Brokers prepare for new creditor insurance rules

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Creditor insurance provider MPP is readying brokers for changes to the way they offer that increasingly popular product in one of the channel's increasingly important markets.

“We are actively reaching out to our broker partners in Quebec to explain to them what the regulatory changes mean,” David Self, VP of marketing and distribution for Benesure, and its Mortgage Protection Plan, told “The new rules now require mortgage brokers to inform their clients about products and services, including insurance ... and to advise their clients to seek the assistance of recognized experts such as licensed insurance representatives, where appropriate.”

That last point around referrals represents a real change from the way things are done in La Belle Province and how brokers are still doing things across much of the country.

Under amendments made last year to the province’s mortgage broker regulations, brokers have effectively been blocked from directly selling mortgage insurance to clients. Instead they must refer them to registered insurance providers, a model with the potential to undercut revenue at a time when brokers are looking to maximize revenue from each and every origination.

Benesure is in the process of adapting its business model to accommodate the change, with the licensing of its own Quebec insurance agency, Credit Security Insurance Agency Inc. That registered firm will offer MPP insurance products in Quebec, allowing brokers the opportunity to refer clients and earn referral fees instead of the compensation they now receive for arranging policies.

The new remuneration terms have yet to be finalized, said Self.

"We are working with the regulators to have a fully compliant referral process in place and operative by end of 2011,” he told “Changes are also being made to relevant websites to make them compliant.”

The Quebec market now represents 10 to 15 per cent of MPP’s business. Self doesn’t expect the new regulations to weaken that penetration.

They may, in fact, help it.

The changes formalize the obligations of brokers to advise clients about their insurance choices, said Self, “and that should get the mortgage broker more involved in referring the product.”

Still, it falls to Benesure to get brokers sending those referrals its way, something Self hopes an expanded product line and MPP's established relationship with Quebec mortgage professionals will help along.

  • Ramona on 2011-10-29 11:09:01 AM

    So why are financial planners offering mortgages through their system. Better yet lines of credit that is not always in the best interest of the client. It's a two way street!

  • Brian Lambert on 2011-10-29 5:01:24 AM

    A as Mortgage Broker I agree that the mortgage industry has no right to be able to offer insurance products without an Insurance Licence. MPP is a poor product as are Mortgage Life insurance products sold by the Banks.They are 40 to 60% more tah a simple TERM Insurance and Mortgage Life insuranceis a non guarenteed product it is underwritten at death. Why would any professional recommend this prodoct. We cross market all financial products at my Brokerage, Term Insuance is given to all clients and we are able to services Investment products as well. If a client has one product with you cahances are they will leave if they use you for all their fiancial needs you have a client for life. Few Brokers are set up to offer Fiancial Planning and there is a great need out there for it.

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