With the adoption of Bill 30, starting July 1, 2026, it will no longer be possible for car dealers and dealerships to sell replacement insurance.

Since time immemorial, it seems, dealers have been able to offer their customers insurance products without a representative. This includes replacement insurance policies, as well as life, health, or unemployment insurance. Changes are also expected for other types of insurance; more on that later.

This decision is causing quite a stir. Some see the law as a good thing, a way to regulate practices and protect consumers. Others find it harder to swallow, as it could lead to significant revenue losses. It’s important to understand that in 2022, about 64,000 replacement insurance policies were sold through some 2,200 car dealerships in Quebec, totaling $140 million.

Why?

What drives the government to act this way? The goal of the law is to promote transparency, strengthen consumer protection, and enhance the efficiency of the entire insurance sector in Quebec. The law aims to balance the interests of policyholders and insurance companies, ensuring that adopted practices are fair and in line with contemporary standards.

Eric Girard, the minister responsible for the matter, stated that consumer interest and protection are the main reasons for this decision. Questionable practices highlighted by the Autorité des marchés financiers (AMF) also served as a wake-up call. According to them, products sold by dealers cost significantly more than their equivalents distributed by brokers. On average, we’re talking about an extra $500 for the same insurance product.

In an interview on the show RPM last January, Hubert Lamontagne, Legal Advisor at APA, stated that an insurance salesperson earned an average commission of 12% on their product, while this percentage could reach 35% to 50% at a dealership. He also confirmed the additional $500 paid by consumers at dealerships. He noted that the refusal rate for insurance taken out at a dealership was twice as high as for policies signed with a broker.

It is in this context that Bill 30 comes into play. And it is also in this context that Autosphere spoke with two industry stakeholders.

Adapting and finding strategies

Sébastien Alajarin, Regional Vice-President, Quebec, iA Dealer Services, took a philosophical stance:

“It is clear that Bill 30 impacts us. We are a dominant player in the market and a key industry stakeholder. However, we will adapt and develop strategies accordingly, to comply with the law, which aims for fair consumer treatment. The good news is that following discussions with the minister’s office, the industry was able to postpone the law’s implementation by one year, giving us 24 months instead of 12. For the implementation of new standards, this involves many technological changes, and it would have been difficult to accomplish everything in just 12 months.”

Until the law comes into effect, Alajarin indicates that the existing offer will be maintained. And if dealers can no longer sell replacement insurance from July 1, 2026, they can still offer personal insurance (life, unemployment, etc.).

“The two-year window gives us time to adjust our product offerings, particularly with credit insurance, which we can continue to offer, but in a different way.” Alajarin refers to the fact that it will no longer be possible to include the insurance premium in the vehicle payment. Instead, we’ll talk about at least an annual premium that the customer can renew or cancel according to their wishes and needs over time.

“People will be better informed. Everything is linked to fair consumer treatment. We’re moving forward and will ensure that practices are compliant,” concludes Alajarin.

A predictable change

At LGM Financial Group, which primarily promotes mechanical protection, the impact is less direct, even though they offer the same service.

For Marc-André Lefebvre, Vice-President of Sales for Quebec, “No one can be happy about this, as changes are not always welcome. However, it was predictable because the AMF has been discussing this for a long time. They found some practices questionable. Dealers will have to adapt, and they are the biggest losers in this. The good news is that they have two years to do so.”

Undoubtedly, the new law will change practices, but we shouldn’t expect dealers and used car sellers to not find other ways to make up for their losses.

“Dealers will adapt. It’s fine to make money, but it must be done the right way. The problem is that some have abused and not followed the rules. The AMF got involved, the government reacted, and we find ourselves in the current situation. The government wants fair treatment for the consumer,” adds Marc-André Lefebvre.

And there are solutions. At LGM, for example, they are working on various initiatives, including a certified used vehicle program. “There are ways to comply with the law. Our goal is to provide retention solutions, but also profitability for dealerships,” concludes Marc-André Lefebvre.

It’s too early to discuss solutions, but some industry experts point out that there was a time when insurance brokers had their offices directly at dealerships and used car lots.

One thing is certain, the issue is far from settled, and we will undoubtedly have the opportunity to revisit it, including discussing with various stakeholders the solutions that will be considered to adapt to this new Bill 30.