Two-thirds (67 per cent) of group insurance brokers said their client base would decrease if employer-paid benefits became taxable income, according to a survey by the Canadian Group Insurance Brokers and Digital Journal Group.
In February 2017, Prime Minister Justin Trudeau said in Parliament his government wasn’t planning to tax employee health and dental plans. However, the Parliamentary Budget Office released a report in May 2018 looking into the taxation of employer-provided health benefits.
“This leaves the Canadian broker community uncertain about this issue,” said Dave Patriarche, founder of the Canadian Group Insurance Brokers, in a news release. “The taxation of benefits will cause lost jobs across the industry, increased costs to taxpayers and a reduction in benefits for many.”
The survey also looked at the issue of compensation disclosure, highlighted earlier this year when the Canadian Life and Health Insurance Association proposed a new guideline for the industry. Three-quarters (75 per cent) of respondents said they’re open to a standardized commission guideline, while 13 per cent said they’d withhold the commission they charge.
“While brokers are supportive of compensation disclosure, a standard commission guideline is a best practice used in other areas of the insurance industry, such as life, home and auto insurance,” said Patriarche. “The broker industry is open to discussing what this could look like.”
The survey found some confusion, however, on whose responsibility it is to regulate compensation disclosure. A third of respondents said they either believe the CLHIA has regulatory authority or they’re unsure. “This response was a shock,” said Patriarche. “The CLHIA is a trade association, not a regulator. I worry this confusion creates an adversarial environment between brokers and other industry partners, which could negatively impact employers and their employees.”
About a quarter (27 per cent) of respondents said they’re unsure whether they’ll disclose commissions according to the CLHIA guidelines, while 46 per cent said they’ll be somewhat or negatively affected by the guidelines, according to the survey.
A vast majority (88 per cent) of respondents said they’ve discussed or implemented drug caps with their employer clients, 76 per cent said their business would be somewhat or very negatively affected by insurance company direct sales of benefits plans and 34 per cent said maintaining a cost-effective plan is one of the biggest challenges for employers.