The General Insurance Council of Manitoba has issued a decision fining former operating agent, Paul Vaccarello, the former operating agent for the Tripemco Burlington Insurance Group Limited for not complying with the Insurance Act of Manitoba when he allowed a self-storage facility’s employees to conduct insurance business.
Through the agency’s program, the self-storage facility’s customers were provided with coverage of $5,000 on each insured locker upon move-in. There was no application, and no individual underwriting was required. “No analysis was completed since there was only one coverage option,” the council’s decision states.
Customers had two options for declining the $5,000 in coverage, which cost $16 each month after the first month – they could bring in their home policy within the first four weeks to confirm the contents of their unit are covered by insurance. If the client refused, they could also sign an insurance addendum declining coverage and assuming all liability.
During the course of its investigation, the council found that both conditions needed to be met for clients to decline the coverage. “Council determined that this was a form of tied-selling which is contrary to the professional standards expected by council,” they write.
The self-storage facility’s employees entered customer information into their operating system which generated a certificate of protection and would sometimes sign the certificates themselves as representatives of the facility when the agency’s electronic signature was not present.
“As the agency’s operating agent, the former licensee was and is responsible for the management of the agency and all its insurance activities, including the prohibited use of unlicensed individuals,” the decision states. They add that the user agreement failed to clearly identify for consumers that the $16 fee included an insurance premium and a facility administration fee. “The self-storage facility is not an entity eligible to hold an insurance agent license in Manitoba,” they add.
Although Vaccarello maintains that no commissions or compensation was paid to the facility, he was aware that the facility was charging an administration fee correlated with the sale of insurance. “By charging an administration fee depended upon the sale of insurance, the self-storage facility was receiving a form of compensation; therefore, the self-storage facility’s activity of selling insurance to customers fell within the activities of an agent as defined by the Act and would need to be completed by a licensed insurance agent.”
All told the council fined Vaccarello $2,000 and assessed partial investigation costs of $3,000.
