In the Matter of The FINANCIAL INSTITUTIONS ACT (RSBC 1996, c.141) (the "Act")
and The INSURANCE COUNCIL OF BRITISH COLUMBIA ("Council")
and TSN INSURANCE SERVICES LTD. (the "Agency")
ORDER As Council made an intended decision on September 13, 2016, pursuant to sections 231, 236, and 241.1 of the Act; and
As Council, in accordance with section 23 7 of the Act, provided the Agency with written reasons and notice of the intended decision dated October 21, 2016; and
As the Agency has not requested a hearing of Council's intended decision within the time period provided by the Act;
Under authority of sections 231, 236, and 241.1 of the Act, Council orders: 1. A condition is imposed on the Agency's general insurance licence that requires all Level 3 general insurance agents authorized to represent the Agency, both current and future, to successfully complete the Council Rules Course within the later of 90 days of the date of Council's order, or within 90 days of becoming authorized to represent the Agency as a Level 3 general insurance agent.
2. The Agency is fined $10,000.00. 3. The Agency is assessed Council's investigative costs of $1_,150.00.
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Order TSN Insurance Services Ltd. LIC-9143677Cl 14721R1 November 9, 2016 Page 2 of2
4. A condition is imposed on the Agency's general insurance licence that requires the Agency to pay the above-ordered fine and investigative costs no later than February 9, 2017. If the Agency does not pay the ordered fine and investigative costs in full by this date, the Agency's general insurance licence is suspended as of February 10, 2017, without further action from Council and the Agency will not be permitted to complete any .subsequent annual filings until such time as the ordered fine and investigative costs are paid in full.
This order takes effect on the 9th day of November, 2016.
Eric Yung ouncil of British Columbia
INTENDED DECISION of the INSURANCE COUNCIL OF BRITISH COLUMBIA ("Council")
respecting TSN INSURANCE SERVICES LTD. (the "Agency")
Pursuant to section 232 of the Financial Institutions Act (the "Act"), Council conducted an investigation to determine whether the Agency acted in compliance with the requirements of the Act.
As part of Council's investigation, on August 15, 2016, a Review Committee (the "Committee") met with the Agency's nominee (the "Nominee") to discuss allegations that the Agency failed to maintain proper books and records; allowed its Level 1 general insurance salespersons ("Salespersons") to act contrary to restrictions on their insurance licences; and mishandled the insurance requirements of a client (the "Client").
The Committee was comprised of one voting member and two non-voting members of Council. Prior to the Committee's meeting with the Nominee, an investigation report was distributed to the Committee, the Agency, and the Nominee for review. A discussion of this report took place at the meeting and the Nominee was provided an opportunity to clarify the information contained therein and make further submissions. Having reviewed the investigation materials, further written submissions provided by the Agency, and after discussing this matter with the Nominee, the Committee prepared a report for Council.
The Committee's report, along with the aforementioned investigation report and written submissions from the Agency, were reviewed by Council at its September 13, 2016 meeting, where it was determined the matter should be disposed of in the manner set out below.
PROCESS Pursuant to section 23 7 of the Act, Council must provide written notice to the Agency of the action it intends to take under sections 231, 236, and 241.1 of the Act before taking any such action. The Agency may then accept Council's decision or request a formal hearing. This intended decision operates as written notice of the action Council intends to take against the Agency.
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Intended Decision TSN Insurance Services Ltd. LIC-9143677Cl 14721Rl October 21, 2016 Page 2of5
FACTS The Agency has held a corporate general insurance licence with Council since 2000. In October 2015, Council received a complaint from the Client that the Agency did not properly handle the renewal of coverage on the Client's strata unit or the collection of an insurance premium. The Nominee denied that the Agency failed to properly place coverage for the Client; however, he acknowledged administrative errors occurred that resulted in the improper invoicing of the premium due for the Client's insurance. He also stated that the Agency could have handled the renewal process for the Client's coverage in a better manner. The Nominee attributed these shortcomings to problems with accounting processes and data entry at the Agency.
Council Inspections of the Agency In 2012, Council inspected the Agency. Following the inspection, Council sent a letter to the Nominee which included a reminder of the following:
• The duty to notify Council when the Agency ends the authority of a licensed representative.
• The restrictions on a Salesperson's licence. In 2016, Council inspected the Agency again. At the time of the inspection, 64 licensees were authorized to represent the Agency, with 55 of them licensed as Salespersons, and nine licensed as Level 2 general insurance agents ("Level 2 agents") or higher, including the Nominee.
