A veteran broker has been fined $6,000 and ordered to work under supervision for two years after he failed to place insurance for clients in three separate incidents.
In each instance, he delivered cover notes to each of the clients indicating they had coverage.
The Insurance Council of B.C.’s intended decision, posted on April 22, found that the broker, Richard Alfred Ford, “did not knowingly leave his clients without insurance, and thought that coverage had been bound in all three cases.”
Ford, who has been a licensed broker for 30 years, “acknowledged his mistakes, and expressed remorse for failing in his duties to his clients, the insurers, and his employer,” the council wrote in its decision.
“Council found there was not sufficient evidence to suggest the licensee intentionally failed to place coverage, but determined that his failure to recognize that coverage was not placed in all circumstances was clearly negligent, and demonstrated a serious disregard for his clients' best interests.
“Council determined that given the Licensee's experience, he should have known it was entirely inappropriate to issue cover notes without any supporting documentation on file.”
Council’s decision outlined three separate occasions.
In the first, Ford’s brokerage received a call from the representative of one client, who said the client had not received its invoice and asked when it could expect to receive its insurance policy. (continued.)
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The brokerage reviewed the file and found that the client had a policy through the agency that expired on May 20, 2011. The brokerage determined that the insurer had sent an email to Ford, advising him that the unnamed client would not be able to renew its business insurance policy. The insurer said it would be willing to renew under a different policy, but the first policy would lapse unless it had heard from the broker.
The file indicated the broker had sought quotes from two other insurers, neither of which was willing to provide a quote. The only other document in the paper file was a cover note, signed by the broker on January 2012. The policy period was stated as January 3, 2012 to January 3, 2013.
“In reality, there was no coverage for Client 1 between May 20, 2011 and June 20, 2012,” council found.
In a second incident, the agency discovered in April 2012 a signed application and a cover note with a policy number for a second unnamed client, with an effective date of August 8, 2011. The client paid $1,354 for the policy on October 14, 2011. The client emailed the broker in November 2011, requesting a cover note for the insurance. On the same day, the broker provided the cover note.
The brokerage later discovered that an actual insurance policy had never been sent to the client, and the agency had not processed an insurance policy.
In a third incident, the secretary of a client contacted Ford to obtain insurance for a home that the client planned to build. Ford established that the foundation for the home would be poured on April 28, 2011, and sent a questionnaire to the client. He spoke with an underwriter for an insurer and obtained an approximate premium to insure the home while under construction.
The secretary made several inquiries between June and October 2011, requesting a written proof of coverage in December 2011. The broker created a cover note for the client, even though insurance was never bound with the insurer.
“The licensee's position was that he did not knowingly leave his clients without insurance, and thought that coverage had been bound in all three cases,” the council wrote in its intended decision.
“Council found that the licensee's extensive experience was an aggravating factor and determined that the issuance of cover notes without having reviewed the clients' files to ensure coverage was in place was a serious breach of the requirements of competency and the usual practice of the business of insurance.
“Council also held that the Licensee's failure to document the clients' files fell outside the usual practice of the business of insurance.”
