TORONTO — Ontario's insurance regulator says it has taken enforcement action after finding widespread deficiencies related to the sale of life insurance products.
The Financial Services Regulatory Authority of Ontario says it looked into the conduct of life insurance agents at companies that use a multi-level marketing model for recruitment and found "unacceptable" levels of non-compliance.
The agency's review of 130 agents found 50 per cent had practices that went against the Insurance Act, including failing to disclose conflicts of interest, misrepresentation to the regulator and gaps in training.
FSRA says two agents surrendered their license after being told they were under review, while the agency took action against 65 agents. It also plans more enforcement, new rules and guidance and a whistleblower protection program to further crack down.
The regulator has been looking for some time into issues around multi-level marketing sales models, especially their heavy use of complex universal life insurance policies that it found in 80 per cent of reviewed files don't align with customer needs.
Such policies are being presented in part as an alternative way to save for retirement, but the regulator found they are being sold to clients who haven't made use of free alternatives like TFSAs and RRSPs, who have high debt, and who risk losing coverage as monthly costs rise significantly over time.
This report by The Canadian Press was first published Oct. 3, 2023.
The Canadian Press