Executive Summary
Consumer demand for Internet distribution has been increasing. The Internet is particularly important for delivering products to consumers who are underserved by traditional channels. Electronic commerce can be used to provide consumers with broad access to clear and consistent information about insurance and the ability to purchase the coverage they need in a convenient manner, mitigating the risk that consumers do not buy necessary insurance coverage.
CAFII supports consistency of regulation across channels. The regulatory frameworks that are now in place have been, and can continue to be, adapted for the Internet distribution channel. CAFII supports the direction that products which do not now require a licensed intermediary would continue to not require a licensed intermediary under Internet distribution. Risk mitigation techniques for distributing insurance without an intermediary have been developed and can be utilized in Internet distribution. These techniques include plain language communication of key facts, advice tools, free-look features, complaint handling protocols, privacy requirements, and claims handling.
A web-based offering can greatly simplify the learning process for consumers. The web has the ability to clarify information and present it to consumers in a logical and consistent manner. It is incumbent on the insurer to build an application and consumer experience that both facilitates a transaction and provides sufficient guidance, disclosure and explanation in regard to the specific product being offered so consumers can fully understand the product offered and make an informed purchase decision. Consumer acceptance is key. Clients self-select a channel to achieve satisfaction.
For those products that require a licensed intermediary, we recommend that a licensed intermediary be available for contact at the client’s request during business hours. Given that clients have chosen to do their research and transaction on the Internet rather than face-to-face and telephone, mandating the use of a licensed agent would add redundancy and costs and go against clients’ needs and wants. Requiring a licensed agent to review an application is particularly problematic as it would mean that clients may be delayed or prevented from completing their transaction.
Internet channels are well suited to making information readily available on a consistent and clear basis. Websites of insurance providers typically provide online advice tools such as contact numbers and “click to chat”, information screens, pop-up information screens, needs analysis tools which provide customized insurance advice based on information provided by the consumer, hints, suspend and resume, “click to accept” key information, frequently asked questions, and a glossary. Internet distribution could make the terms and conditions and all policy documentation readily available in a form that provides for ready storage and retrieval.
CAFII appreciates the opportunity to work with the CCIR on assessing issues related to electronic commerce and insurance distribution, a channel that is increasingly in demand by consumers. We would be pleased to meet with the CCIR to discuss our submission in more detail.
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