The British Columbia Financial Services Authority (BCFSA) has entered into a voluntary compliance agreement with the Old Republic Insurance Company of Canada wherein the insurer does not agree it breached sections of the province’s Financial Institutions Act (FIA) but acknowledges that the BCFSA’s superintendent of financial institutions is of the opinion that a breach took place.
Ontario’s Old Republic was accused of carrying on the business of insurance in British Columbia when it underwrote, marketed and distributed contracts of total vehicle protection to British Columbia consumers. The agreement also says the insurer allowed unlicensed insurance agents and salespersons to receive payment for the sale of the policies.
As the insurance company began taking steps to cease further distribution of the policies once the alleged breach was identified during the BCFSA investigation, the agreement notes that the province’s superintendent is of the opinion that a voluntary compliance agreement is an appropriate resolution.
Under the terms of the agreement, Old Republic will begin including a new contract clause in all new service agreements it has with any third-party agents involved in the distribution of its products. The clause states that the distribution of insurance is regulated under the FIA and that payments to unlicensed agents is prohibited. “Proof of compliant licensing or licensing exemption status under the FIA is required prior to your receipt of commissions or other compensation contemplated under this agreement,” the clause concludes.
In addition, the insurer agreed to pay the BCFSA $20,000 in lieu of the superintendent assessing an administrative penalty. Old Republic also agreed to pay investigation costs totalling $3,000.
