Mr. William Ngu, Acting Superintendent of Insurance
Nova Scotia Department of Finance and Treasury Board
Financial Institutions Division
PO Box 2271
Halifax, Nova Scotia B3J 3C8
Dear Mr. Ngu:
In a recent meeting with David Weir, New Brunswick’s Deputy Director, Insurance, CAFII reaffirmed our support for legislation and/or regulation to enable electronic beneficiary designations. David noted that any change to facilitate electronic beneficiary designations would be undertaken on a regionally harmonized basis in Atlantic Canada; and encouraged us to write to the Superintendents of Insurance in all four provinces to express our support for this.
CCIR’s October 2013 final position paper on “Electronic Commerce In Insurance Products” outlined the following points regarding “Designation of Beneficiary”:
To protect consumers, and to harmonize standards across Canadian jurisdictions, the Committee concluded that CCIR should recommend that insurers have in place effective systems for offering consumers the option of designating and changing beneficiaries by electronic means.
Electronic beneficiary designation transactions should be acknowledged by electronic or other means as a critical protection against fraud.
Any best practice guidelines, whether promulgated by industry or regulators, should clearly address evidentiary issues.
In the absence of specific legislative provisions that authorize electronic beneficiary designations, insurers continue to require designations to be made in paper form and without a designation on paper, benefits are paid to the estate by default. This not only delays insurance payments to beneficiaries, it also renders the insurance proceeds taxable and vulnerable to claims from creditors.
It is also worth noting that when consumers choose to purchase life insurance online or via telephone, they don’t expect to have to fill out paper forms that subsequently arrive in the mail. As a result, they may procrastinate and forget to submit their beneficiary designation and with more and more consumers choosing to purchase insurance by e-commerce, this problem can only get worse.
Therefore, it is our view that it would be in consumers’ best interests to give them the ability to designate a beneficiary and/or notify an insurer of a beneficiary change via their channel of choice, including by electronic means. At the same time, CAFII agrees that in order to protect consumers from fraud, electronic beneficiary designations should be acknowledged by electronic or other means. And, in keeping with provincial electronic commerce legislation, an electronic beneficiary designation should be an option requiring the consent of both parties and not be mandatory for the insured or the insurer.
CAFII supports harmonized approaches to legislative and regulatory change, and we therefore encourage you to work with your Superintendent colleagues from the other Atlantic Canada provinces to address this important issue at the earliest possible opportunity.
Should you require any additional information or further elaboration on the rationale for CAFII’s position, including the safeguards our members have in place to protect consumers under a regime that permits electronic beneficiary designations, please contact Brendan Wycks, our Executive Director, at brendan.wycks@cafii.com or 647-218-8243.
Sincerely,
Greg Grant, MBA, FLMI, ACS
Board Secretary and Chair, Executive Operations Committee
Canadian Association of Financial Institutions in Insurance
c.c. Jennifer Calder, Deputy Superintendent of Insurance