The Canadian Council of Insurance Regulators and the Canadian Insurance Services Regulatory Organizations have released a consultation paper that recommends three principles for managing conflicts of interest.

The paper seeks comments on recommendations designed to promote consumer confidence in the insurance industry. It is the third paper released by the Industry Practices Review Committee on the subject of managing actual or potential conflicts of interest in the insurance industry.

In June 2005, the IPRC released a consultation paper to outline the findings of two market conduct questionnaires and to ask stakeholders for comments on possible policy options. In November 2005, it released a second paper to summarize the responses to the June paper. The recommendations described in the current paper have been developed from these earlier papers and should be read in conjunction with them.

The IPRC is making three principle-based recommendations that focus on market place outcomes. These principles strengthen and harmonize requirements that are, to a large extent, already in place across Canada.

Subject to this consultation, the IPRC intends to recommend to CCIR and CISRO the three principles for regulators to consider and industry associations to support as appropriate means to manage actual or potential conflicts of interest associated with insurance advice or transactions.

An intermediary must place the interests of policyholders and prospective purchasers of insurance ahead of his or her own interests. Consumers must receive disclosure of any actual or potential conflict of interest that is associated with a transaction or recommendation. The recommended product must be suitable for the needs of the consumer.

Following the review of comments provided by stakeholders, the IPRC will finalize its recommendations and report to the CCIR and CISRO in the spring of 2006. Submissions are due by March 24.