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 Jeseicka Black
(the "Agent")
DECISION
OF
The Life Insurance Council
(the “Council”)
This case involved allegations pursuant to ss. 480(1)(a) and 509(1)(a) of the Act. Specifically, it is alleged that the Agent indicated on her 2016 life and accident & sickness (“A&S”) renewal applications that she had completed a continuing education (“CE”) course when she did not, in fact, complete the CE course. In so doing, it is alleged that she made a misrepresentation as contemplated in s. 480(1)(a) of the Act. In the alternative, it is alleged that the Agent made a false or misleading statement by reporting that she had completed a CE course to renew her certificates of authority for life and A&S insurance in the 2016 certificate term, when she did not complete the CE course. In so doing, it is alleged that the Agent made a false statement as set out in s. 509(1)(a) of the Act.
Facts and Evidence
This matter proceeded by way of a written Report to Council dated March 15, 2017 (the “Report”). The Report was forwarded to the Agent for her review and to allow the Agent to provide the Council with any further evidence or submissions by way of Addendum. The Agent failed to sign the Report and failed to submit any additional information for consideration.
The Agent has been licensed since November 21, 2012 for life and A&S insurance. As part of AIC’s pilot CE audit program, a “Demand for Continuing Education (CE) Certificates/Records” was sent to the Agent by e-mail dated October 21, 2016. This demand required that the Agent provide her CE records within 30 days. The Agent provided her CE course certificates on December 6, 2016. Included amongst these included a certificate for course #33371 (Anti-Money Laundering in the Financial Services Industry). On her renewal application, the Agent indicated that she completed the course on June 30, 2016. While that was the date that she ordered the online course the CE certificate indicated that she completed the course on August 17, 2016. As a result, this course could not be used to meet the 15-hour CE requirement to renew her certificates of authority.
The Agent’s explanation of this discrepancy was that she had ordered course #33371 on June 30, 2016 and had completed the course at that time on a computer that belonged to her mother. However, the “Submit” button did not complete loading until the next time she was on the computer. From the Agent’s perspective, she believed the date she ordered and completed the course was June 30, 2016. It was not until she went back onto her mother’s computer after June 30, 2016, when she realized the course completion process had stalled.
There is no question that the course was ordered on June 30, 2016. The Agent produced a sales receipt. And there is no question that the course was not completed until August 17, 2016. Where the difficulty lies is in the total number of credits the Agent had validly accumulated and reported in support of her July 1, 2016, license renewal. She only had 10.75 CE hours in the 2016 certificate term for life and reported 5.00 CE hours, and had a requirement of 8.00 CE hours in the 2016 certificate term for A&S and reported 3.00 CE hours. In summary, not having completed course #33371 means she did not possess sufficient CE credits for either her Life or A&S certificate renewals.
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 did not possess the required CE credits as of June 30, 2016. However, based on the evidence before us, we are not able to conclude that the Agent made a deliberate misrepresentation with the intention to deceive the AIC. To do that, we would have to find that she knew she did not have the requisite CE credits but reported she did, and did so knowing that the information was false. Whether a reasonable person would have believed a purchase receipt was the same thing as a certificate of completion is not for us to say we are left in sufficient doubt that it would not be appropriate to find the Agent guilty of an offence under s. 480(1)(a) of the Act.
This now brings us to s. 509(1)(a), which provides that “[n]o insurer, insurance agent or adjuster may make a false or misleading statement, representation or advertisement.” This section falls into a category of offences called strict liability offences. As such, the AIC only has the onus to prove that the Agent’s statement that she had earned the CE credits she reported was false. Once this occurs, the onus shifts to the Agent to establish a defence of due diligence. To establish this, she must prove that she took all reasonable measures to avoid making the false statement. In our view, she has not done that. While she possessed a receipt, she obviously did not turn her mind to the fact that she did not have a CE completion certificate that confirmed she completed the course. This carelessness may be attributable to the fact that she waited until the very last day of the two-month renewal period to obtain the required CE. We also note that she could have obtained her CE in the 10 months prior to renewal but chose not to do so. Therefore, we find that the Agent made a false or misleading statement contemplated in s. 509 of the Act and that she breached a section of the Act pursuant to s. 480(1)(b) of the Act.
As to the appropriate sanction for this conduct, we can levy civil penalties in an amount up to $1,000.00 for offences pursuant to s. 480(1)(b) and 13(1)(b) of the Certificate Expiry, Penalties and Fees Regulation, A.R. 125/2001. We also have the jurisdiction to order that her certificate of authority be revoked for one year or suspended for a period of time. Based on these factors and the evidence before us, we order that a civil penalty of $300.00 be levied against the Agent.
This Agent (and all other agents) need to recognize that CE is mandatory and that leaving things to the last-minute exposes them to the risk of not being able to renew their certificates. Computers fail, credit cards are rejected, circuit breakers blow and routers and modems become inoperable. In this case, an internet download failed. While the renewals period is open from May 1 through to June 30 each year there is no reason for agents to procrastinate in this way. To the extent that they choose to do so, they will bear the risks of that choice. This case also highlights why the AIC is currently focusing its CE audit efforts on agents that choose to renew their certificates in the last days of the renewal period.
The civil penalty must be paid within thirty (30) days of the mailing of this decision. If the civil penalty is not paid within thirty (30) days, the Agent’s certificate of authority will be automatically suspended and interest will begin to accrue. 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.
Dated: April 28, 2017
Kenneth Doll
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