New regulations relating to strata insurance
Following up on Bill 14, Municipal Affairs and Housing Statutes Amendment Act (No. 2), 2020, Government has issued an Order in Council (OIC) with new regulations under the Financial Institutions Act.
Referral payments respecting strata property insurance
The OIC brings into force changes to section 178 of the Financial Institutions Act (FIA), enacted this summer. The amendments prohibit the payment of referral fees or any other kind of compensation to property managers or anyone else who is not an insurance licensee for the sale or renewal of strata property insurance.
Notification Period for Change/Non-renewal of Existing Insurance Policy
The OIC also makes changes to the Marketing of Financial Products Regulation, made under the FIA, including changing the name of the regulation to the Financial Products Disclosure Regulation (FPDR). In instances where strata property insurance will not be renewed or will not be renewed at the same terms and conditions, the regulations will require that insurers provide clients with a notice and/or the proposed terms and conditions a minimum of 30 days prior to the expiration of their existing insurance.
If the insurer provides notice and terms to the agent instead, they must do so a minimum of 45 days prior to the expiry of the existing insurance; the agent is then responsible to provide the terms and conditions or notification of non-renewal to the client a minimum of 30 days in advance of insurance expiry.
Disclosure of Broker Compensation
The amount of compensation involved in strata property insurance sales and renewals will now need to be disclosed to the strata corporation under the amended regulations. Agents will now be required to disclose in writing the actual dollar amount of compensation they receive or, if that information is not available, an estimate of that amount and how it will be calculated. Where there is a material change to the policy terms, disclosure must be provided a minimum of 30 days prior to the expiry of the existing strata contract.
The prohibition on payment of referral fees takes effect immediately and the new FPDR disclosure requirements will come into effect November 1, 2020.
Questions on these new regulations should be directed to the Financial and Corporate Sector Policy Branch in the Ministry of Finance at FCSP@gov.bc.ca.
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