March 15, 2021 by David Gambrill
A former Alberta broker has been ordered to pay a civil penalty of $5,000 for omitting and/or withholding client information on insurance application forms to get a better deal for her clients.
The Alberta Insurance Council had already revoked Heather Martinson’s general level 2 broker certificate on Oct. 4, 2019 — one day after the brokerage terminated Martinson’s employment with cause. In a complaint to council, the brokerage indicated it was conducting an internal investigation of 27 different files handled by Martinson between April 2019 and October 2019.
Council’s decision cites examples of evidence contained in the brokerage’s report on its internal investigation. In its report, the brokerage observed how one of Martinson’s clients, a motorcyclist, had a conviction for speeding and yet the insurer had the customer “rated at a Driving Record 5 with a discount for Conviction Free,” per council’s citation of the report.
In another example, the broker’s client, a homeowner, received an insurance claim payout of $11,403 for damage sustained in a 2015 hail claim. This information did not appear in the application document submitted by the broker to the insurer. “Client is receiving a No Comprehensive Claims Discount, which she would not qualify for, as there was a hail claim in 2015,” the brokerage report observes, as cited by council.
In yet another instance, the broker omitted to report in an insurance application that her client had been terminated for non-payment by another insurer.
“It is the council’s view that the [evidence contained in the brokerage’s report] proves that the agent intentionally entered false information on her clients’ insurance applications, which allowed the clients to obtain favourable terms, coverage, and/or premiums that they would have likely not been able to obtain had the former agent entered the correct information,” council states in its decision. “The council was troubled to see that there was an established pattern of behaviour. The council determined that these actions were more than a clerical oversight, and that the agent omitted the information intentionally.”
In her defence, council noted, Martinson said she was not motivated by malice. She contended that her clients were not harmed by her actions; indeed, they benefited from her actions, as she observed.
Council remained unpersuaded that her clients were not at risk of harm.
“The council is of the view that the agent’s actions prevented the insurer from accurately assessing risk assumed through their prospective clients, and also affected the ability to charge the appropriate premium for the policies issued,” council wrote in its decision. “Moreover, it is never in the client’s interest to use false information to obtain an insurance coverage.
“If an agent enters false information, the client could be blamed for failing to disclose information and his or her coverage could be jeopardized as a result.”
Feature image via iStock.com/MangoStar_Studio