VSA BULLETIN
January 13, 2010
Issue #2 - 2010
"Etching" program sales require insurance licence
Insurance Council publishes guidelines
In an "open letter" to motor dealers, the Insurance Council of British Columbia has
established rules for the sale of so-called "etching" programs. This is categorized as
anti-theft insurance. Effective January 31, 2010, all dealers and salespeople who sell
this insurance must be licensed by the Council to do so.
The Insurance Council criteria follows an April 2009 cease and desist order issued by
the Financial Institutions Commission (FICOM) against one dealership which was not
only selling what it labelled Platinum Security Protection (a product of an
Alberta-based underwriter), but doing so as a "mandatory" add-on to vehicle sales.
FICOM categorized the "etch" packages as auto insurance and, as such, could only be
sold by licensed insurance brokers.
The Insurance Council policy now clearly states
that this product must be OPTIONAL and FULLY
DISCLOSED to vehicle buyers in writing. The
word “disclosure” means the actual cost of the
insurance and any dealer add-ons must be
specifically itemized. The VSA has had reports of
a $40 insurance premium sold by dealers for as
much as $200.
At the time of the FICOM ruling, 228 dealers in
B.C. were selling "etch" products.
The Insurance Council "open letter" states, in part:
Council determined that, based on its
understanding of the motor vehicle
anti-theft products being offered and the
training provided, it was prepared to
issue a licence which would be restricted
to the sale of the motor vehicle anti-theft
product outlined with an application (or
identical product) subject to the following
additional licence conditions:
- all sales must include clear and concise
written disclosure to the consumer
about all coverages and exclusions of
the insurance product; and,
- prior to any sale, the consumer must be
told that the purchase of the coverage
is optional and may be declined at no
cost to them.
The Council requires that one person in each
dealership must obtain “Level 3 accreditation as a
broker and be responsible for the program within
the business. The more basic Level I licence
restricted to the anti-theft product must be
obtained by each person selling the "etch"
package.
For a copy of the “open letter” and details of the
requirements, dealers should contact their
insurance company. Application forms and a
licence fee schedule can be found at the
Insurance Council's website,
www.insurancecouncilofbc.com.
www.vehiclesalesauthority.com
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