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The mistakes that can get brokers the wrong attention



Bad brokering in B.C. may be forgiven but not forgotten. On its website, the Insurance Council of British Columbia has published files on all disciplinary actions against brokers going back to 2000—and has no plans to take them down.

“It’s expected generally that people know who’s disciplined and when,” says Gerry Matier, executive director of the B.C. Council. The aim is to help folks looking for trustworthy brokers, as well as to show the industry what behaviour is disciplined. Plus, the name-and-shame strategy can work as a deterrent: Matier notes, “A lot of people would take a double penalty if [their name] wasn’t published.”

Last year, the B.C. Council disciplined more than 50 brokers, which Matier estimates accounts for between 25 and 30 percent of complaints received. We divided some of the recent disciplinary actions into three main categories: mistakes that can be attributed to ignorance of the rules; using broker privileges to seek confidential information; and concealing, or not bothering to obtain, essential facts.

Oops! I won’t do it again

Regency Volkswagen, a car dealership in Coquitlam, B.C., holds a general insurance licence to sell car anti-theft insurance. In July 2013, its nominee left the company, but Regency didn’t replace them or tell the B.C. Council they were working without one, regulatory documents revealed. The Council only found out during a site inspection in November 2013 and promptly suspended the company’s licence. During the five months it was working without a nominee, the company conducted 61 insurance transactions; Regency explained it didn’t fully understand the rules or mean to break them. And even before the nominee left the company, an unlicensed employee had conducted four insurance transactions; Regency thought employees could begin selling insurance as soon as they applied, according to regulatory documents. The Council fined Regency $750, plus $600 in investigative costs.

In cases where a broker or an agency isn’t sure of its legal responsibilities, Matier suggests asking the Council for advice or talk to a lawyer. He adds that the definition of who needs a licence to sell insurance is quite broad. “Most brokers tend to exercise discretions. They say, ‘I’d rather have you licensed than not, even if you’re not going to be doing anything.’ ”

Curiouser and curiouser

In life, they say, there are watchers, and there are doers. The Council would probably like it if certain brokers watched less. “[Younger brokers specifically] may not mean any harm in it, but they have to realize you just can’t look at things unless there’s a reason to do so now,” says Matier. “…In some cases, they were trying to be helpful, or they thought they were. So for them, I think [these mistakes are] an educational thing.” He adds that the Council and other organizations are developing a course for new brokers about council rules, privacy requirements and other regulations that might not have been covered in pre-licensing stages.

According to Council documents, broker Ashish Kulkarni was first disciplined in 2012 when he accessed the Council’s database to figure out what kind of car the Council’s president drove. He denied doing it, but his story had a problem; he claimed he was at his agency’s office on the day in question, which prompted the Council to let him know there was a power outage at the time. Worse, the regulatory documents show his father called the agency and told them his son had admitted to accessing the president’s data. The ruling called for a closer eye to be kept on Kulkarni, and that he take the Council’s “Privacy Please” course. But in March 2014, the Council learned he used the database at least 31 times for non-insurance reasons between October 2011 and December 2013, including checking out “local professional athletes” and “several well known businessmen,”as well as dentists, friends, colleagues and old high school classmates.

In response to inquiries, Kulkarni admitted he used the database, citing curiosity about what cars wealthy locals drove. He wanted to know if it was “worth his while” to get their Autoplan business. And he said he looked up old pals and classmates to get their phone numbers. That explanation didn’t satisfy the panel, which pointed out some of the screens he looked at had Payment Plan Status info and personal banking details. Not surprisingly, the Council cancelled his licence and barred him from re-applying until 2019. He was also fined $2,375 in investigative fees.

