The Financial Services Regulatory Authority of Ontario (FSRA) has ordered Canadian Life Settlements Inc. to “refrain” from purchasing or providing loans in return for the transfer of life policy ownerships in Ontario.
The compliance order and voluntary payment of a $10,000 administrative penalty comes after the regulator initially proposed to fine the company $100,000. After initially denying the allegations, FSRA and the firm entered into discussions and settled on the lower amount.
Canadian Life Settlements, formerly known as Life Insurance Liquidity Options Inc., is a federally incorporated entity holding a corporate life insurance agent’s license. “Canadian Life has contravened the (Insurance) Act by trafficking or trading in life policies without being licensed to do so,” FSRA states in its notice of proposal to impose an administrative penalty.
Originally, Grand Orange Lodge of British America, a federally incorporated fraternal society that operates as a life accident and sickness insurer in Ontario, appointed Canadian Life Settlements as its duly authorized agent for providing life advances – loans collateralized by life insurance policies, and life settlements, described as the purchasing of life insurance policies. In November 2018 it undertook to immediately cease trafficking or trading in life insurance policies. “Canadian Life did not provide such an undertaking,” the FSRA notice states.
July 2019 Canadian Life Settlements stated to the regulator that it no longer purchased life policies in Ontario. November that year, FSRA received a life agent reporting form (LARF) from the Empire Life Insurance Company alleging that the company was still trafficking in life insurance policies.
According to the notice of proposal, a former policy owner directed Empire Life to transfer a life insurance policy to Canadian Life Settlements. Under the agreement, Canadian Life Settlements paid $265,000 to take ownership of the policy with a face value of $1-million. The client also directed Manulife to transfer a policy to Canadian Life Settlements after the firm paid $585,000 to take ownership of a $2-million policy.
Under its agreement with FSRA, Canadian Life Settlements “agrees that it will conduct its business so as to refrain from” purchasing or providing loans in return for the transfer of ownership of any life policies in Ontario. It will refrain from soliciting residents of Ontario for life settlements, and says it will cease marketing life settlements to residents of Ontario. It is ordered to include statements on its website advising that life settlements are not available in the province of Ontario. If the business does offer life settlements in the future, it must do so using the address of its Quebec office.
