Canadian Insurance Regulators Issue Proposed Conduct Principles for Intermediaries

On May 25, 2021, the Canadian Insurance Services Regulatory Organizations (“CISRO”) released proposed Principles of Conduct for Intermediaries (the “Principles”). The Principles are intended to help ensure the fair treatment of customers in the life & health and property & casualty insurance sectors in their dealings with adjusters, agents, brokers and other intermediaries. CISRO is currently seeking feedback on the Principles from stakeholders. The deadline to submit comments is July 9, 2021.

The Principles


According to CISRO, the Principles are meant to reinforce the fair treatment of customers as a core aspect of the intermediary business culture, including the conduct of business in an honest and transparent manner. Although the insurer is responsible for the fair treatment of customers throughout the life cycle of the insurance product, as it is the insurer who is the ultimate risk-carrier, this responsibility does not absolve intermediaries of their own accountability to customers. Intermediaries with oversight responsibilities, in particular, must ensure that their employees and representatives meet high standards of ethics and integrity.

The Principles are also meant to reflect the minimum regulatory conduct standards that are common across Canada regarding fair treatment of customers, while recognizing that each jurisdiction has its own regulatory approach to conducting business. Intermediaries should conduct their business in a way that embodies the Principles while still ensuring compliance with applicable laws, regulations, rules or regulatory codes in their respective jurisdictions. Where there are stricter or more specific requirements, rules or standards of conduct, those will take priority over the Principles.

Overall, the Principles are intended to be a resource for insurance customers to better understand the conduct that is expected of adjusters, agents, brokers and other intermediaries. Expectations for the conduct of insurance business may differ, however, depending on the nature of the relationship to the customer (e.g., whether it is direct or indirect), the type of insurance provided and the distribution method.

When finalized, the Principles will supplement and build upon the Conduct of Insurance Business and Fair Treatment of Customers Guidance provided by the Canadian Council of Insurance Regulators and CISRO in 2018.

Who Are “Intermediaries” and “Customers”?

CISRO has defined “intermediary” broadly in the Principles and has noted that its meaning will differ based on the applicable definitions in each jurisdiction across Canada. The current definition includes adjusters, individual agents, brokers and representatives, as well as business entities that distribute insurance products and services, such as managing general agencies and third party administrators. The definition also applies to all distribution methods, including the internet. The Principles will apply to all intermediaries which are authorized to do business within any jurisdiction, whether licensed, registered or exempted from licensing and registration.

The Principles define “customer” as the policyholder (which includes a certificate holder of a group policy) or a prospective policyholder with whom an insurer or intermediary interacts, and includes, where relevant, other beneficiaries and claimants with a legitimate interest in the policy.

The Proposed Principles

The CISRO has proposed ten principles which outline professional behaviour and conduct expectations for the fair treatment of customers. Based on these principles, intermediaries must:

  1. comply with applicable laws, regulations, rules and regulatory codes to which they are subject;

  2. place customers’ interests ahead of their own, including when developing, marketing, distributing and servicing products;

  3. identify, disclose and manage any actual or potential conflict of interest associated with a transaction or recommendation;

  4. seek complete information from customers and provide objective, accurate and thorough advice to enable customers to make an informed decision;

  5. disclose relevant information to all parties, including the insurer, in a way that is clear and understandable for customers, regardless of the distribution model or medium used, so that customers can make informed decisions;

  6. promote products in a clear and fair manner, ensuring that promotions are not misleading and are easily understandable, and disclose all necessary and appropriate information;

  7. handle claims, complaints and disputes in a timely and fair manner;

  8. take appropriate measures to protect personal and confidential information, including collecting only such information which is necessary for the fulfilment of the product or service provided, using it only for the purposes to which the customer has consented and complying with all applicable privacy legislation;

  9. maintain an appropriate level of professional knowledge and fulfill continuing education requirements, while not misrepresenting their level of competence; and

  10. provide appropriate oversight of employees and third parties in the distribution or servicing of an insurance product.

Providing Feedback

For more information, please see the Principles and CISRO’s news release dated May 25, 2021. Clients who wish to discuss the Principles in further detail are invited to contact Pamela Miehls directly.