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Disclosing Embedded Costs and Fees to Life Insurance Consumers


FSRA proposes new Rule requiring companies to improve annual statements for segregated fund contract owners

TORONTO, May 27, 2024 /CNW/ - Ontario's financial services regulator (FSRA) is taking steps to better protect life insurance customers with individual segregated fund contracts (seg funds).

FSRA is proposing a Rule that would require insurers to provide customers with improved annual statements about the performance and embedded costs and fees associated with owning seg funds. If approved, the approach to disclosing total costs and fees will be consistent for investment and seg fund holders, making it easier for consumers to compare and decide on the product that's right for them.

"Ontarians need greater transparency to make informed decisions about their financial futures," said Huston Loke, Executive Vice President, Market Conduct, at FSRA. "This Rule, if approved, will provide individual segregated fund customers with essential information to help them determine if these investments are right for them and to ensure they understand what fees they are being charged."

FSRA has been working with the Canadian Council of Insurance Regulators as well as with the Canadian Securities Administrators to enhance and harmonize how performance and fees are disclosed for investment and seg funds.

Insurers are required to provide annual statements right now. The FSRA rule will increase the information insurers would be required to provide on the annual statements, such as:

Some insurers already provide some of the above information on a voluntarily basis.

The proposed Rule will set out requirements that would be applied consistently across the sector in alignment with the Individual Variable Insurance Contract Ongoing Disclosure Guidance published by the Canadian Council of Insurance Regulators in 2023.

FSRA wants to hear from you

FSRA is committed to making sure consumers and industry members understand this proposed Rule. That's why we're asking the public to join us live online for an overview of the Rule and an interactive Q&A session on June 19, 2024. Register for the webinar now. 

The consultation period for the proposed Rule is now open and will close on July 26, 2024. FSRA invites stakeholders to review the proposed Rule and submit their feedback.

Learn More

FSRA continues to work on behalf of all stakeholders, including consumers, to ensure financial safety, fairness, and choice for everyone. Learn more at www.fsrao.ca.

Links

FOR MEDIA INQUIRIES:

Ashley Legassic
Sr. Media Relations and Digital Officer 
Financial Services Regulatory Authority
C: 647-719-8426
Email: [email protected]

SOURCE Financial Services Regulatory Authority of Ontario


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