Another B.C. broker, Barbara Qian Yu, had been licensed for less than a year when she was disciplined for misusing the database, Council transcripts show. But in her case, when she accessed the database in December of 2013, it was allegedly to find out when her boyfriend’s car insurance was renewing. Instead, she mistakenly plugged in the plates for her boyfriend’s dad and got his information. The now ex-boyfriend became suspicious when he thought he saw Yu drive by his father’s house, since he had recently moved in with his dad but hadn’t given her his new address. Since Council believed she “was not acting with malice,” and there were “mitigating factors,” Yu’s licence was only suspended for six months and she was fined $600 in investigative fees. Similarly, Council documents show Kelowna broker Misti Dawne Mason accessed the database five times over nine days in September and early October of 2013 and accessed some info on her partner’s ex-wife. She later claimed she was concerned for the safety of her partner’s daughter, since the ex had allegedly been involved in multiple car accidents, and was trying to learn about a collision that happened while the daughter was in the car. The Council found out all this because Mason actually called them up to discuss the matter but the Council didn’t buy her story, especially since details on accidents aren’t available on the database she accessed. Mason’s licence was suspended for two years and she was ordered to pay investigative costs of $1,500.

“Had she disclosed this info…”

Broker Peter Hing-Fu Hung wrapped up transactions for a couple of luxury cars in November 2011. Which was interesting because the cars’ registered owner complained later he wasn’t even there. Hung was dealing with an imposter. Council documents show that during his hearing, he admitted he found it odd that a) the same person was buying two luxury cars in just two days, and b) the person freely admitted he wasn’t going to be the principal driver of the vehicles, but was getting them for a friend (Hung allegedly “did not believe it was any of his business”).

He also accepted a void cheque to pay for the insurance in the name of a company that wasn’t registered in the name of the real registered owner. Hung explained he didn’t know individuals had to provide proof from the bank confirming their signing authority. A year later, regulators say Hung signed the client’s initials when arranging a storage policy purchase. He said he thought you could do this.

The Council ordered Hung to complete three of its courses, plus the Insurance Brokers’ Association of British Columbia’s ethics course. He was barred from conducting broker business outside his company’s premises until he completed those courses and fined $1,000. He also had to pay investigative costs of $2,650.

Then there’s the case of withholding important information from regulators. Noel Francine Smith, who’s worked as a broker in Ontario, got her British Columbia licence in 2010. Council documents reveal Smith left out certain details, including not answering a question about whether she’d been disciplined or bankrupt even though RIBO had disciplined her twice, and she’d had two personal bankruptcies. When the Council found out in 2014, Smith explained she saw the disciplines and bankruptcies as “personal situations” and didn’t want to “rehash” the past, according to the Council transcript. Turns out Smith had told the same story when applying for a life agent licence in Saskatchewan, but pulled her application before a suitability hearing could commence. FSCO had also disciplined her when she tried to renew her Ontario licence, according to council documents.

Smith argued “her non-disclosures to regulators should not reflect on her work,” and that she “always puts the client’s interest first.” The council hearing committee felt differently. It said her actions “were tantamount to fraud” and suspended Smith’s general and life licences for a year. She was fined $5,000 and also had to pay $1,000 in investigative costs and $3,283.08 in hearing costs.

“Had she disclosed this information,” says Matier, “it probably would not have affected her suitability to get a licence… Her regulator at the time had dealt with [the bankruptcies and disciplinary actions], and she was still licensed, so it would have been very challenging for Council to come along and say ‘you’re not suitable because of these things,’ because she was suitable to do work in her home jurisdiction.”

But the fact Smith told a similar story to more than one regulator “just went to [her] untrustworthiness,” says Matier. A broker like Smith, who was first licensed in 1981, is completely out of the demographic of the Council’s educational plan, which is designed to ensure young brokers get up to speed on the myriad regulations governing their businesses. So what’s a regulatory body to do? “Well, in her case, she’s no longer in the industry in British Columbia,” says Matier. “So that’s how we corrected it.”
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Copyright 2015 Rogers Publishing Ltd. This article first appeared in the April 2015 edition of Canadian Insurance Top Broker magazine

Transcontinental Media G.P.