FSRA enforces penalties on insurance entities and unlicensed agent

Industry collaboration emphasised for consumer protection

FSRA enforces penalties on insurance entities and unlicensed agent

Life & Health

By Roxanne Libatique

The Financial Services Regulatory Authority of Ontario (FSRA) has taken enforcement actions against Industrial Alliance Insurance and Financial Services Inc (IA), World Financial Group Insurance Agency of Canada Inc (WFGIA Canada), and Gurpreet Singh Ghuman.

The FSRA noted that from October 8, 2021, to July 14, 2022, Ghuman – who lacked a proper license – operated as an insurance agent and advisor for IA, arranging 58 life insurance policies.

Ghuman was affiliated with WFGIA Canada, a managing general agency (MGA). IA depended on WFGIA Canada to verify his licensing status.

“Consumer protection is a collaborative effort, and we expect industry to do their part,” said Elissa Sinha, director of litigation and enforcement at FSRA. “As such, insurance companies must have a system of compliance to reasonably ensure that agents selling their product are licensed and comply with the act, the regulations, and FSRA rules. We appreciate IA and WFG’s cooperation in immediately resolving this matter.”

FSRA imposes administrative penalty on Gurpreet Singh Ghuman

FSRA – which is seeking feedback on two draft guidance documents aiming to protect insurance consumers while promoting industry sustainability – has proposed an administrative penalty of $80,000 on Ghuman for acting as a life insurance agent without a license, violating Section 392.2(6) of the Insurance Act, R.S.O. 1990, c.I.8.

Ghuman has requested a hearing before the Financial Services Tribunal concerning this proposal.

Settlement between FSRA and IA

IA and FSRA have settled the enforcement action.

Under the settlement, FSRA has imposed administrative penalties totalling $115,000 on IA:

  • $65,000 for violating Section 403(1) of the Act by indirectly paying commissions through WFGIA Canada to Ghuman for soliciting and placing insurance policies without a license; and
  • $50,000 for violating Section 12(1) of Ontario Regulation 347/04 by failing to maintain a system ensuring its agents comply with the act, regulations, FSRA rules, and licensing requirements.

FSRA imposes administrative penalty on WFGIA Canada

Additionally, FSRA has imposed a $50,000 administrative penalty on WFGIA Canada for compensating Ghuman for insurance policy solicitation and placement while unlicensed, contravening Section 403(1) of the Act.

WFGIA Canada did not request a hearing on FSRA’s proposal.

FSRA issues advisory on unlicensed insurance activity

FSRA’s enforcement actions against the two entities and Ghuman come after it warned against unlicensed individual Andi Efovia.

It emphasised the risks of engaging with unlicensed insurance providers, saying: “We recommend consumers avoid purchasing insurance, including auto insurance, from Efovia.

“Consumers are not protected under the Insurance Act when purchasing insurance from unlicensed individuals and/or companies. Implications of purchasing insurance from unlicensed individuals include: you have no assurance the policy is valid, which can result in claims not being covered; your policy can be voided or cancelled for misrepresentation; policy cancellations can impact your insurance history which can lead to increased costs.”

FSRA urges consumers to consult its website to verify the licensing status of Ontario insurance agents and insurers. The Registered Insurance Brokers of Ontario’s (RIBO) website also provides a list of RIBO-licensed insurance brokers.

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