With IBAO CEO Colin Simpson
The question of whether credit unions should be allowed to sell general P&C insurance products has cropped up regularly in the past decade. A few years ago, the Ontario Government granted credit unions the ability to purchase insurance brokerages—they’re permitted to buy up to 30% of a brokerage under certain conditions and a controlling stake with the expressed permission of FSRA’s CEO. This acquisition ability effectively allowed them access to P&C distribution, while restricting sales to a separate entity and location.
Late last year the IBAO was alerted to credit unions’ legislative push for the ability to sell P&C insurance from the same premises. In the spring of 2021, the Minister of Finance’s office was transitioning through a period of change, and we wanted to ensure that the new team was aware of the potential consumer conflicts and concerns with such a move. Although the IBAO isn’t directly opposed to this change in principle, in July, we submitted a letter to the Ministry of Finance outlining concerns around how this practice could potentially unfold.
“We worked closely with our government relations advisors and the Ministry to place strategic messaging in the hands of those that were influential on shaping the outcome of this issue,” said IBAO CEO Colin Simpson. “At the request of the MOF team, we set up a meeting with one of our larger members who had specific experience on the evolution of credit unions out west to assist in their understanding and thought process.”
Following the meeting, we submitted subsequent communications to the MOF expanding and clarifying our discussion issues, including messaging from the meeting and information gratefully provided by the Insurance Brokers Association of British Columbia.
One thing we strive to do is provide our key stakeholders with solutions to problems rather than just voicing our concerns.
“We were clear with the government that on the face of it, we’d be supportive of this change, provided that existing controls to prevent cross-selling and tied-selling to protect consumer interests remained in place.”
Communications outlined a framework of how the regulations and subsequent business practices could be shaped to safeguard consumers.
“One thing we strive to do is provide our key stakeholders with solutions to problems rather than just voicing our concerns. They specifically thanked us for doing that.”
At the time of writing, two of the three new regulations on credit unions have been released for public consultation. We have until December 24th to respond to proposed regulations and the high-level parameters around them. We’ve proactively connected with the Ministry following the release to ensure we continue our candid discussion.
“We’re currently reviewing regulations—it appears our messaging was effective. But the devil is in the details and we’ll keep communication channels open as the insurance regulation itself is drafted.
“We’ll continue to submit our comments based on available information and ongoing review. Once the MOF team collects public comments towards the end of December, they’ll finalize regulation changes in the new year. And we’ll certainly notify our members when that happens.”