The Approach: Serving the Client Through Need-based Sales Practices

November 2016 (Originally published October 2007)

Reference Document:

THE APPROACH: SERVING THE CLIENT THROUGH
NEEDS-BASED SALES PRACTICES

Introduction

Background
In Spring 2006, the Canadian Council of Insurance Regulators (CCIR) and the Canadian Insurance Services Regulators' Organization (CISRO) endorsed three principles for managing conflicts of interest that might arise in the sale of life and health insurance products. These are:

• the interests of the consumer must be placed ahead of those of the advisor;
• actual and potential conflicts of interest must be disclosed; and
• the recommended product must be suitable to the needs of the consumer.

At the same time, CCIR/CISRO agreed that the industry should take the lead in developing approaches to address these principles. To that end, Advocis, the Canadian Association of Independent Life Brokerage Agencies (CAILBA), the Canadian Life and Health Insurance Association (CLHIA) and Independent Financial Brokers (IFB) have worked together to describe the industry practices that relate to these principles.

Purpose
The Approach specifically addresses the third principle that the product recommended be suitable. The needs-based sales practices described in The Approach, however, are part of a broader package of industry practices intended to safeguard the interests of life and health insurance consumers. More generally, therefore, when coupled with meaningful and appropriate disclosure, these practices will help ensure that recommendations made by licensed life and/or accident and sickness insurance agents (advisors) address the client’s circumstances, including their financial needs and objectives, and that the advice is not unduly influenced by other factors.

General Principle
The recommended product or service must be appropriate for the needs of the client as determined by a needs-based assessment done by the advisor and/or as identified by the client...