B.C.’s broker regulator fined a broker $2,000 and his former brokerage $2,500 for sending out an incorrect declarations page to a client that was modelled after a dec page issued by an altogether different brokerage.
Questioned about the error by the Insurance Council of B.C., the broker, Amanprit Singh Ghaug, said he did not know where the incorrect dec page came from. He confirmed the insured was in fact covered, noting the client had successfully received coverage for a water damage claim in 2019.
Council ruled office procedures at the former brokerage, Marquis Underwriting Managers, were lax, which accounted for why the brokerage issued the wrong dec page. Specifically, it found:
- template documents at the brokerage were allowed to be manipulated
- the broker allowed work colleagues to use his company email address to conduct business in his name
- the former brokerage should have had document-handling procedures in place to help track where the false dec page had come from and who had used it.
“Although Council determined that the licensee and former agency did not purposely intend to mislead, there was no evidence to suggest that the insured’s interest was prioritized,” council ruled in a decision released in January 2024. “Council determined that the licensee and former agency failed to engage in the usual practice of the business of insurance.
“The former agency did not have proper file handling procedures in place to provide for the safekeeping of records and emails, which was evident as the licensee did not know which individual created the declaration. In council’s view, the lack of recordkeeping was particularly egregious.”
The disciplinary matter arose due to the complaint of another brokerage, which noted the similarities between one of its dec pages and a dec page issued to a strata corporation in July 2019 under Marquis’s name and logo.
“The complaint specified that the contract numbers and insurers appearing on the [Marquis] declaration [page] represented agreements that the [complainant brokerage] had with insurers under its proprietary strata insurance program, and therefore could not represent insurance coverage placed by [Marquis] with the insurers as shown,” council’s decision states.
“The [complainant brokerage] provided a copy of its template [to council] and conducted a side-by-side comparison of its template and the declaration…The [complainant] agency explained that it had been asked to provide a quote for the insured and in the process, it had been given a copy of the declaration.”
Council said one of the aggravating factors in its decision about penalty was the potential reputational harm caused to the complainant brokerage and insurers appearing in the incorrect dec page.
Ghaug told council Marquis did not write much condo insurance business, and the brokerage had templated dec pages employees could use to help create documentation for clients.
“The licensee stated that at the time of the issuance of the declaration, the former agency had administrative employees who would access templates stored in the former agency’s system and edit the templates to produce binders and/or certificates,” council’s decision states. “These documents were not otherwise protected against manipulation…
“The licensee did not know where the template for the declaration had come from. The licensee stated that it could have been a customer’s document, or a generic form intended for future use as a reference.”
The broker said the complainant brokerage made him aware of the issue in May 2020. He informed the client about the incorrect dec page in July 2020. The two-month delay in informing the insured about the error factored into the council’s decision about penalty.
Ghaug confirmed Marquis had sent correct insurance policy documents to the insured multiple times, and that a water damage claim in 2019 was successfully paid out. Council also took into consideration that he only worked at the brokerage part-time when the issue happened because he was tending to a family matter; this is why he allowed his email to be used by work colleagues for business purposes, the broker told council.
After the incident occurred, the former brokerage had instituted a policy to make sure two people reviewed insurance documentation before it was sent to consumers. He audited condo policy customers to make sure the same thing didn’t happen to anyone else. And he recommended his staff receive additional education.
“As a result of the incident, the licensee told the [council’s investigations] committee that he was no longer comfortable acting as a nominee and decided to close the former agency. He stated that it had taken a toll on him emotionally and impacted him professionally with his peers.”
Feature image courtesy of iStock.com/ArLawKa_Aung_Tun