The Alberta Insurance Council has fined former designated representative, Kenneth Moland, of the now-defunct agency, NIB Insurance Group Ltd., $5,000 – the highest penalty the council is allowed to impose in the case – after he withheld premiums paid for a commercial policy and failed to remit those funds to the insurer.
The council says were Moland still licensed, it would have exercised its authority to revoke his certificates of authority in the interest of public protection.
The council began investigating Moland after being advised by an insurer, known as S.I. General Insurance Company in the council’s decision documents, that NIB received the payment of an insurance premium, a significant part of which was secured by a lender, but failed to remit the premium amount to “TCIM,” the managing general agency acting on the insurer’s behalf. In due course, the policy was cancelled for non-payment. The client, in turn retained legal council in response to the canceled insurance policies for the business. Total premium for the policy was $198,566, of which $174,789.09 was funded by the lender.
Policy cancelled
“NIB Insurance failed to remit the premium to the insurer in a timely manner, which caused the insurer to cancel the policy instantaneously,” the client’s legal council wrote to the Alberta Insurance Council during the course of its investigation. “The cancellation caused great difficulties for the insured,” they add, including a demand to the client, from the lender, for repayment of the absconded funds when they are collected from the broker.
During the course of its investigation, Moland told the council’s investigators that his firm had been wound up, its contents packaged and placed into pods. “I am unable at this time to reconcile my trust account and account for the remainder of the monies or even determine what that amount is,” he wrote. “I have not been able to locate the sufficient records. At different times Moland also blamed his bookkeeper and suggested that the firm he sold NIB to was withholding the client’s file.
Moland also argues that he was negligent but that his actions fell short of misrepresentation, fraud, deceit, untrustworthiness or dishonesty. The insurance council, however said the wording of the province’s Insurance Act is clear that each single premium payment an agent receives is explicitly held in trust for the insurer. “To that extent, if an insurance intermediary refuses or neglects to remit premium funds to an insurer, it is presumed that the agent has used the funds for an improper purpose.”
Misappropriation was done knowingly
“The council did not agree that the agency’s recollection was supported by evidence,” the council writes in its decision. “The client, the lender and the insurer provided a matching chronology and corroborating evidence which proved that several demands had been made of the agency to remit the premiums to the insurer immediately. The client also retained legal council to compel the payment of insurance premiums to protect the insurability of the commercial limited corporation. However the agency never remitted these funds. As such, the council finds that it is more likely than not that the designated representative was aware of his obligation.” They add that the misappropriation was done knowingly and with intention.
