ALBERTA INSURANCE COUNCIL
(the “AIC”)
In the Matter of the Insurance Act, R.S.A. 2000 Chapter I-3
(the “Act”)
And
In the Matter of Kraig Anderson
(the "Agent")
DECISION
OF
The Life Insurance Council
(the “Council”)
This case involved an allegation pursuant to s 480(1)(a) of the Act. Specifically, it is alleged that the Agent forged his clients’ signatures and inaccurately dated policy delivery and consent forms. In so doing, it is alleged that he made misrepresentations and acted in an untrustworthy and dishonest manner as contemplated in s. 480(1)(a) of the Act.
Facts and Evidence
This matter proceeded by way of a written Report to Council dated February 26, 2016 (the “Report”). The Report was forwarded to the Agent for his review and to allow the Agent to provide the Council with any further evidence or submissions by way of Addendum. The Agent signed the Report on March 9, 2016 and did not submit additional information for our consideration.
The Agent has held certificates of authority to act in the capacity of a life, general and accident & sickness agent since 2007. The Alberta Insurance Council (“AIC”) received a letter dated November 4, 2015 from an official of the Co-operators Life Insurance Company (“FT”). In her letter, FT advised, “It has come to our attention that [the Agent] signed documents on behalf of his clients rather than getting the clients to sign these documents as would have been the proper procedure. We believe that he did this in order to make things easier for his clients and there was no intent to defraud the customers. Further, there does not appear to have been any intent for him to benefit or have a financial gain as a result.”
The Investigator wrote to FT and requested further information and documentation by way of letter dated January 5, 2016. FT responded by email and accompanying attachments dated January 15, 2016. In the email, FT advised that that the Agent was the subject of an internal audit during which the auditor noted signature discrepancies on “Policy Delivery Checklist & Privacy Consent/Withdrawal of Consent” forms. Included amongst the attachments were copies of internal investigation reports, the forms in question and a letter wherein the Agent admitted his actions.
The Investigator wrote to the Agent by letter dated January 20, 2016 and requested information and documentation. The Agent responded in a series of emails on January 22, 2016. The Agent also attached a number of documents to his email including, among other things, a letter dated January 22, 2016. In this letter, the Agent wrote:
1. In 2015 the Cooperators was conducting their regular annual agency audit. A few days prior to the audit I received a list of files that the auditor was going to review. In preparation I pulled the files and glanced through to ensure all documentation was complete. As I was going through the files I noticed that in two files the policy delivery/review checklist was missing. In a moment of panic I completed the forms and incorrectly dated them. In these two situations the policies were delivered by e-mail (see attached) to the clients but I never received a signed Checklist. As you can see the policies were delivered shortly after they were issued.
2. As per the attached emails the policies were delivered by e-mail shortly after the policy issue date. There was not a substantial period between the policy issue date and the policy delivery date as the forms were incorrectly dated by myself.
3. There was no excuse for why I signed the documents; it was a foolish and a pour decision on my part. I was concerned about the audit and panicked and completed these forms to get a favorable score. It was a very regrettable action that I am very sorry for.
Discussion
In order to conclude that the Agent has committed an offence pursuant to s. 480(1)(a) of the Act, the Report must prove, on the basis of clear and cogent evidence, that it is more likely than not that the Agent committed the act as alleged. The requirement of clear and cogent evidence reflects the fact that our findings can dramatically impact an insurance agent’s ability to remain in the industry. Additionally, the elements of s. 480(1)(a) offences have been discussed by the Alberta Court of Queen’s Bench in Roy v. Alberta (Insurance Councils Appeal Board), 2008 ABQB 572 (hereinafter “Roy”). In Roy, the Council found that an Agent committed an offence pursuant to s. 480(1)(a) of the Act when he attested to completing the applicable CE when he did not, in fact, have the required CE. The Agent also held a securities license and stated that he believed that the CE required to maintain his securities license was applicable to his insurance agent requirements. The Insurance Councils Appeal Board also found the Agent guilty of an offence and the Agent appealed to the Court of Queen’s Bench. In his reasons for judgment, Mr. Justice Marceau reviewed the requisite test to find that an offence pursuant to s. 480(1)(a) of the Act has been made out and expressed it as follows at paragraphs 24 to 26:
[24] The Long case, albeit a charge under the Criminal Code of Canada where the onus of proof is beyond a reasonable doubt (not on a preponderance of evidence as in this case), correctly sets out the two step approach, namely the court or tribunal must first decide whether objectively one or more of the disjunctive elements have been proven. If so, the tribunal should then consider whether the mental element required has been proved. While the Appeal Board said it was applying the Long decision, it did not make a finding as to whether step 1 had been proved with respect to each of the disjunctive elements. Rather it immediately went into a step 2 analysis and found that the mental element required for untrustworthiness might be less than the mental element required for fraud (as a given example).
