A former family insurance agency, Z.L.S. Insurance Services Ltd., is being fined for not maintaining errors and omissions (E&O) insurance for nearly six years, despite the fact the agency conducted no business during the lapse period.
The former agency held a corporate life and accident and sickness insurance agent’s license from May 1987 until May 2024 when the license was cancelled at the agency’s own request.
The issue was discovered in February 2023 during a random audit of the former agency’s E&O insurance. After becoming aware of the policy’s lapse, the former agency obtained coverage the next day. It also provided financial statements dating back to 2018 showing the agency received only referral fees in relation to policies sold during the lapse period but did not participate in the sales process directly.
“The former agency’s legal counsel described the former agency as a family business which had been initially started by the former nominee’s grandfather and operated by the former nominee’s uncle, who had been the former agency’s nominee for the significant majority of the lapse period,” the Insurance Council of British Columbia’s intended decision in the case states. “The former nominee assumed his role as nominee of the former agency on May 12, 2021, after its prior nominee passed away.”
The insurance council says the most significant mitigating factor in the case is that the former agency did not conduct any business and that the breach was unintentional. “Council also considered the fact that the former agency was winding down business to be slightly mitigating, because it further suggested that the former agency did not breach its obligations intentionally nor would it be likely to repeat the breach,” they write. “Council considered the significant length of the lapse period (2,139 days) to be aggravating.”
In addition to a $5,000 fine, the former agency was also assessed the council’s investigation costs in the amount of $750.
