2023 1121 - FSRA - Proposed Guidance on Life Insurance Agent & MGA Licensing Suitability - Project

  • 1914
  • Change no damage
  • accountability - white paper
    • 2010-Blumenthal v New York Life - Deposition - Universal Life Policy - accountability - p90
  • ejm - ul - dinney
    • dinney - I didn't explain it very well
    • ef hutton
    • if that's the case
  • fehr v sunline
    • confusing for judges
    • min max premium
  • Target premium
    • if you are training, not making it there
  • dinney - li as investment - disintermediation
  • primerica v marco
    • coffeezilla
  • 2023 - LC - Primerica vs Marco Moukhaiber – Always Marco, Q2303 13143, Court of King's Bench of Alberta, Edmonton
  • 1914 - No difference how well-intentioned and honest an insurance man's advice may be it may prove very expensive and harmful if not based on accurate knowledge.

  • 1993 - The working group's concern was how to bring about a change without damage to the market place. 

  • 1994 - Second, it was observed that ... there is virtually no accountability for any of the participants in the sale, not for the company, not for the agent, and interestingly, the white paper discussed accountability on the part of the purchaser as well.  
  • 1995 - I think any way that we can make illustrations more understandable to the public is certainly going to help us.
    • We've seen the problems that have occurred when Senator Howard Metzenbaum (D-OH) was given an illustration with a vanishing premium, and he had absolutely no idea that he had bought a policy that was not paid up in four years.
    • It caused many problems for the industry; it caused many problems because the press got involved, and the press doesn't understand the products as well as it thinks it does.  
  •  1981 - Subject to responsibility being accepted (and documented) by somebody else, we hold that the father is George R. Dinney, and the place of conception Winnipeg, Canada.
    • George R. Dinney - Universal Life is not well understood and part of the mystery about it may well be due to a failure in my communication... Universal Life was developed in 1962 as a generic plan, which means that it subsumes all other life insurance products.
  • 1983 - In fact, it is accurate to describe Universal Life as a generalized version of the actuarial formulas underlying traditional life insurance products.
    • In other words, it is possible to produce any traditional plan of insurance from the generalized formulas underlying universal life.  
  • 1979 - RE: Universal Life
    • If that is the case, how does an agent program somebody?
    • How does he tell a person what he needs to pay to keep his premiums level or to have paid-up insurance at age 65?  
  • 2018 0905 - LC - Fehr v Sun Life - Decision - Ontario - Court of Appeal -  73p
    • p20 - [64] I have noted that the policies are relatively complex financial instruments. They are also relatively complex contracts. The language is technical and legalistic, and important terms are undefined. For example, there is no definition of "minimum premium" or "maximum premium".
      • The actual meaning of those terms is a matter of controversy.
      • According to Sun Life, "minimum premium" does not mean the lowest premium that a policyholder is required to pay in order to keep the policy in good standing.
      • And "maximum premium" does not mean the highest premium that can ever be charged to a policyholder.
      • Some technical terms, such as "non-rated classification", are undefined.
      • ⇒  Other terms, such as "premium", "monthly cost of insurance" and "monthly insurance charge", are confusing.
    • p33 - Common issue 8: maximum premium
      • ⇒  Kevin Morrissey, a Vice President of Sun Life, had deposed in the course of the Indemnity Litigation that "the year 2030 is the median point at which Universal Plus policyholders are likely be required to pay an amount in excess of the 'Maximum Premium' set out in their policy specifications pages."
    • (49-50) - [151] In determining when each plaintiff knew or ought to have known that a misrepresentation had been made, the motions judge applied what he described as "venerable law", that "once an insurance policy is delivered to an insured, he or she is taken to have read the policy and accepted its terms".
      • ⇒  He referred in particular to The Provident Savings Life Assurance Society of New York v. Mowat (1902), 32 S.C.R. 147.
  • 2001 - If your training process for your agents is to sell at target premium, for example, and target premium carries the policy to maturity at a 7 percent rate, if you’re only crediting 6, it’s not making it there.
    • So keep an eye on how you’re training your agents to sell your products and try to avoid problems up front in the product performance before they become a premium risk problem.  
  • 1982 - Disintermediation of traditional life insurance is most severe for policies sold as savings instruments. 
  • 1997 - LC- Grove v Principal - Brief In Support of Defendant's Motion to Dismiss the Class Action Complaint - CASE NO. 4-97-CV-70224 (Iowa) - 115p
    • The Groves cannot establish that they justifiably relied on Foster's alleged failure to disclose the primary purpose of the policy.
      • The policy is labeled "Adjustable Life Policy" on the cover page and clearly states, "The purpose of your policy is to provide a death benefit." (See Ex. A at 4.)
      • It does not mention "retirement'' or "college funding" or suggest in any way that it was designed for these other needs. (p27)

<Universal Life> afford(s)purchasers greater flexibility in designing their contracts so as to meet their individual needs. 