Eight of the Salespersons advised Council that it was generally understood they were to operate as producers, which meant soliciting insurance business from family and friends outside of the office and attending the Agency only when bringing in clients to complete insurance transactions. The Nominee claimed to be unaware of these activities; however, he acknowledged he may have been "spread too thin".
The Nominee advised that improvements were required to the management structure at the Agency and that it is in the process of developing employee training manuals, moving from a paper-based filing system to an electronic agency management system, and requiring that its Salespersons take the required education to upgrade their insurance licences so they can engage in insurance business as Level 2 agents.
Intended Decision TSN Insurance Services Ltd. LIC-9143677Cl 14721Rl October 21, 2016 Page 3of5
ANALYSIS In light of the Client complaint and issues identified from Council's inspections of the Agency, the Nominee acknowledged there was a lack of proper processes at the Agency and inadequate supervisory oversight. To addre~s these shortc,omings, the Nominee advised that various steps will be implemented, such as updating the Agency's electronic computer system and bolstering its management team to improve the level of oversight.
Council acknowledged that the Agency is taking steps to ensure its representatives are in compliance with Council Rules. However, Council was concerned that these steps had not been taken until recently, despite Council's reminder to the Nominee in 2012 about Council requirements. Council found it particularly egregious that Salespersons representing the Agency acted contrary to their licence restrictions despite the aforementioned reminder.
Council concluded that the Agency failed to ensure that all of its insurance activities were actively supervised as required and therefore it acted contrary to the usual practice of the business of insurance and Council Rules.
In light of the previous reminder, Council determined it was necessary to impose a meaningful fine on the Agency to emphasize the seriousness of the shortcomings in its operations, which Council concluded were contributing factors in the Client complaint. Council also determined that all Level 3 general insurance agents representing the Agency should be required to successfully complete Council's Level 3 Seminar (Duties and Responsibilities of a Level 3 General Insurance Agent).
Council further concluded it is necessary to inspect the Agency prior to March 31, 2017, to determine whether the concerns in this matter have been adequately addressed.
INTENDED DECISION Pursuant to sections 231, 236, and 241.1 of the Act, Council made an intended decision to: 1. Impose a condition on the Agency's general insurance licence that all Level 3 general insurance agents authorized to represent the Agency, both current and future, be required to complete the Council Rules Course within the later of 90 days of the date of Council's order; or within 90 days of becoming authorized to represent the Agency as a Level 3 general insurance agent.
2. Fine the Agency $10,000.00. 3. Assess the Agency Council's investigative costs of $1,150.00.
Intended Decision TSN Insurance Services Ltd. LIC-9143677Cl 14721Rl October 21, 2016 Page 4of5
The Agency is advised that, should the intended decision become final, the fine and investigative costs will be due and payable within 90 days of the date of the order. In addition, failure to pay the fine and investigative costs within the 90 days will result in the automatic suspension of the Agency's general insurance licence and the Agency will not be permitted to complete any annual filing until such time as the fine and investigative costs are paid in full.
The intended decision will take effect on November 9, 2016, subject to the Agency's right to request a hearing before Council pursuant to section 23 7 of the Act.
RIGHT TO A HEARING If the Agency wishes to dispute Council's findings or its intended decision, the Agency may have legal representation and present a case at a hearing before Council. Pursuant to section 23 7 (3) of the Act, to require Council to hold a hearing, the Agency must give notice to Council by delivering to its office written notice of this intention by November 8, 2016. A hearing will then be scheduled for a date within a reasonable period of time from receipt of the notice. Please direct written notice to the attention of the Executive Director.
If the Agency does not request a hearing by November 8, 2016, the intended decision of Council will take effect.
Even if this decision is accepted by the Agency, pursuant to section 242(3) of the Act, the Financial Institutions Commission still has a right to appeal this decision of Council to the Financial Services Tribunal ("FST"). The Financial Institutions Commission has 30 days to file a Notice of Appeal, once Council's decision takes effect. For more information respecting appeals to the FST, please visit their website at fst.gov.bc.ca or contact them directly at:
Financial Services Tribunal PO Box 9425 Stn Prov Govt Victoria, British Columbia V8W9Vl
Reception: 250-387-3464 Fax: 250-356-9923 Email: FinancialServicesTribunal@gov.bc.ca
Intended Decision TSN Insurance Services Ltd. LIC-9143677Cl 14721Rl October 21, 2016 Page 5of5
Dated in Vancouver, British Columbia, on the 21st day of October, 2016. For the Insurance Council of British Columbia
E~9utive Director 604-695-2001 gmatier@insurancecouncilofbc.com
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