The Insurance Council of British Columbia has departed from precedent and fined a former family agency, Harold Zlotnik Limited, just $5,000 for being without errors and omissions (E&O) insurance for more than 14 years.
Licensed between November 1981 and May 2024 when the corporate life and accident and sickness insurance license was cancelled at the agency’s own request, the agency’s nominee at the time explained that the agency received an allocation of referral fees and renewal commissions from a related company during the lapse period – purportedly for estate planning purposes – but that it did not participate in the sales process directly.
The family business, started by the former nominee’s grandfather, was operated by the former nominee’s uncle, who has since passed away, during the majority of the 5,334-day lapse period.
The former agency’s financial statements also indicated that it received commission income between 2007 and 2009 but the specific business details were not available.
Although the insurance council had latitude to impose a fine of $1,000 for each year in which the agency failed to maintain coverage, it said in its intended decision that the fact the former agency did not conduct any business and the fact that it was winding down business and would not be likely to repeat the breach were both mitigating factors which warranted a departure from the precedents set in other cases.
In addition to the $5,000 fine, the former agency was also assessed investigation costs in the amount of $750.
