Insurers welcome Insurance Act changes to protect vulnerable seniors
News ReleaseRelease Date: 03/11/2020 Staff Reference: Kevin Dorse
(Toronto, March 11, 2020) – The Canadian Life and Health Insurance Association (CLHIA) applauds the Government of Nova Scotia for passing Bill 238, which amends the Insurance Act to protect consumers, especially vulnerable seniors, by prohibiting trafficking in life insurance policies. The amendments also clarify the definition of premium for life insurance, which reinforces the separation of insurance and banking in Canada.
Insurers have been urging governments to take these steps to protect policy holders from exploitation. Life insurance trafficking, also known as “life settlements” results in vulnerable persons, very often seniors losing the full value of their insurance policies to unregulated third parties who offer cash payments at rates below the face value of the policy.
“Nova Scotia's legislation will protect vulnerable consumers while ensuring that life insurance continues to fulfil its purpose of providing financial protection to individuals and their loved ones,” Stephen Frank, CLHIA’s President and CEO said. “Our industry has been vocal in our concerns that life settlements pose a very real and significant risk for fraud and abuses of consumers.”
In the U.S., in several states where life settlements have been allowed there are examples of abuses including insufficient contract disclosure and misleading sales practices aimed at vulnerable policy holders.
With the government’s bill having received Royal Assent yesterday, Nova Scotia became the eighth Canadian province to prohibit trafficking in life insurance.
With the passage of the amendments, Nova Scotia became the second jurisdiction after New Brunswick to clarify the definition of premiums for life insurance. Alberta has also introduced legislation.
“It’s becoming increasingly clear that legislators across the country are committed to protecting Canada’s longstanding public policy, which differentiates insurance contracts from deposit-taking accounts,” said Stephen Frank, President of the CLHIA. “We will continue to work jointly with all remaining provinces to help them clarify their rules where necessary to enshrine this important principle.”
About the CLHIA
The CLHIA is a voluntary association whose member companies account for 99 per cent of Canada's life and health insurance business. The industry provides a wide range of financial security products such as life insurance, annuities (including RRSPs, RRIFs and pensions) and supplementary health insurance to almost 29 million Canadians. It also holds over $850 billion in assets in Canada and employs more than 156,000 Canadians.
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