Manitoba brokers and insurers are now exempt from the province’s ban on negative-option billing under the Consumer Protection Act.
But don’t expect the industry to take up the practice anytime soon. Negative option billing is still regulated under the province’s Insurance Act, and so the province decided two stones weren’t necessary to kill one bird.
The Manitoba Consumer Protection Office recently notified the public that licensed insurers and brokers are exempt from the ban under the Consumer Protection Act. Brokers were originally included in the province’s consumer protection legislation, which introduced a ban against negative-option billing in 2010.
“Manitoba recently updated their consumer protection legislation,” said Nilanka Maldeniya of Cassels Brock. “They were catching not only insurers, but anyone who was engaged in [negative-option billing].
"But in a recent evaluation, they decided that the insurance legislation [the Insurance Act] was already catching insurers who were engaged in such practices, so they didn’t really see the need to have this duplicated in two different pieces of legislation.”
Negative option marketing is when a business charges for goods or services supplied to a consumer, but the consumer did not ask or them. Or it might involve surcharging for service enhancements without the consumer’s consent.
For example, an insurance company might offer claims protection coverage that didn’t previously exist on an auto policy, or it might add identity theft coverage onto a homeowner’s policy.
If the insurer adds the coverage without actually talking to the consumer, it’s okay as long as there is no additional charge for the coverage.
“But if there is a charge, and they are adding that charge without actually getting the customer’s consent, that is a problem,” said Maldeniya. “That would be considered negative option marketing.”
Registered Insurance Brokers of Ontario (RIBO), the self-regulatory body for brokers in the province, said it considers negative option billing to be “an unfair and deceptive act.”
“The brokerage has at all times, an obligation to provide written notification to the consumer of any policy amendments or modifications,” RIBO’s website states. “Failure to comply with the above may result in a consumer complaint that RIBO would be required to address.”