-- STATEMENT OF THE <ACLI> AMERICAN COUNCIL OF LIFE INSURANCE, BEFORE THE NASAA/NAIC JOINT REGULATORY INSURANCE PRODUCTS STUDY COMMITTEE,  August 31,1981

1982-1, NAIC Proceedings

  •  
  • Responsibility
  • 2018 - Consultation - https://www.ccir-ccrra.org/Documents/View/3442 - Guidance on the Conduct of Insurance Business and Fair Treatment of Customers
    • On the question of Agents and Representatives’ responsibilities, we understand that the definition
      varies between CCIR and the international body, the International Association of Insurance Supervisors
      (IAIS). Moreover, in the IAIS guidelines – Insurance Core Principles -- there is clarification that the insurer is not the “ultimate risk carrier” (CCIR) but that “the good conduct in respect of the relevant service(s) is a shared responsibility of those involved” (ICP). We, therefore recommend that CCIR revisit the definition to better align with the ICP to ensure that all parties – intermediaries and third-party suppliers – bear equal responsibility for consumer protection.

    • CAFII 20-x - (p23) - In addition, the language in the second to last bullet “and does not put an unreasonable onus on the Customer” is vague;

    • (p23) - Disclosure to Customer - We recommend clarifications to two sections, perhaps using the following wording: “The information provided to customers should be sufficient to enable Customers to understand the characteristics of the product they are buying and help them understand whether and how it may meet their needs”; and “be accessible in written format, on paper or another durable medium, such as digital."
    • (p24) - Concluding Observations - We believe that a critical building block for enhancing the fair treatment of customers is raising their level of financial literacy. Customer education around financial literacy is a shared, multi-stakeholder
      responsibility.

      • ⇒  While customers are ultimately responsible for their purchase decisions, governments and regulators have an important role to play, alongside the industry, in providing education which can help customers better understand the benefits and limitations of products and improve their financial literacy. 
      • In that connection, we believe that in their communications, CCIR and CISRO should emphasize, where appropriate, customers’ responsibilities with respect to financial and insurance products, in addition to their rights.

    • CAILBA - 26-x - 

    • CFA - 28-
      • We agree that the industry’s focus must be on delivering strong consumer protection throughout the life-cycle of an insurance product. Consumers are directly impacted by improper advice from distributors that may lack appropriate training, and thus public confidence in the industry is undermined. The ability to access independent insurance advice is very important, especially given factors such as the aging population
        and other vulnerable investors.
      • We note in particular that sales of insurance products are often made by dually licensed salespersons, which exacerbates potential conflicts in that the salesperson might be incentivized to sell the lesser-regulated product. In addition, there are a number of hybrid investment products currently in the market which combine features of both securities and insurance products, leading to investor confusion with respect to the regulatory regime and realistic expectations of their advisors.
    • CLHIA
      • (p33) - Comprehensive Oversight
        • Throughout Canada today, insurers are expected to have practices in place that support fair outcomes for customers. In many cases, insurers rely on the work done by intermediaries to assist with these practices and, over the years, the industry has taken steps to clarify roles and responsibilities for oversight and to standardize industry practices (e.g., CLHIA Guideline G18, Insurer-MGA Relationships). Such standards reflect the industry’s belief that, in some cases, intermediaries may be in the best position to fulfill these activities.
          • However, we note that, for the most part, the activities of intermediaries are not the subject of a regulatory licensing and oversight regime that requires them to treat customers fairly.
        • If regulators have specific expectations of intermediaries beyond their current obligations (i.e. to maintain an agent license and sometimes continuing education, and errors and omission coverage), the law may need to change to support those expectations. That said, we believe that setting regulatory expectations for
          intermediaries through the draft Guidance is a positive step. 

    • 62-FSCA - How can you expect the best from insurance agents and representatives when the worst is allowed to lead these agents and representatives?

      • promote products and services in a clear, fair and not misleading manner
      • When it comes down to the sales of Universal Life, this requirement is simply ignored.