Council agrees administrative error behind the issuance of false declaration

Amanprit Singh Ghaug and his agency, Marquis Underwriting Managers Ltd., are both being sanctioned by the Insurance Council of British Columbia after another agency complained to the regulator that Marquis was issuing policy declaration pages which closely resembled their own, showing coverage for the client which had not been bound.

The other agency complained to the regulator in May 2020 and informed the insurance companies listed on the declaration in question, who in turn filed complaints with the council. Another agency altogether also weighed in, saying they were concerned that the contract numbers displayed on the declaration were unique to their organization and were not available to Marquis.

During the investigation Ghaug, who was the former agency’s nominee and owner, said administrative employees would access templates stored in the former agency’s system and edit the templates to produce binders and certificates. The intended decision states that administrative employees handled the issuance of certificates and sometimes used Ghaug’s email address on his behalf to send the documents. “The licensee did not know where the template for the declaration had come from. The licensee stated it could have been a customer’s document or a generic form intended for use as a reference,” the intended decision adds.

Ghaug was able to prove that the client had valid coverage and was given the correct documentation on multiple occasions during the policy term. The client also suffered a water damage claim which paid out successfully. The insured was also informed that the declaration had been issued in error.

Following the incident, the firm hired an office manager, implemented new procedures and staff were encouraged to obtain additional education. The firm also began to utilize new insurance software. Despite this, the intended decision goes on to say that Ghaug decided to close the former agency, as he was no longer comfortable acting as nominee.

“Although council determined that the licensee and former agency did not purposely intend to mislead, there was no evidence to suggest that the insured’s interest was prioritized,” the intended decision states. “Council found that the former agency was more culpable as there was no protocol in place to prevent documents from being manipulated,” the intended decision states. “In council’s view, the lack of recordkeeping was particularly egregious.” They say this was evident, as Ghaug did not know who created the declaration.

Neither Ghaug nor his firm requested a hearing of the council’s intended decision. Ghaug was fined $2,000, the former agency was fined $2,500 and both were jointly and severally assessed the council’s investigation costs in the amount of $3,062.50. In addition, Ghaug, who was licensed since April 2011 and a level three agent from September 2016 until May 2021 (Ghaug is currently licensed as a level two agent), is also banned from upgrading his license to a level three general insurance agent’s license for five years. To keep his level two license, he must also complete remedial coursework by July 2024.