BC-4.21.2
(a) Credit policies must specify whether the licensee will bear the cost of insurance cover or if it will recover the cost from the customer;
(b) If a customer wishes to buy his own insurance cover, the licensee must not refuse to accept assignment of such policy, however, the licensee may require the customer to ensure that the insurance policy terms, duration and features match its requirements;
(c) If insurance is arranged by the licensee for its customer, the cost recovered from the customer must be the actual cost paid by the licensee to the insurance provider;
(d) The insurance cost recovered from the customer, in the case of group insurance cover, must not exceed the proportionate aggregate cost payable to the insurance company attributable to the credit facility. Licensees must, on an annual basis, evaluate the insurance costs, which must be based on the actual insurance premiums levied by the insurer for the purpose of determining the insurance cost to be recovered for new facilities. At maturity of the financing or at the point of early repayment, the licensee must refund any excess insurance cost amount collected;
(e) Licensee must not receive any commission, referral fees or any other fees from the insurance provider and/or receive any commission from the borrower;
(f) Full disclosure with respect to the insurance arrangement (whether individual or group insurance cover), must be made to the customer prior to signing the financing agreement regarding:
(i) The terms of the insurance coverage and name of the insurance provider;
(ii) Benefits and exclusions;
(iii) Need for medical examinations, underlying illnesses not covered and the implications of health conditions on the insurance cost or the insurance claim;
(iv) Payment method for the insurance cost (i.e. one time upfront payment or addition to financing amount and recovered as part of repayment instalments);
(v) The insurance premium rate currently applicable and
(vi) The basis and method of calculation of the insurance cost at the time of granting of the financing;
(vii) Refund/adjustment of insurance cost in the case of early repayment/ pre-payments and top-ups;
(g) Customers must be informed in writing if:
(i) There is a change in the insurance provider in the case of individual insurance cover;
(ii) There is a possibility of additional costs to be recovered or refunds in case of upfront payments due to changes in insurance premium rates; and
(iii) Additional insurance costs would be recovered from the customer if financing repayment instalments are not paid on time; and
(h) The statements of account must clearly show the insurance cost as a separate item where applicable.
Added: January 2024