Distribution without a representative: Bill 30 targets recreational vehicle dealers and merchants offering insurance products

On June 7, 2023, Quebec Minister of Finance Eric Girard introduced the Act to amend various provisions mainly with respect to the financial sector¹ (Bill 30) to the National Assembly of Quebec. Bill 30 gives effect to the commitment Mr. Girard announced at the last annual meeting of the Autorité des marchés financiers (the AMF) to adopt a series of omnibus bills modernizing the regulatory framework of Quebec’s financial sector.

Bill 30, which is part of this series, more specifically proposes a significant reinforcement of the provisions of the regime under which insurance products are distributed without a representative. If the bill is passed in its current form, this reinforcement will no doubt have a considerable impact on the distribution of insurance products by vehicle dealers or recreational vehicle merchants in Quebec.

To iterate, under the current regime of distribution without a representative, insurers are free to offer certain types of insurance products through a distributor² instead of through a representative holding a certificate issued by the AMF. Examples of the insurance products targeted by this simplified distribution regulatory regime include replacement insurance³ (in damage insurance) and debtor life, health and employment insurance (in insurance of persons). Consequently, the regime of distribution without a representative allows vehicle dealers and recreational vehicle merchants, among others, to distribute these two types of insurance products without actively involving a representative who is authorized by the AMF.

In that regard, Bill 30 introduces two important amendments that would:

• exempt replacement insurance from the regime of distribution without a representative, that is to say property insurance under which the insurer guarantees the replacement of the insured vehicle or insured parts;⁴ and
• subject debtor life, health and employment insurance contracts to an annual insurance premium for each year of the contract.

In our opinion, the proposed legislative amendments clearly align with what the AMF has been suggesting these last few years in its many notices, guidelines and regulations with a view to improving commercial practices in this market niche. An AMF report published in June 2020⁵ notes that despite interventions with dealers ranging from oversight to penalties and proceedings, deficiencies are on the rise and consumer dissatisfaction persists. Bill 30 therefore appears to be a legislative recognition of the fact that the difficulties identified by the AMF in this distribution niche continue to this day, despite its recent attempts to resolve them. 

It remains to be seen whether the proposed amendments will survive the various stages of the legislative process or a more nuanced legislative solution for these important issues will be identified in collaboration with dealer associations and the main insurers active in this niche. These questions will hopefully be answered when parliamentary proceedings resume this fall.

The author wishes to thank Ariadne Florez et Emile Letellier-Limoges, law students, for their help in preparing this legal update.