[25] I am of the view that statement was in error if it was made to convey a sliding scale of mens rea or intent depending on which of the constituent elements was being considered. In my view, the difference between the disjunctive elements may be found in an objective analysis of the definition of each and certainly, as demonstrated by the Long case, what constitutes fraud objectively may be somewhat different from untrustworthiness. However once the objective test has been met, one must turn to the mental element. Here to decide the mental element the Appeal Board was entitled, as it did, to find the mental element was satisfied by the recklessness of the Applicant.
[26] While the language used by the Appeal Board may be characterized as unfortunate, on this review on the motion of the Applicant I need not decide whether the Appeal Board reasonably could acquit the Applicant on four of the disjunctive elements. Rather, the only matter I must decide is whether the Appeal Board acting reasonably could conclude, as they did, that the Applicant’s false answer together with his recklessness justified a finding of "untrustworthiness". (emphasis added)
In applying this test to the case before us, it is clear that the Agent forged the clients’ signatures on the policy delivery documents in question. As a result, this made it appear to the insurer that the clients had reviewed the policies and did not disclose a change in their medical circumstances. The Agent candidly admits that he forged the signatures. In our view, this proves the objective element of the legal requirement discussed in the above-noted cases. As to the Agent’s intent, he states that he signed the documents as he did because of the impending audit that the insurer was conducting. Regardless of the Agent’s motivations, he recognized that what he did was inappropriate.
In our view the Agent’s actions constitute misrepresentation, dishonest, and untrustworthy conduct as contemplated under s. 480(1)(a) of the Act. Quite simply, the Agent intentionally signed client signatures on documents that he was required to complete for his clients’ signatures. As such, we are prepared to conclude that the Agent committed an offence pursuant to s. 480(1)(a) in relation to each of the two client files involved.
As to the appropriate sanction for this conduct, we have the ability to levy civil penalties in an amount up to $5,000.00 for offences pursuant to s. 480(1)(a) and 13(1)(a) of the Certificate Expiry, Penalties and Fees Regulation, A.R. 125/2001. We also have the ability to order that his certificate of authority be revoked for one year or suspended for a period of time. As noted above, the Agent admitted his actions and acknowledged that he acted inappropriately. In this case there is no evidence that clients were put at risk and it does not appear that the Agent was motivated by financial gain. Additionally, this is the Agent’s first offence under the Act.
Based on these factors and all of the evidence before us, we order that a civil penalty of $1,000.00 be levied against the Agent on each of the two offences ($2,000.00 total). We do not believe that a suspension or revocation is appropriate. The civil penalties must be paid within thirty (30) days of receiving this notice. In the event that the penalties are not paid within thirty (30) days, the Agent’s certificate of authority will be automatically suspended. Pursuant to s. 482 of the Act (copy enclosed), the Agent has thirty (30) days in which to appeal this decision by filing a notice of appeal with the Office of the Superintendent of Insurance.
This Decision was made by way of a motion made and carried at a properly conducted meeting of the Life Insurance Council. The motion was duly recorded in the minutes of that meeting.
May 11, 2016 Original
Signed By
Kenneth Doll, Chair
Life
Insurance Council
Extract from the Insurance Act, Chapter I-3
Appeal
482 A decision of the Minister under this Part to refuse to issue, renew or reinstate a certificate of authority, to impose terms and conditions on a certificate of authority, to revoke or suspend a certificate of authority or to impose a penalty on the holder or former holder of a certificate of authority may be appealed in accordance with the regulations.
Extract from the Insurance Councils Regulation, Alberta Regulation 126/2001
Notice of appeal
16(1) A person who is adversely affected by a decision of a council may appeal the decision by submitting a notice of appeal to the Superintendent within 30 days after the council has mailed the written notice of the decision to the person.
(2) The notice of appeal must contain the following:
(a) a copy of the written notice of the decision being appealed;
(b) a description of the relief requested by the appellant;
(c) the signature of the appellant or the appellant's lawyer;
(d) an address for service in Alberta for the appellant;
(e) an appeal fee of $200 payable to the Provincial Treasurer.
(3) The Superintendent must notify the Minister and provide a copy of the notice of appeal to the council whose decision is being appealed when a notice of appeal has been submitted.
(4) If the appeal involves a suspension or revocation of a certificate of authority or a levy of a penalty, the council's decision is suspended until after the disposition of the appeal by a panel of the Appeal Board.
Address for Superintendent of Insurance:
Superintendent of Insurance
Alberta Finance
402 Terrace Building
9515-107 Street
Edmonton, Alberta T5K 2C3