Case #72059
Life Insurance Council
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 Himmat Johal (the "Agent")
DECISION OF The Life Insurance Council (the “Council”)
This case involved an alleged violation of s. 481(2) of the Act. Specifically, that the Agent failed or refused to provide information requested by the Minister, through the AIC, by way of a formal demand for information (the “Demand”). In so doing, it is alleged that the Agent subsequently violated s. 480(1)(b) of the Act.
Facts and Evidence This matter proceeded by way of a written Report to Council dated September 7, 2022 (the “Report”). The Report was forwarded to the Agent for review, and to allow the Agent an opportunity to provide the Council with any further evidence or submissions by way of Addendum.
This matter arose due to the Agent’s failure to respond to the Demand made in the course of an investigation into the Agent’s conduct by the Agent’s Former Agency.
The Agent held both Life and Accident and Sickness (“A&S”) certificates of authority from February 20, 2020 to June 1, 2022, when the Agent’s certificates of authority were terminated.
On July 29, 2022, the AIC investigator sent a request for information to the Agent, via priority mail and email, which provided a deadline of August 15, 2022, for the Agent to respond.
On August 17, 2022, the AIC investigator sent the Demand to the Agent, via priority mail and email, which provided a deadline of September 6, 2022, for the Agent to respond.
Case #72059
Life Insurance Council
On September 26, 2022, after receiving the Report, the Agent provided the AIC investigator with the following response, by way of email: […] They haven’t showed [sic] me anything.
[…]
On September 28, 2022, the Agent provided the AIC investigator with the following additional information: […] Financially I am suffering right now.
One humble request don’t [sic] charge me any penalty please. I might not be able to recover from that. I hope you understand [sic] […]
Discussion The Minister of Treasury Board and Finance has delegated its authority to the AIC to investigate complaints against holders, and former holders, of certificates of authority. Pursuant to Ministerial Directive 01/11 to the AIC “[t]he Minister may direct the holder or former holder of a certificate of authority to provide to the Minister within a reasonable period of time specified in the direction any information specified by the Minister relating to the matters in s. 480(1).” Subsection 2 states that “… A person served with a direction … who has the information must provide the information in accordance with the direction” (emphasis added).
The Demand itself is formed under s. 481(2) of the Act.
Section 481 of the Act provides, in part; Demand for information 481(1) The Minister may direct the holder or former holder of a certificate of authority to provide to the Minister within a reasonable period of time specified in the direction any information specified by the Minister relating to the matters in section 480(1).
(2) A person served with a direction under subsection (1) who has the information must provide the information in accordance with the direction.
Section 480 of the Act provides: Sanctions affecting certificates 480(1) If the Minister is satisfied that the holder or a former holder of a certificate of authority […] (b) has contravened any provision of this Act or the regulations or similar legislation in another jurisdiction or legislation that is a predecessor of this Act or the regulations,
Case #72059
Life Insurance Council
[…]
Section 780 of the Act stipulates: Offences 780 A person who contravenes any of the following provisions is guilty of an offence: […] (c) in Part 3, sections […] 481(2)
In this regard, the act of failing to provide a response to the Demand is a potential violation of s. 481(2) of the Act.
Regulatory offences such as these are strict liability offences. As such, the AIC has the onus to prove that the Demand was properly made upon the Agent, proper in the sense that they meet all the requirements under the Act, and that the Agent did not comply. Once this occurs, the responsibility then shifts to the Agent to establish that due diligence was exercised in meeting the statutory requirement to respond. To substantiate this due diligence defence, the Agent must prove that all reasonable means were taken to avoid making the offence. There is nothing that requires the AIC to prove that the Agent’s failure to respond was intentional.
In consideration of the evidence before it, and the appropriateness of the request to provide a response to the allegations against the Agent, the Council is satisfied that the Demand met the requirements of s. 481 of the Act. The Council agreed that the Agent was provided a reasonable opportunity to respond to the Demand. Despite the reasons provided by the Agent, the Agent failed to respond when called upon, therefore the Agent has not met the burden of proof to establish a due diligence defence. As such, the Council finds the Agent guilty of violating s. 481(2) of the Act as alleged, and also finds that the Agent has subsequently violated s. 480(1)(b) of the Act.
In terms of the applicable sanction, the Act requires that all holders, and former holders, of certificates of authority produce information when called upon. The Council is of the view that the public is not well-served when insurance intermediaries fail to comply with demands, like the Demand made in this case. Pursuant to s. 13(1)(b) of the Certificate Expiry, Penalties and Fees Regulation, A.R. 125/2001, the Council has the discretion to levy a civil penalty in an amount up to $1,000.00. In this case, the Agent has not responded in any meaningful way and the Council believes that a significant civil penalty must be assessed to send a strong message to, not only the Agent, but to all certificate holders. In consideration of all of the evidence, the Council orders that a penalty in the amount of $1,000.00 be levied against the Agent
Case #72059
Life Insurance Council
The civil penalty of $1000.00 must be paid within thirty (30) days of the mailing of this Decision. In the event that the civil penalty is not paid within thirty (30) days interest will begin to accrue at the prescribed rate. Pursuant to s. 482 of the Act (excerpt 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.
Dated: January 11, 2023
[Original Signed By] Andy Freeman, Chair Life Insurance Council
Case #72059
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.
Contact Information and Useful Links for Appeal: Email: tbf.insurance@gov.ab.ca Phone: 780-643-2237 Fax: 780-420-0752 Toll-free in Alberta: Dial 310-0000, then the number Mailing Address: 402 Terrace Building, 9515 – 107 Street Edmonton, AB T5K 2C3 Link: Bulletins, notices, enforcement activities | Alberta.ca – Interpretation Bulletin 02-2021 – Submitting Notices of Appeal of Insurance Council Decisions