Canadian Underwriter

Broker fined after leaving agency with his own book of business

May 8, 2018   by David Gambrill

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A B.C. broker who believed he was leaving one agency for another with his own book of business received a $2,500 fine for a privacy breach when he took a spreadsheet of his clients’ information with him.

Before joining his brokerage in 2004, Jason Robert Verbeke had a verbal agreement with the agency’s nominee that he would continue to own his book of clients that he had built during his time at the brokerage. (The brokerage was not named in the Insurance Council of B.C.’s ruling on the matter.)

During his 12 years at the brokerage, he managed his own client files: he drew no salary, made income strictly on commissions, and was responsible for his own expenses. He mainly handled Autoplan insurance business and serviced automobile dealerships.

In 2016, he left the brokerage to join another agency. When he left, he took no physical files with him, but he did keep a spreadsheet that he maintained while representing the agency — including client names, policy numbers, and policy effective dates.

“The licensee stated he felt he did not act improperly, since he believed these clients to be his own,” the Insurance Council of B.C. wrote in its final decision imposing a fine for the privacy breach.

Verbeke told council his policy was to ask his clients each year if he could contact them the following year for their Autoplan renewals and have them sign ICBC consent forms.

He maintained that he called each client when their insurance policy was up for renewal and informed them that he had changed agencies. And he said he obtained their consent before proceeding with a renewal. He also said he sent a letter of brokerage to all of his home insurance clients and posted on public media that he was transferring to a different agency.

However, he did not, as council noted, receive permission from his previous agency to take the spreadsheet. Nor did he have the express consent of the clients to keep the information on the spreadsheet. For that breach of privacy, even though no harm was done to the clients, council levied a $2,500 fine, and ordered Verbecke to take privacy compliance courses.

In coming to its conclusion, council cited its June 2017 bulletin, Reminder of Licensee Responsibilities Related to Disclosure or Transfer of Client Information.

The bulletin states: “[It] is the general insurance agency, and not the general insurance agent representing the agency, that is the agent of record on a client’s general insurance policy. Therefore, the agency ultimately holds responsibility for the proper handling of a client’s information.

“As such, if a general insurance agent leaves one agency to represent another, the general insurance agent must not have client information, including records or documentation, in his or her possession, and must also not disclose or transfer client information from the former agency to the new agency without the consent of both agencies and the express authority from the client to do so.”

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5 Comments » for Broker fined after leaving agency with his own book of business
  1. Frank Cain says:

    Did the insurance agency deny the 2004 verbal agreement between the agent and the agency’s nominee? That agreement represented a legal contract between the agency and the agent. Contracts defined as verbal, written or in the process of being written are all legal contracts. If, as the article states, in quoting a bulletin, the agency, not the agent, is responsible “for the proper handling of a client’s information”, then there existed an error on the part of the agency in failing to discuss the disposition of the agent’s clients prior to the agents departure and to settle the terms of separation at that time. The error on the part of the client was failing to conclude the verbal agreement with the agency into a written form only to dispel any dispute of non-declaration.

    The agency backtracked on the verbal agreement and as per the obligation of the agency in the bulletin, should have taken steps well beforehand to ward off the consequences of not involving all three parties to the transfer. The agency did not have to know that the agent maintained a spreadsheet of his clients. The fact that the agent was leaving the agency should have opened all doors re client transfer including agency remuneration, agency letters of intent to clients and authorization by the agency of any correspondence from the agent to his clients.

    I suppose that in the insurance business, we are so wrapped up in the legal matter of dealing with the client’s own insurance, we fail at times to recognize our own position when it comes to looking after our personal legal obligations.

    • Jason Verbeke says:

      Hi Frank, the fact of the matter is that I had several signed and even notarized contracts over the years with the owner of the agency and which were presented to both the Insurance Council and in a court of law when I sued the owner for unpaid commissions. In a court of law the contracts were upheld and the agency owner was forced to pay. However according to the insurance council I did not have the right to my own self made records…not even my own mothers! So according to the rules they were forced to give me a penalty which I understand was as minimal as possible which I gladded accepted of course but did not necessarily agree with. The owner accused me of stealing his records which is totally ridiculous and was nothing more than an excuse to call the council. I simply admitted to having the information on a spreadsheet. Nothing to hide here, it was clearly stated in the contract he signed! He was even reminded of this fact when the judge told him he had to pay me and threatened to charge him with theft! Many people may ask why I admitted to having the spreadsheet to the IC and it’s because I’m an honest guy and perhaps to a fault but thats okay by me and is how I got to where I am today. My previous agency called and solicited my clients for a full year after I left, because they are the “agent of record not the agent so therefore have the right”, but it was to no avail. After so many years my relationships were solid as a rock and everything got transferred successfully.

      Understand this. If I was a life insurance agent, a mortgage broker, a realtor or even a lawyer this situation would not have even had the chance to occur because they are all enabled to transfer their business and regulated in such a way that this is possible all while protecting the best interest and privacy of the client. So why is General Insurance so screwed up? The current rules/regulations surrounding my personal example here are just so outdated and out of touch with reality it should be embarrassing to someone.

      I spent around one year in court, I consulted with lawyers and the council before I entered into multiple signed contracts with the agency owner. I received multiple levels of express consent from my clients. I even had consultation from an industry regulatory consultant, I told the truth and I still got hit with a fine!

      All I can do is shake my head!

  2. AlanMcNulty says:

    Disagree Frank. The fine was for a breach of privacy by the broker. We assume the old agency (or someone) brought the existence of the spreadsheet to the attention of the IC of BC. Failure on the agency’s part not to report this would only amplify their risk and their legal and administrative responsibility for the privacy breach.
    Surely there were numerous opportunities to formalize the verbal agreement into something some substantive over 12 years, especially clarification on departure rules. . And any agreement, that may circumvent Council regulations, will not be recognized by the Council.

  3. Derek says:

    Well, that’s another rule to break. My clients follow me not the agency. I will pay the fine if caught but that’s the cost for doing business.

  4. Frank Cain says:

    The concluding paragraph of the article supports the argument that resolution from enquiry and examination by the agency of rightful departure may have gone to curtailing any action by the agent to breach duty. The I C of B C’s ruling is after the fact of the consequences of an agency’s failure to bring all elements of an agent’s departure to a point of priority.

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