An insurance broker under investigation for padding his bills asked Calgary police to charge the province’s broker regulator for theft, following the Insurance Council of Alberta’s seizure of records belonging to three of his clients.
Council ultimately suspended the broker and fined him a total of $21,000 in civil penalties. It issued a decision stating that the broker had billed and collected fees in excess of stated policy amounts.
Calgary insurance broker Robert Arnold has appealed the council’s judgment against him. He also launched appeals with the Calgary Police Service, the Privacy Commissioner of Alberta, the Superintendent of Insurance, the Premier of Alberta and the Law Society of Alberta over the regulator’s seizure of clients’ records during its investigation.
Council investigators attended the broker’s office in March 2012. They removed files in connection to three of the Arnold's clients, issued a receipt to the broker for the files they took, copied the files, and then returned them to the agent’s office by courier on April 4, 2012.
One day prior to returning the files, the broker sent the council a fax stating: “If you have not obtained permission from the individual policyholders you are in violation of the privacy act. Are you aware of this? I will be contacting them all today over your alleged accusations.”
Council sent a response outlining the legal authority by which it temporarily seized the documents. The broker responded by fax: “I have been in contact with all three clients and they have not authorized you to remove or review these files…I will contact all three of them again and ask if I should contact the police to have to obtain these files on [their] behalf.”
True to the broker’s word, one day later, the council’s director of compliance received a call from an officer of the Calgary Police Service. “The officer advised that he had received a call from the agent who was extremely irate and wanted the CPS [Calgary Police Service] to charge the [council] personnel with theft,” council noted in its decision on the matter.
Council provided to police the legal authority under which it obtained the files. Section 759 of the Insurance Act says an examiner may enter the premises of a regulated person [i.e. a broker], make copies or take notes of records under examination, and “temporarily remove” the records.
“We are of the view that the agent’s numerous complaints, allegations and assertions that [council] personnel acted illegally have no basis and will comment no further on them,” the council said in its decision.
Meanwhile, the council proceeded to examine the client files on suspicion that the broker had billed and collected fees in excess of stated policy amounts without the knowledge and consent of three clients. Council was acting on a complaint from an insurance agent formerly employed at Mitchell Insurance Brokers, where Arnold was the designated representative.
Arnold told the council that he did in fact make his clients aware that he was charging fees above the stated policy amounts.
He also claimed that, in sub-brokered accounts, regulations do not require that a broker receive a client’s agreement in writing for charging fees above the premium amount. He said he bought the policies for three clients from a ‘wholesaler,’ then added his fees on top of the premium charged to “offset a reduced commission rate.”
Council found that the clients would not have understood that the broker’s fees were on top of commissions he had already received when purchasing the policies. For example, in one transaction under examination, “Client A paid $23,000 for a policy that was issued (inclusive of the commission of $2,738) for $18,500,” council said in its decision. “Therefore, not only did Client A pay the 15% commission, it paid an additional $4,500.”
Council also found against the broker’s billing in two other client matters.
