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CLHIA comments regarding Alberta's creditor's group insurance (CGI) and critical illness coverage


Release Date: 12/07/2015
Staff Reference: Leslie Byrnes

December 7, 2015

Joanne Abram
Chief Executive Officer
Alberta Insurance Council
10104 - 103 Avenue
Suite 600, Bell Tower
Edmonton, Alberta
T5J 0H8


Dear Ms. Abram,

We are writing regarding our mutual interest in ensuring that creditor's group insurance (CGI) products continue to be provided to Alberta consumers in an appropriate manner. In particular, we would like to discuss critical illness coverage, which has been included for many years as part of the CGI product offering of many insurers. We were surprised to learn there is any question regarding its distribution, given that the current process appears to be working well.

Established in 1894, the Canadian Life and Health Insurance Association (CLHIA) represents life and health insurers accounting for 99% of the business in Canada. Twenty-one life and health insurers offer a wide range of CGI products through over 800 plans in Alberta, some of which include critical illness coverage.

CGI products serve a consumer's need for debt relief when a specified unexpected event occurs. CGI products include life coverage, and may include optional accident and sickness coverage, like disability and critical illness. Critical illness coverage pays a lump sum if the insured is diagnosed with a life altering illness such as cancer, heart attack, stroke, multiple sclerosis or Parkinson's disease. The lump sum is equal to the amount outstanding on the loan and the creditor receives the insurance proceeds to relieve the debt.

The Insurance Council's 2012 specification states that "credit related insurance" can be distributed under a restricted licence, and section 1(5)(a) of the Insurance Agents and Adjusters Regulation states that credit related insurance means creditor's group insurance. It has always been the industry's view that CGI products, including those with critical illness coverage, fall under this description...