New agent sanctioned for client loan and undisclosed policy replacements

The Insurance Council of British Columbia has ordered that Brian Garcia Acuna pay investigation costs and complete a series of courses after an insurance company reported that Acuna persuaded policy holders to cancel policies solely for the purpose of selling them new policies.

Acuna was also sanctioned for failing to follow proper replacement procedures when he failed to complete mandatory Life Insurance Replacement Declarations (LIRD), and for making a personal loan of $200 to a client.

Licensed with council as a life accident and sickness insurance agent since October 2018, at the material time he was being supervised by another agent who had been licensed since October 2012.

According to the council’s order in the case, it was Acuna’s practice at the time to advise clients at his first meeting with them that the Insured Retirement Strategy (IRS) he promoted was not meant to replace existing coverage but rather to supplement existing coverage. (Acuna’s business mix is mostly universal life, specifically related to the IRS.)

“Despite the licensee’s intentions, four of his clients surrendered their existing policies with the insurer after he sold them new policies. One of the client’s existing policies lapsed after the licensee sold him a new policy. Eight clients kept their existing policies after the licensee sold them new policies,” the order states. “Client notes indicate that each of the clients contemplated cancelling their existing policies after the new policies were issued. In many cases, the premiums for the new policies were the same or more than for the old policies.” 

Acuna told council that he did not think he needed to complete a LIRD unless clients expressly told him that they intended to cancel their existing policies. His supervisor at the time says he does not recall seeing any indication that there was an intention to replace existing in-force policies.

“The supervisor was asked if he discussed completing a LIRD with the licensee during his training in relation to handling a potential replacement with his clients. The supervisor advised council staff that the agency’s advisors are trained to discourage clients from cancelling their existing policies so there isn’t much of a focus on replacements or LIRD during training.” 

Regarding the personal loan, Acuna says a client was interested in a quote despite having existing coverage, because she did not have any retirement savings and her husband would be moving to Canada soon. “According to the licensee, the client begged to borrow money from the licensee (most of Acuna’s business comes from referrals from friends) as a personal loan, to purchase a plane ticket for her husband.” 

When Acuna later learned that the client had gone with another agency at the time she instructed him to cancel her application, he says he was disappointed and asked her to return the loan.

Although the council contemplated imposing a fine, they state that with adequate training and supervision, Acuna will have the information he requires to comply with the rules in the future. “Although council has concerns about the licensee’s personal loan to the client, the evidence does not support a finding that the loan was provided for business purposes.

In addition to a condition on his license which stipulates that Acuna is required to be supervised for 24 months of active licensing, he must also complete the Insurance Institute’s Ethics and the Insurance Professional course, Advocis courses including Compliance Toolkit: Know your Client and Fact Finding and suitability courses, a council rules course through Advocis and must also attend the council’s life agent webinar within a year. In addition, Acuna was assessed investigative costs totalling $2,520.