February 17, 2005, Ottawa – Today, the Canadian Federation of Independent Business (CFIB) will appear before the Senate Standing Committee on Banking, Trade and Commerce to discuss consumer issues in the financial services sector, and will call for greater consumer protection and transparency from Canada�s insurers. �The livelihoods of thousands of small business owners, professionals and their employees are being threatened by skyrocketing business liability insurance premiums, and drastic reductions in insurance coverage and availability for many small businesses,� asserted CFIB president Catherine Swift.
Swift said that one key step in achieving better insurance customer relations is for the industry to develop a Code of Conduct to protect the interests of small-and medium-sized business clients. Also, there is currently insufficient data on business insurance markets to permit SME consumers to be adequately informed of their options.
She said such a Code of Conduct should include: a commitment to putting the client�s interest first; the right to be informed; the right to advance notice of any changes to an insurance policy; and the right to redress. �Under the current system, those principles are inconsistently applied and too often the small business policy holder gets blind-sided.�
Swift pointed out that in the 1990s, the banking sector developed a voluntary code of conduct for doing business with small- and medium-sized enterprises. Although problems still exist with accessing SME financing, these positive accountability steps have improved consumer relations with the major banks. While the banks were reluctant to report to parliament annually on their SME lending practices, they now consider it a worthwhile endeavour that helps them improve service.
�Access to financing is less of an issue today than it was 20 years ago, as leasing and other credit options have alleviated some of these pressures,� said Swift. �However, every business requires insurance, and the availability of affordable liability insurance is crucial to a well functioning economy anchored by the SME sector. Because of this we believe further transparency and better insurance data are critical.�
Swift also noted that, on this issue, the federal government�s reaction has been most disappointing. �Business liability insurers operate in a jurisdictional black hole somewhere between federal and provincial responsibility. Government agencies are presently not doing enough data gathering on the insurance sector, the true level of competition within the insurance sector is unknown, and there are gaps in government oversight.�
�The insurance industry is embarking on a multi-million dollar PR campaign to convince Canadians that the upward pressure on rates is easing and that everything is fine. We are hearing the opposite from our members, both anecdotally and through the high number of member faxes we continue to receive in our office on a daily basis. So far, CFIB has received over 45,000 faxes from members calling on the government to seek more comprehensive information on the insurance industry. We believe that if we are to avoid in the future the cyclical problems that have recently plagued the insurance industry and threatened small business, government has to shine more light on what is going on there,� concluded Swift.
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CFIB works on behalf of more than 100,000 independent business owners in every sector and region in Canada. Taking our direction from CFIB Members, through regular surveys, we lobby for small- and medium-sized businesses at the federal, provincial and local levels of government.