Canadian Underwriter

B.C. brokerage fined $20,000 for flouting rules for entry-level brokers

November 29, 2018   by David Gambrill

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Park Georgia Insurance Agencies, a full-service brokerage in B.C., has been fined $20,000 for allowing 36 of its Level 1 general insurance agents to sell insurance outside of the brokerage on a full-commission basis and without supervision, contrary to the rules for entry-level brokers.

The nominee of the brokerage, Churk Yin Winnie Lo, was fined $5,000 and her Level 3 broker’s licence was downgraded to a Level 2 licence for two years, ending Nov. 6, 2020. At that point, she may reapply for her Level 3 licence.

The brokerage must produce a plan to the regulator to ensure the agency’s Level 1 brokers are compliant with the rules that prevent them from selling outside the agency without supervision.

A Level 1 licence qualifies an entry-level broker to work in any of several positions inside an insurance brokerage: handling auto, home and other personal lines transactions, or as a mobile road agent (visiting car dealerships to insure newly purchased vehicles).

Level 1 salespeople operate under the supervision of a Level 2 or 3 broker; a condition on their license prevents them from selling insurance outside of the office without supervision. In addition, the compensation of a Level 1 broker must consist of a salary whereby a minimum of 60% of the annual income is based on an hourly, daily, monthly or other regular rate.

The Insurance Council of B.C. found that Park Georgia Insurance Agencies and its nominee had “knowingly allowed salespersons authorized to represent the agency to conduct insurance business outside the agency and had compensated the salespersons solely through commissions, resulting in the salespersons acting contrary to [the] rules,” as the council noted in its decision.

“Council found this behavior particularly egregious as the agency and the nominee had created an environment of non-compliance with respect to their salespersons. It was further troubling that the nominee did not appear to be properly supervising the salespersons within the agency.”

Because of the scale of the non-compliance, council said it could not find many precedents when trying to come up with an appropriate penalty for the rule violations.

Council drew on a 2017 decision in which a brokerage nominee with 30 years of experience allowed a Level 1 broker to work outside the agency unsupervised; in addition, the nominee allowed an individual to act on behalf of the agency without an authority to represent. In that case, the agency was fined $10,000, plus investigative costs, and the nominee’s license was downgraded from a Level 3 to a Level 2.

But in that matter, council noted, only one Level 1 broker was allowed to work outside the agency as a producer, not 36. “Further, in the present case, both the nominee and the agency knew the salespersons were not permitted to conduct business outside of the agency office and that compensation structure was in breach of council rules,” council noted. “As such, council determined that a more stringent sanction against both the agency and the nominee is required.”

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1 Comment » for B.C. brokerage fined $20,000 for flouting rules for entry-level brokers
  1. Patrick Treacy says:

    This extreme breach of regulations received nothing more than a “slap on the wrist” from the Insurance Council of British Columbia of $20,000.

    If the case earlier case they used produced a $10,000 for one person, at a minimum, the fine should have been at a minimum $100,000 to teach this errant Nominee a severe and punishing penalty and their Level 3 reduced to Level 2 permanently !!!

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