The Insurance Council of British Columbia has handed down a series of decisions related to a firm whose agents processed Insurance Corporation of British Columbia (ICBC) Autoplan transactions repeatedly for the same clients before the policies were cancelled within 48 hours. The decisions not only note the damage potentially caused to the industry and to the ICBC by the practice, they also note that the pattern could enable the clients in question to evade taxes and launder money.

The firm’s nominee, Julan Lo was among the agents sanctioned by the council. She was fined $5,000, assessed investigation costs in the amount of $1,875 and was ordered to complete three remedial courses, including a supervisor’s course and one on ethics.

Lo, first licensed in May 1989, did not provide any training or coaching to the salespersons who conducted the transactions, was not aware of the transactions and did not perform any review of the supervision activities of level 1 agents – her role being one where she was predominantly responsible for marketing the agency.

“The licensee further advised that the current nominee assigned another agent, KL, who was the team leader and supervisor of the Autoplan division,” they write. “The licensee (Lo), found it challenging to fulfill her responsibility as the nominee of the agency since she is not aware of most of the agency’s insurance activities,” the council’s intended decision states. Lo also did not regularly attend the agency’s meetings on ICBC matters and did not receive information bulletins.

Elements of tax evasion 

Between January 2019 and September 2019 alone, the agency processed at least 27 transactions involving purchases and cancellations on the same policy within 48 hours. “ICBC concluded that these transactions were not in the best interest of ICBC and elements of tax evasion and potential money laundering were also discovered,” the decision states. The transactions were also not reported, a contravention of the Autoplan Procedures Manual.

Four owners accounted for 22 of the 27 transactions. ICBC’s data also showed an additional 59 policies purchased by the four clients. “The combined total premium of the 86 policies issued by the agency amounted to $1,143,437.” They add that 85 of the policies had premiums higher than BC’s 2019 average auto premium.

In all cases, one company in particular, noted only as IH in all of the decisions, would cancel the policies within 48 hours and request a refund by check before the vehicles were exported out of the country. “IH would purchase the full policy instead of the standard non-license or Temporary Operation Permits (TOP) to conceal from the manufacturer that the vehicles were purchased for exportation.” 

Complacent approach 

The agency has since concluded the matter with the ICBC. “Council concluded that the licensee did not fulfill her nominee duties competently and adequately,” they note. “Council found the licensee was complacent in her approach towards being a nominee of the agency.” That said, the decision goes on to say the owners of the agency put her in a difficult position which affected her ability to perform her responsibilities.

The agency itself, meanwhile, was fined $20,000, the maximum amount allowable in the case. It was also assessed investigation costs in the amount of $2,500 and ordered to ensure that a full-time level 3 insurance agent be in attendance at any branch the firm’s nominee does not regularly attend. The intended decision in this case, concerning Capstone Insurance Services Ltd., says there was no evidence suggesting that anyone working at the agency knew the transactions may have been linked to the vehicle export grey market. 

Still, they say the council found that the agency’s actions showed a willful disregard for the laws governing its conduct. “Although council considered a suspension of the agency, it concluded that this was not warranted in this case. Council determined that the agency misconduct stemmed from willful blindness, and not as a result of intent to act contrary to ICBC policies.” 

Sanctions against other agents 

Other agents caught in the sweep include Wayne Lin, registered since June 2007. Lin was suspended for one year, with his level 3 agent’s license being downgraded to a level 2 license for one year when he resumes his position. Lin was also fined $10,000, ordered to pay costs in the amount of $1,875 and ordered to complete remedial coursework.

“Council found that the licensee’s conduct demonstrated a willful disregard of duties and obligations,” the intended decision in Lin’s case states. “The licensee failed to properly oversee and notice the red flags arising from the ICBC transactions. Further, council found the licensee’s attitude to be lackadaisical.” Aggravating factors included the fact that Lin had been disciplined previously by the council and by the Real Estate Council of British Columbia.

The level 2 and level 1 salespersons who transacted most of the business, Wai Ling Vivian Ha and Chuan (Ken) Huang, registered in June 2014 and August 2018 respectively, were each fined $1,500 with Ha paying $1,500 in investigation costs and Huang, who is no longer in the industry, being assessed costs in the amount of $1,000.

Ha was also required to complete four remedial courses, including the ICBC’s Autoplan Basics for Brokers program. In Ha’s case, when she sought assistance from the agency’s management with the 63 transactions she processed for the clients in question, she was told by both owners of the agency to proceed with the transactions if the paperwork was in order.

“The licensee believed IH was operating a used car dealership and she was not aware that IH was engaged in the business of exporting vehicles,” her intended decision states. Huang was similarly unaware that IH was engaged in exporting luxury vehicles from dealership to foreign markets. “He did not know the vehicles would not be driven in Canada.” 

Both of the agency’s owners also admitted to council that Huang brought his concerns forward but was told by supervisors at the time to proceed with the transactions. 

All of the sanctions came after the council issued a production order, requesting the ICBC provide records between July 2018 and May 2021 where an agency or licensee in the same agency office placed more than 40 one-year policies on newer vehicles that were subsequently cancelled within 30 days. In all of the current cases, the premiums per policy were higher than the average auto premiums paid that year, according to the Insurance Bureau of Canada.

In July 2018 and February 2020, the ICBC issued broker news bulletins on licensing vehicles appropriately – when a vehicle is licensed, it must be for the purpose of operation on British Columbia roadways. “If a licensee is aware that the only reason a policy is being sold is to facilitate the export of the vehicle, and the customer intends to cancel the policy within days of issuance, the customer should only be sold a TOP,” they state.

Related: 

Agent sanctioned over cancelled Autoplan policies issued for exported cars