policy by the promoter, the higher the profit from the investment,” the group noted.
Despite past promises to address the practice, the CLHIA said, the government hasn’t taken enough action to combat the risk of abuse.
“The government must urgently prohibit this practice to stop it from taking hold in Quebec, and work with our industry to define an effective and sustainable solution,” it said.
The CLHIA’s other recommendations to the Quebec government include calls to revise financial sector legislation, which, it says, hampers insurers’ ability to invest while imposing operational constraints.
The group also advocates cutting taxes on insurers, taking steps to combat climate change and working with the industry to contain drug costs.