Following an investigation by the Insurance Council of British Columbia, the council has published an intended decision, banning former licensee, Virlie Aimendral Canlas from applying for any insurance license for five years. Canlas is accused of operating a scheme whereby he incentivised clients to apply for life insurance by offering them rebates for their entire first year’s premiums.
As part of the scheme, Canlas did not conduct needs-based assessments for his clients and knowingly sold insurance products that went beyond client needs. He is also accused of conducting unlicensed securities activities for friends and family, most of whom lost money when investing with the former agent. In addition, Canlas is accused of borrowing substantial sums from clients and owes his former managing general agency (MGA) over $200,000 for chargebacks related to the scheme.
“Council notes that the former licensee’s misconduct was egregious enough to justify the imposition of a fine in addition to a five-year license prohibition,” the council writes in its intended decision. “However, in consideration of the significant debts that the former licensee owes to both the agency and his former clients, council has elected not to fine the former licensee, as doing so might adversely impact his stated efforts to repay his debts.”
During the investigation, Canlas disclosed that he used the commissions he received to pay client premiums. Although the scheme initially worked, it began to unravel when clients began cancelling their policies. By May 2018 he was no longer able to continue paying the premiums or the chargebacks being incurred. Documents show 79 clients terminated or lapsed their policies between February 2017 and January 2019, leading to a total of $258,940.93 in chargebacks. The agency is currently pursuing a civil suit to recoup its losses.
Another court judgement, meanwhile, requires that Canlas also repay a former client $85,000. The intended decision documents also say Canlas is in the process of repaying other clients, to whom he owes smaller amounts in the range of $3,000 and $4,000.
Licensed since July 1999, Canlas’ contract with his managing general agency was terminated in December 2018 and his life license was terminated by council in August 2019.
“The former licensee explained that in 2017 he was having major financial problems, which made him come up with a plan designed to increase his insurance production volume in an unethical way, with the hope that in subsequent years he would be able to increase production and earnings by doing “real business.” To this end, he convinced his clients to obtain life insurance, even if they did not require coverage, with the agreement that he would pay their first-year premiums in full. The former licensee indicated that he also paid a bonus to some clients, in addition to paying their premiums,” the council writes.
“The former licensee admitted during the investigation that he knowingly sold his clients life insurance products that went beyond their needs. He also revealed that his files did not contain supporting documents relating to his insurance recommendations and that he did not undertake fact-finding measures or perform needs analyses for his clients. The former licensee explained that he had not been conducting needs-based assessments because his recommendations were not based on what his clients needed.”
