The Financial Services Regulatory Authority of Ontario (FSRA) has published its second annual report on the growing number of agents who have been reported to FSRA by insurers for unsuitable behaviour.
In its announcement, the regulator also said that it created a life and health agent conduct team in late 2020 which supervises agent conduct, business practices and reviews agents who are the subject of such reports from insurers. The regulator adds that it plans to share its life and health agent supervisory framework in the coming months.
Under the Insurance Act in Ontario, insurance companies must monitor agent conduct and report unsuitable agents using a Life Agent Reporting Form (LARF). During the April 1, 2020 to March 31, 2021 reporting period, FSRA received and reviewed 57 LARFS, up from just 19 reported in the previous period. Of those cases reported during the most recent period, 78 per cent were escalated for further investigation, a letter of warning or the agent was asked to surrender their license.
The report, Life Agent Reporting Form (LARF) Summary Report, Second Edition also looks at open LARFs from the previous year. Of those still remaining from the 2019-2020 fiscal period, FSRA commenced regulatory enforcement proceedings in six cases and closed three. Of those reports filed last year, 42 per cent remain under review.
In the most recent year, meanwhile, of the 57 LARFs that were received and reviewed by the regulator, 40 per cent were escalated for further investigation, 49 per cent were closed and 11 per cent remain under investigation. Letters of warning were issued in 19 cases where LARFs were opened and closed during the same period. Letters of warning were issued for infractions that vary widely, from unlicensed activity to outright forgery, fraud and misrepresentation. (Fraud was in fact the most commonly reported infraction – 20 LARFs reported in the 2020-2021 period cited evidence of fraud in their reasons for reporting the agent. This is up considerably from 11 cases where fraud was reported during the 2019-2020 period.)
FSRA says it issues letters of warning based on evidence provided by insurers, particularly where it is noted that agents were placed under close supervision, terminated, let their licenses lapse, or in cases where no consumer harm was identified.
In six cases, FSRA says no action was taken against the agents in question, because FSRA has no jurisdiction in the case, because of insufficient evidence or because the agent’s license had lapsed. Six cases received during the 2020-2021 year remain open and under investigation.