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12. Policyholder Protection

Apr 13, 2025

Lecture Notes: Assuris and Policyholder Protection

Overview of Assuris

  • Assuris: A not-for-profit organization funded by the Canadian insurance industry.
  • Purpose: Protect Canadian policyholders in case their insurance company becomes insolvent or bankrupt.
  • All Canadian insurance companies contribute funds to support Assuris.

Procedure in Case of Insolvency

  1. Regulator's First Step:
    • Attempt to find another insurance company to acquire and take over the troubled company's policies.
    • Transfer the obligations to the acquiring company.
  2. If Acquisition Fails:
    • The troubled company undergoes liquidation.
    • Policyholder benefits under Assuris apply to the policyholders of the liquidated company.

Benefits Provided by Assuris

  • Death Benefits:
    • Guarantee of $200,000 or 85% of the promised benefit—whichever is higher.
  • Health Expenses:
    • Coverage of $60,000 or 85% of the promised benefit—whichever is higher.
  • Monthly Income Plans (e.g., Disability Income Plans, Immediate Annuities):
    • Coverage of $2,000 per month or 85% of the promised benefit—whichever is higher.
  • Cash Value in Policies:
    • Coverage of $60,000 or 85% of the value—whichever is higher.
  • Deferred Annuities:
    • 100% of the deposit is covered up to $100,000.
    • Similar to protections in banking and securities industries.
  • General Coverage Rule:
    • 100% coverage up to specified limits, then 85% coverage on excess amounts.

Ombudsman Service in Life and Health Insurance

  • Role:
    • Independent complaint resolution organization.
    • Assists clients in resolving disputes with insurers.
  • Process:
    • Clients start by addressing complaints with their agent or insurance company.
    • If unresolved, escalate to the Ombudsman.
    • Ombudsman facilitates discussion between client and insurer.
    • No authority to enforce resolutions; aims to mediate and reach an agreement.
  • Final Resolution:
    • If unresolved through Ombudsman, legal proceedings are an option.

Key Takeaways

  • Assuris provides essential protection to policyholders in case of insurance company insolvency.
  • The Ombudsman Service offers a platform for resolving disputes without legal action.
  • Both services aim to protect consumers and maintain trust in the insurance industry.

Full transcript