Government Services
January 25, 2007

Government Releases Consumer Protection Document

A new tool is now available to consumers when they purchase all types of insurance. Government committed to develop a document requiring insurance companies and brokers to improve disclosure to consumers so they can make informed choices regarding insurance products. As a result, government is releasing Principles for the Sale of Insurance which is a consumer protection document.

"All insurance companies and brokers are now obliged to provide this consumer protection document to all consumers when they purchase automobile, homeowners, commercial, marine, life and other insurances and to provide the information about their insurance purchase as outlined in the document," said the Honourable Dianne Whalen, Minister of Government Services. "We are working with insurance companies and brokers to ensure consumers are better informed about what they are purchasing so they can make informed decisions and choose the best policy to suit their needs."

Government publicly committed to producing a consumer protection document as a result of the Public Utilities Board review and subsequent report it prepared on homeowners, commercial and marine insurance which was released on August 15, 2006. The report indicated that a document which obligated insurance companies to advise consumers of their rights when purchasing insurance would be beneficial as suggested by the Consumer Advocate, Tom Johnson.

"Knowledge is power when it comes to the purchase of insurance," said Mr. Johnson. "I hope that consumers will take full advantage of their rights in this new consumer protection document in order to level the playing field between the consumer and the insurance companies."

The Principles for the Sale of Insurance specifically outlines expectations respecting the need for:

  • Clients� interest to come first
  • Disclosure of deductible options and premiums with various deductibles
  • Disclosure of any available discounts
  • Plain language disclosure of all coverages available and costs of each
  • Disclosure of companies represented and quotes obtained
  • Disclosure of reasons for cancellation or refusal to renew as well as rationale for increases
  • Disclosure of Broker affiliations with insurance companies
  • Disclosure of commission structures
  • Product suitability
    •

    "We are extremely pleased with this document and believe that consumers will benefit greatly from it," said Minister Whalen. "It is a new approach. We are the only province to have anything like this and we are committed to evaluating its effectiveness over the next two years. We want to make sure that insurance companies are complying with these principles and that consumers find it useful in becoming fully knowledgeable about their insurance choices."

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    Media contact:
    Vanessa Colman-Sadd
    Director of Communications
    Department of Government Services
    709-729-4860, 682-6593
    vanessacolmansadd@gov.nl.ca 

    2007 01 25                                               10:00 a.m.
     

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