As originally appeared in Canadian Auto Dealer, April 9, 2025
Author: Carina Ockedahl
Interrupting a good book of business is always concerning, but that’s when the opportunity for innovation presents itself
There has been a lot of focus on modernizing the Finance & Insurance experience for consumers. But while dealers are using more efficient technologies to present their products, regulators are moving forward with changes that leave dealers with the unenviable task of untangling insurance jargon to ensure compliance.
Quebec & Alberta
That challenge is most evident in Quebec, Alberta, and British Columbia, where regulators are paying more attention to the automotive sector. Some would argue, however, that Quebec has stood in the spotlight more intensely than others.
“Quebec has always had, I would say, the most stringent regulations just around which products can be sold and how they can be sold,” said Will Wheaton, Vice President of Sales and Marketing at First Canadian Financial Group, in an interview with Canadian auto dealer. “And (L’Autorité des marchés financiers) definitely had their eye on the car industry for years, and it’s been a focus.”
Back in February 2015, the AMF released a press notice about targeting automobile insurance practices. At the time, they said they were setting up measures to put a stop to non-compliant commercial practices, and that the measures followed four years of overseeing replacement insurance and related commercial practices — including several reminders about legal obligations.
“I think they just eventually decided that they were going to take a bit of a different approach, and they’re making some fairly major changes to the (F&I) products,” said Wheaton.
On the biggest adjustments coming up, he sees two major changes: one in which dealers will have to adapt to, as the sale of credit insurance is changing. And the other is replacement insurance.
“It has to be sold by a licensed agent … which I think is likely going to fall into the hands of the auto broker, the collision insurance broker, to sell the policy. And dealers are allowed to refer their customer to the auto broker, but they’re not allowed to sell it unless they have a licensed person on staff. And I don’t know if they could do that or not.”
As for the Alberta Insurance Council (AIC), they published an updated bulletin in December around several different F&I products that more clearly defined what they wanted to see — in terms of whether the products are considered to be insurance or not.
On its website, the AIC stated that dealerships and equipment dealers seeking to sell loyalty programs and/or ancillary vehicle protection products will need to have those products underwritten by licensed insurers. They will also need to “apply for and hold a new ‘dealership loyalty programs and vehicle protection products’ type of Restricted Certificate of Authority with AIC” that authorizes the sale of those products.
British Columbia
One province over, neither time nor clarity seems to be at the disposal of dealers in B.C. Adam Hill, Founder and Executive Chair at LGM Financial Services, said dealers here are probably the most concerned, due to a lack of transparency as to why the regulator is intervening and taking significant action.
“That’s the part that’s a bit unfortunate in my mind, is not giving context as to why there seems to be such a deep dive,” he said. “But what’s troubling B.C. dealers in particular around F&I products is the about-face, if you like, between where the BCFSA is now sort of reviewing and applying the Insurance Act against F&I products that are currently in market, versus the way they interpreted those products in prior years.”
“Quebec has always had, I would say, the most stringent regulations just around which products can be sold and how they can be sold.” — Will Wheaton, Vice President of Sales and Marketing at First Canadian Financial Group
The BCFSA, or BC Financial Services Authority, is a Crown agency. Back in 2008, when it was known as the Financial Institutions Commission or FICOM, Hill said the regulator issued a bulletin that was similar to the Alberta bulletin released in December.
“It gave good clarity as to which products were considered insurance, which ones were not, and which ones were exempt. It made sense and … dealers would conduct themselves around those parameters. But last year the BCFSA changed its position.”
Hill said the regulator’s interpretation of the Act evolved in a way that now makes it more difficult for dealers to be able to sell certain products without “a lot more licensing.”
Adding to an already complicated situation is the Insurance Council of British Columbia, which Hill noted works hand-in-hand with the BCFSA. He said the council has been precluded in the last couple of years from being able to issue restricted licenses to dealers to be able to sell certain F&I products. The combination of the Insurance Council and the BCFSA, with their new interpretation of the Insurance Act, has left dealers questioning what they can sell.
“They (the BCFSA) want certain products to be removed from the dealer landscape from being able to offer to consumers,” said Hill, highlighting the appearance protection product as an example. “As it stands right now, the BCFSA is saying we think that that’s a product of insurance. A dealer would need to be a full blown insurance agency and the people representing that product, the FSMs (Financial Services Manager) would need to also be licensed.”
LGM is actively challenging the new interpretation that the BCFSA has brought to market. The company is petitioning before the Supreme Court to have the regulator interpret the Act and come up with a determination around which products that the dealers are currently selling are in fact products of insurance, and which ones do not require licensing.
“We are looking for others to join us as interveners or to provide affidavits, and that could include dealers that are being negatively impacted by this new bulletin, or manufacturers, or even other third party F&I suppliers that feel like the bulletin has gone a bit too far in terms of interpreting the Insurance Act,” said Hill.
Progressing under regulatory scrutiny
Derek Sloan, President of Sym-Tech Dealer Services, thinks the regulatory changes we are seeing are just the beginning of additional changes coming down the road. As a result he advises continued diligence through the process, as well as working with the regulator and trying to understand the changes.
“Some changes are happening because there have been rules in the past that have not been followed and those rules became a frustration,” said Sloan. “I’ll be more specific. The AMF … became very frustrated with the experience of trying to work with the dealers and providers, and just felt like they were not getting the results that they wanted to get. So they made the change and that’s fine.”
“Now, if I’m a dealer, am I concerned?” asked Sloan. “You’re always concerned when you have a good book of business and all of a sudden it’s being potentially interrupted. Absolutely. I will tell you that the change is actually taking its time in terms of the process, more than in British Columbia. B.C. just makes a decision — and bang — it’s done. Which is a challenge. Is that the right approach? It’s not really the right approach.”
However, Sloan sees an opportunity in these changes. He said that when things stay the same for many years, innovation can become lethargic. It can get “a little more passive.”
“Some of these changes that are happening are going to allow us to create a whole set of new products that are going to be very relevant to customers, and that dealers are going to be able to take advantage of and be able to expedite.” — Derek Sloan, President of Sym-Tech Dealer Services
But change creates an opportunity to become innovative. Sloan said it creates the potential to consider the changing and shifting environment, and to come up with a better way to do things or bring something new to the table.
“Some of these changes that are happening are going to allow us to create a whole set of new products that are going to be very relevant to customers, and that dealers are going to be able to take advantage of and be able to expedite,” said Sloan, with a hint of secrecy.
As dealers work through insurance jargon and with their providers to better understand the coming regulatory changes, innovation is likely stirring from a rest it no longer needs.
Sébastien Alajarin is Vice-president Quebec iA Dealer Services & President Garantie Nationale. In terms of the environment for F&I in Quebec, he says the changes will ultimately benefit consumers. “The global regulatory context is evolving rapidly with the aim of providing better fair treatment for consumers,” said Alajarin.
“Provinces are adjusting their regulations based on the issues they have identified. Although some changes require significant adjustments from an operational and technological standpoint, it is certain that consumers will get significant benefits,” he said.
More specifically, the changes in Quebec will disrupt the way products are currently bought and sold. “Bill 72 will require the creditor of an insurance product to contact the consumer following the cancellation of the protection to determine how the amount due should be applied to their loan,” said Alajarin, adding that Bill 30 will mark the end of single-premium credit insurance and will remove the right of dealerships to sell replacement insurance.
But Alajarin said the changes could also lead to an improvement in the relationship between car buyers and dealerships. “I encourage dealerships to embrace change. When one page turns, it’s time to move on to the next.”
