Proposed Rule Wording
How to read the proposed wording changes to the Rules:
Bolded text represents the addition of proposed wording.
Text that has been
struck outrepresents wording proposed for removal.
What is the proposed change?
This new rule restricts insurance agencies that have common ownership with property management companies from conducting strata insurance business for stratas managed by that property management company.
This change includes the addition of definitions for the terms “immediate family,” “significant individual” and “strata corporation” to clarify how these terms are defined in the new rule.
What is the rationale?
Recent amendments to the Financial Institutions Act and Financial Products Disclosure Regulation prohibit the payment of referral fees for strata insurance and introduce requirements for disclosure of commission. However, this could be circumvented if a property management firm has common ownership with an insurance agency or adjusting firm and receives commissions for strata business.
The creation of this rule would address this loophole to align with the legislation’s intent of consumer protection regarding strata insurance.
Additional information:
The ban on referral fees to property managers from strata insurance transactions became effective September 4, 2020, following changes to the Financial Institutions Act.
Provide feedback about proposed changes to the Council Rules
Consultation is now closed. Stakeholder consultation on this proposed rule amendment ran March 28 to June 1, 2022.