B.C. regulators spell out new rules for selling incidental insurance

Businesses in B.C. selling insurance incidental to their primary business activities must obtain and maintain a new Restricted Insurance Agency (RIA) licence, effective Jan 1, 2027.

B.C.’s broker regulator, the Insurance Council of BC, published new regulations regarding qualifications to obtain an RIA licence on Jan. 7.

Meanwhile, the BC Financial Services Authority, which regulates insurance and other financial services in the province, settled a dispute with Mazda Canada over the status of the vehicle manufacturer’s “Mazda Appearance Protection” offering. That dispute turned on whether the car manufacturer’s protection constitutes an “insurance” product requiring a licence to sell.

B.C. has been looking for some time at how to regulate the sale of incidental insurance products. Under B.C.’s new regulations, to obtain the new RIA licence, among other things, business selling incidental insurance must have at least one contract with an insurer authorized to conduct business in British Columbia.

Also, the province’s broker regulator requires businesses selling incidental insurance to appoint a designated representative to be the primary contact for the Insurance Council of BC.

“Businesses must ensure that representatives who sell insurance on their behalf complete an accredited training course specific to the insurance products being sold,” as McMillan LLP lawyers Darcy Ammerman, Delina Wen, and Daniela Hartmann summarize the council’s rules in a blog post on Mondaq.

“While the training course may be offered by any provider, it must be accredited by the council to ensure the course content aligns with the required knowledge and skills outlined in the specified performance requirements for the RIA Licence.”

Among the many classes of businesses required to obtain the RIA licence, “motor vehicle dealers” are listed. Classes of insurance related to motor vehicle insurance are listed in the new regulations, including credit protection insurance, guaranteed asset protection insurance, and vehicle warranty insurance.

Businesses must renew their licence on an annual basis and pay applicable fees. Those selling insurance products under an RIA licence must meet qualification requirements, including continuing education. Businesses must notify the council immediately if they no longer have a designated representative in place.

In other news: Sales Column | How to help your clients relate to their insurance policies

In an unrelated settlement in January between BC Financial Services Authority and Mazda, it appears one potential source of contention will be whether businesses are selling an “insurance” product.

Mazda Canada, for example, underwrote Appearance Protection contracts, and added these protection contracts for B.C. consumers. Benefits of the protection include key and keyless remote replacement, front windshield repair on the roadside, head and tail-light protection, minor dent repair, interior protection and tire, wheel and curb scuff repair.

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The BC Financial Services Authority deemed Mazda’s protection to be “insurance” and found the car manufacturer was not authorized to offer these contracts to consumers. It also found B.C. consumers were not harmed by the protection.

Mazda Canada does not agree its appearance protection contracts are insurance products.

On Jan. 5, the two sides entered into an undertaking in which Mazda agreed to pay the regulator $25,000. Mazda has the right to continue to provide its appearance protection contracts.

But Mazda Canada also agrees “not [to] carry on any new business of insurance in B.C. (other than adjusting, resolving, and paying claims made under Appearance Protection Contracts and Added Protection Contracts in place with B.C. consumers prior to the effective date of the undertaking) until and unless [Mazda Canada] is authorized by [BC Financial Services Authority] to engage in the business of insurance.”

David Gambrill

David has twice served as Canadian Underwriter’s senior editor, both from 2005 to 2012, and again from 2017 to the present.