Alberta broker Bob Arnold is appealing a $1,000 fine and a six-month suspension of his license after the provincial broker regulator found he conducted business with a client in an unfair and unprofessional manner.
The Insurance Council of Alberta ruled that Arnold acted unfairly by attempting to collect premiums for the renewal of an agency-billed policy five months after the client thought he had cancelled his policy by allowing it to lapse. The insurer informed council that the policy had been automatically renewed.
Council found the brokerage had waited more than five months after the renewal date to inform the insurer that the policy had been cancelled. Shortly before contacting the insurer, the broker tried to collect the outstanding permiums from the client.
Council's decision in mid-June also found that Arnold’s conduct regarding the client’s file and the council’s subsequent investigation was “deplorable, immature and completely unprofessional.”
Arnold has appealed the decision. He denied that he tried to get a colleague at his brokerage to confirm to council that he did not use unprofessional language in his phone conversation with the client, despite the fact that the colleague denied hearing the conversation.
Arnold’s brokerage is on an “agency bill” system. Under this billing arrangement, an insurance company issues renewal policies 45 to 60 days in advance of the actual policy renewal date. The brokerage is then responsible for collecting the premium from the client.
If the renewal documents are not returned to the insurer within 30 days, and the brokerage has not received payment from the client in that time, the brokerage can notify the insurer and the policy is cancelled without any premium owing to the insurer.
Council found that in this case, Arnold’s brokerage, Mitchell Insurance Brokers, did not seek payment from the client or send the insurer, Portage la Prairie Mutual Insurance Company, a request to cancel the client’s policy until five months after the expiry date of the renewal. (continued.)
According to council’s decision, Arnold’s commercial client purchased a policy running from June 11, 2010 to June 11, 2011. The client indicated in his complaint to council that, when the notice for renewal came up on May 31, 2011, he did not respond to the renewal notice because he had no interest in renewing the policy. The client was under the impression that if he did nothing, the policy would lapse, since it had a fixed term.
But Portage told council that the policy in fact automatically renews.
Mitchell waited until August 2011 to send an invoice to the client in an effort to recover the premium amount of $1,118, covering the time that the brokerage was on risk. Arnold told the client that the delay was due to the client’s file being “lost in the system.”
In December 2011, the matter came to a head in a phone conversation between the client and Arnold. According to the client, Arnold threatened legal action against him if he did not pay the outstanding premium amount, and if he could not prove that he had valid coverage as of the expiration date of the policy on June 11, 2011. The client had a policy with Intact Insurance, effective Dec. 19, 2011.
Arnold accused the client of suggesting that the Intact policy started shortly after the Portage policy ended, an allegation that the client denies. Arnold had said in a fax to the client that he had called Intact to cancel the policy until such time as the client had paid premiums owed to Mitchell.
When the client indicated to the broker that he was considering taking up the broker’s actions with the Insurance Bureau of Canada [IBC] and the privacy commissioner, the broker responded with an email to the client, in which the broker wrote: “It is rather obvious you are not capable of telling the truth and you expect others to pay your bills.”
Meanwhile, Arnold sent correspondence to Portage in January 2012 asking for a back-dated cancellation of the policy. The cancellation would show the client – and hence, the agency – did not owe any premium. In correspondence between the insurance company and the broker, the insurer told Arnold that direct billing between the insurer and the client would have prevented the issue from arising.
“It is interesting that the agent accused Client A of being dishonest and wanting others to pay for his bills when the whole cause of the situation was that the agent did not do his job properly and he wanted his client and others to take responsibility for his errors,” council ruled.
