A life and accident and sickness insurance agent in British Columbia, in the business for two years at the time he first sold the first disputed life insurance policy which ultimately led to a client complaint, has successfully argued that he was a new agent when the transgressions occurred. The Insurance Council of British Columbia (ICoBC) has declined to order monetary sanctions in the case, instead ordering Oscar Danioel Salgado Velez to complete a number of remedial courses, be subject to supervision and pay the council’s investigation costs.
The intended decision in the case examines allegations that Velez misled two clients into purchasing life insurance products that were unsuitable for their needs. He failed to maintain records and client notes for the two client files and also failed to provide full and accurate information to an insurer when submitting a life insurance application. Velez is additionally being sanctioned for failing to safeguard a client’s personal information.
First licensed in May 2019, the insurer first warned Velez about the transmission of confidential client information without adequate password protection in 2024 after he sent a financial statement using his agency’s email without first securing it with a password. The insurer also determined at that time that Velez did not provide evidence of the client’s financial needs. The agency Velez worked for followed suit, issuing a compliance notice about the same password matter, once it became aware of the insurer’s concerns.
July 2024 the insurer sent a life agent reporting form (LARF) to the regulator identifying client product suitability issues and privacy concerns after receiving phone calls from two clients, one of whom submitted an official complaint.
In the first client’s case, it was said that Velez described the whole life policy in question as being like a bank account and stated that funds could be obtained after the one-year anniversary. One year later, the insurer received a request for a policy loan, recommended by Velez for the purpose of making a Registered Retirement Savings Plan (RRSP). Velez says the subsequent tax refund should’ve been used to pay off the loan. The interest rate of the loan was 9.45 per cent. The client, saying he’d been misled, cancelled the policy in January 2024. The insurer issued a full refund of all premiums paid.
The second client’s needs analysis, meanwhile, showed a limited payment capacity. In both cases, Velez said he recommended the whole life policies because both had businesses that they might one day incorporate. (Neither did.) Client two stated that the whole life policy was opened fraudulently and without his consent. The insurer did not provide a refund of the premiums paid when it was cancelled.
During the course of the investigation the council found that Velez’s record-keeping practices were poor. “Council was concerned that the licensee sold the whole life policies to the clients based on an assumption that they would incorporate a business in the future. In council’s view, a competent insurance licensee would not have made the same recommendation in the circumstances,” the intended decision in the case states. It goes on to say that more likely than not, the licensee took advantage of the client’s lack of sophistication when he sold the policies. In the same decision, however, the council also added that there was no evidence to suggest the agent was untrustworthy.
In addition to requiring one year of active supervision for the agent, the council also ordered Velez to complete a confidentiality course, a know your client and fact-finding course, a product suitability course and one on documentation. The agent was also assessed the council’s investigation costs totalling $3,937.50.
