The Insurance Council of British Columbia is fining the Sussex Insurance Agency and its nominee, Kenneth William Armstrong, after it was discovered that six Sussex agents sold out of province policies in jurisdictions where they weren’t licensed. Some transactions occurred as early as November 2012.
The policies in question were generally for add-on coverage in cases where clients already had a British Columbia-located risk. Other transactions involved clients that were acquired when the agency purchased two books of business. The regulator’s intended decision notes that the agency was not actively marketing or attempting to acquire business from outside of British Columbia.
“In summary, there were 67 insurance transactions completed between November 18, 2012 to November 1, 2022, by the agency’s agents who did not hold an active license in Alberta or Ontario. The transactions were completed by six different agents at the agency,” the intended decision notes. “Council was concerned about whether there were appropriate procedures and policies in place to ensure that all licensees within the agency understood that out-of-province insurance transactions required the licensees to be licensed in the location in which they were selling an insurance product.”
Unlicensed activity discovered by Ontario regulator
The unlicensed activity was discovered in April 2022 by the Financial Services Regulatory Authority of Ontario (FSRA) and was also reported that same month by a client directly to the British Columbia regulator. When questioned about the steps the agency was taking in response to their awareness about the unlicensed activity, another agent responded on behalf of the agency, saying “we are in the process of educating ourselves on the requirements for these agents to be licensed in Alberta and Ontario and we intend to proceed with that licensing process where applicable.”
The intended decision goes on to state that the agency later determined that out-of-province licensing was too cumbersome for the number of policies involved and took steps to transfer those policies to qualified brokers.
The regulator ultimately fined Armstong $5,000 and ordered him to complete the Council Rules Course for general insurance and adjusters, along with the Nominee Responsibilities and Best Practices Course for General Insurance ang Adjuster Nominees and Applicants. The agency, meanwhile, was fined $20,000. Both Armstrong and the agency were jointly and severally assessed the council’s investigation costs in the amount of $2,625.
