The Alberta Insurance Council says several agents caught up in an annual audit seeking to verify that errors and omissions (E&O) insurance coverage was in place, are being sanctioned for not maintaining appropriate coverage in some cases, and for not responding to the audit in time for another.
The random audit asked auditees to provide proof of their current E&O coverage in February 2022. To get in touch with auditees the council’s process includes sending an initial emailed demand for information, three follow up emails, a telephone call and a final reminder email to remind the agent about the deadline to respond. In cases where agents missed the deadline, reports were also sent by registered mail. In some cases the council’s investigators also contacted the last known E&O insurer on the agent’s file in an attempt to verify if current coverage was in place.
In one case, Gail Carstairs, a life, accident and sickness insurance agent from November 2016 until March 2022 when her certificates of authority were suspended, says that all of her accounts were handed over to another advisor before her E&O coverage expired. The council, however, points out that the Insurance Act in the province requires anyone licensed, holding a certificate of authority, to maintain the appropriate coverage. The Insurance Council levied a $1,000 fine, the maximum penalty it could impose in the case.
Next, the council suspended the certificates of authority for life, accident and sickness insurance agent, Marites Soriano, who was licensed from January 2018 until March 2022. Soriano says she was not actively pursuing clients and thought she could save the E&O coverage expense. In her correspondence with the insurance council she adds that she is not putting any companies in jeopardy. “I never thought I would get penalized for it,” she wrote. “I never would have renewed my license if I knew it came hand-in-hand with E&O.” Despite claims that she is not in any position to pay a penalty and subsequent requests for leniency, the council fined Soriano $1,000. “It is the responsibility of all insurance intermediaries to understand their obligations under the Act,” the council’s decision states.
Finally, retiring agent, Robert Young, licensed from December 2013 until his license was suspended in March 2022, failed to respond to the council’s demand for information within the time frame provided. When he was finally contacted, Young wrote to the council saying he was retiring after 45 years. The council, however, pointed out that current certificate holders are required to respond to the audit demands. Young’s managing general agency (MGA) ultimately furnished investigators with the appropriate documentation. The insurance council levied a penalty of $500.
