Actuarial Notes

Code of Consumer Rights and Responsibilities

Study guide: Exam 6C

The Code of Consumer Rights and Responsibilities is the Insurance Bureau of Canada's voluntary industry code setting out what a home, auto or business insurance customer is entitled to expect from an insurer — and what the customer owes in return. It is self-regulation: adopted by IBC member insurers, not enacted by any legislature, and enforceable only through the regulator's conduct powers if a Superintendent chooses to treat a breach as evidence.

  • Consumer rights under the Code: to be informed about coverage, price and the claims process in plain language; to professional and prompt service; to privacy of personal information; to prompt and fair claims handling with reasons if a claim is denied; and to complain and have the complaint escalated — internally, then to the General Insurance OmbudService.
  • Consumer responsibilities: to ask questions and understand the coverage bought, to provide complete and accurate information, to inform the insurer of material changes in risk, to pay premiums when due, and to report claims promptly and honestly.
  • The Code's structure mirrors the insurance contract's own logic — the insurer's duty to act in good faith (Duty of Good Faith) and the insured's duty of full disclosure — but expresses it as service expectations rather than as conditions of coverage.
  • Its limits are the exam point. A voluntary code has no statutory remedy, applies only to members, is drafted by the industry it governs, and does not create a cause of action. Its defenders argue it raises the floor faster than legislation can; its critics argue it is unenforceable where it matters.
  • The Code sits inside the wider fair treatment of customers framework from CCIR and CISRO, which is backed by regulatory expectation — the direction of travel has been from voluntary code toward supervised outcome.

Voluntary Code Versus Regulation A policyholder's claim is denied without written reasons. Under the Code, they were entitled to reasons. What can they actually do?

Answer Directly under the Code, nothing — it creates no cause of action. The available routes are:

  1. The insurer's internal complaints process, which the Code and the fair-treatment guidance both require the insurer to maintain.
  2. The General Insurance OmbudService, an independent dispute-resolution service; its recommendations are non-binding on the consumer and, in practice, generally followed by insurers.
  3. The provincial regulator, as a market-conduct complaint. Here the Code matters indirectly but substantially: a pattern of denials without reasons is evidence of a conduct failure, and the regulator's powers are real.
  4. The courts, for the coverage itself and, where the denial was handled in bad faith, for Bad Faith Damages.

So the honest description of the Code is that it is a statement of expectations that feeds enforcement elsewhere, not a remedy in itself. Candidates asked to evaluate self-regulation should say both halves: it moves industry practice quickly and cheaply, and it leaves the individual consumer dependent on someone else's enforcement.