Broker fined $2K for obtaining premium relief for a client while unlicenced

A Manitoba broker was recently fined $2,000 after obtaining premium relief for a client within hours of being told by the regulator that he was unlicensed to act as a broker.

On Dec. 19, 2018, Darcy Dion Boguski completed the Insurance Council of Manitoba (ICM)’s online licence application to obtain a supplemental insurance licence with an unnamed brokerage, as the council notes in its disciplinary decision released Tuesday.

On May 31, 2019, both of his Level 2 licences had lapsed due to non-renewal.

ICM’s licensing portal notes indicate that on June 3, 2019, at 3:18 p.m., Boguski called and indicated to the council’s senior licensing officer that he was still obtaining continuing education credit hours required for his licence. The officer reminded him that he was unlicensed.

As it turns out, on that very day, the broker was binding coverage on behalf of a client, according to an unnamed insurance carrier’s email records, which were entered into evidence during the council’s disciplinary hearing in September 2019.

The insurer’s emails show that the insurer received a request from the broker to bind coverage for a client on May 22, 2019, about nine days before his broker license lapsed. Two days before his license lapsed, the broker asked the insurer “if anything could be done regarding the mandatory 15% renewal premium increase,” according to the council’s decision.

Three days after his license lapsed, on June 3, at 12:18 p.m., the broker sent a follow-up email to the insurer and inquired as to whether there was any word on the rate change. The insurer provided the broker with a revised renewal premium for $56,734, plus a $500 fee. About half an hour before contacting the council to advise on his status of collecting continuing education credits, the broker told the insurer that he had sent their revised renewal terms to his client.

At 3:18 p.m. Boguski heard from the licensing officer that he was unlicensed. About two-and-half hours later, he indicated to the insurer: “Ok to go ahead and bind coverage effective June 6, 2019 renewal date per the revised rating you sent me earlier today.”

Council informed Boguski in September 2019 that he was under investigation for unlicensed activity and holding out as an agent.  He was provided with copies of the emails received from the insurer and asked for written comments about his actions.

In an email dated Sept. 19, 2019, the broker told Council: “I did, unfortunately not renew my license on the renewal date because I was behind on my credit hours, which I have now rectified.” Additionally, he said, “I really don’t know what else to say regarding this matter, except it was wrong and I will not go out of character like this again. I’m sorry.”

“By failing to disclose his unlicensed status, the licensee misrepresented to [the client] that he was a licensed agent, in violation of section 375(1)(a) Misrepresentation, of the Act,” council ruled.

“As the licensee’s licence(s) had lapsed, he should have declined to act, or advised [his client] to seek a licensed agent or broker. By not doing so, [he] acted in an untrustworthy manner in violation of section375(1)(e) Untrustworthiness, of the [Insurance] Act, and section 1 Integrity of the Code of Conduct.”

Boguski did not contest the decision, paid the $2,000 fine and the $900 investigation fees.

Feature photo by iStock/fatido