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Agent fined after discovery of doctored E&O certificate

By Andrew Rickard | December 12 2016 01:30PM

A life insurance agent in Ontario has been fined after producing a falsified errors and omissions (E&O) insurance certificate.

In a decision released last week, Ontario’s Financial Services Tribunal (FST) ordered Serena Lam to pay a penalty of $2,500 for failing to maintain E&O coverage for a period of about 16 and a half months.

In 2015 the Financial Services Commission of Ontario (FSCO) conducted an onsite examination of Lam’s life insurance business systems and practices. The compliance officer asked her to provide proof that she had valid E&O insurance, and Lam produced a certificate with an effective date of September 9, 2015 to September 9, 2016.

The appearance of the certificate of coverage was suspicious, however, since the number “5” in 2015 and the number “6” in 2016 were in a font that was visibly different from the rest of the document. The compliance officer checked with Lam’s insurer, Westport Insurance Corporation, which confirmed that Lam's coverage had in fact expired on September 9, 2014. The insurer also confirmed that written notices of cancellation of E&O coverage that had been sent to Lam on September 30, 2014 and to FSCO on October 17, 2014.

Lam says that she asked her son’s girlfriend, a woman named Joanne who is now living in Hong Kong, to renew the E&O policy while she was away. Lam testified that she was the victim of a fraud perpetrated by her son’s girlfriend, who had altered the original certificate. Lam also pointed out that she was not working in the insurance industry during the time she was without E&O coverage, and did not write any new business during this time.

The FST ruled that Lam either knew or should have known that the certificate of coverage supplied to FSCO was false. The decision notes that tribunal has heard a number of similar cases in which life insurance agents have attempted to avoid monetary penalties for contraventions of the E&O requirement, and that in every case it has concluded that a fine is appropriate.

The complete decision is available on CanLII.org.

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