COVID no excuse as B.C. insurer loses appeal over $40K fine | iNFOnews | Thompson-Okanagan's News Source

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COVID no excuse as B.C. insurer loses appeal over $40K fine

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A B.C. insurer that failed to stop unlicensed companies from selling its insurance has lost an appeal after it was fined $40,000 by the regulator.

According to an Aug. 15, B.C. Financial Services Authority decision, the Old Republic Insurance Company of Canada argued the fine was too steep and that in its 27 years of business this was its first infraction.

The insurance company also blamed the pandemic, saying it was so busy dealing with the early days of COVID it was slow to stop the unlicensed sales even though it was aware they were happening.

In February the B.C. Financial Services Authority fined the Old Republic Insurance Company of Canada and WorldStrides Canada $40,000 and $35,000 respectively after both companies failed to issue refunds to high school students in B.C. who had trips cancelled because of the pandemic.

The parents of the student pursued a class-action lawsuit, which after being settled out of court saw more than $900,000 finally refunded.

The insurance had been sold through Explorica Canada which did not have a licence to sell insurance.

Old Republic became aware the company wasn't licenced but did nothing to stop its sales.

In its appeal, Old Republic argued that it became aware of the unlicenced sales in March 2020, when it was dealing with inquiries from policyholders about the onset of the COVID-19 pandemic.

The company said because of the pandemic it did not act "as quickly as otherwise would have been the case."

The regulator didn't buy it.

"While I accept that Old Republic likely was required to reallocate its resources at the beginning of the pandemic, the reality is that Old Republic was, by March 9, 2020, in possession of information which would have clearly indicated, with a minimal amount of investigation, that Old Republic's travel insurance policies were being sold by unlicensed entities," the decision reads.

The regulator says that the fact that policies were sold by an unlicenced company led in part to the delay in the payout of valid claims.

The company also argues that contrary to what the regulator had previously said, only 32 travel insurance policies were sold without a licence, not 87 as in the Notice of Penalty.

While the B.C. Financial Service Authority agrees with Old Republic that the original number was incorrect, the regulator says that aspect doesn't affect the fine.

"The reality of this case is that Old Republic did not maintain appropriate controls over its outsourced functions and that this resulted in travel insurance policies being sold to members of the public by unlicensed entities," the regulator said. "Old Republic was in a position to ensure that this contravention did not occur at first instance, and to address the contravention expeditiously when it became apparent. It did not do either and in failing to do so, allowed the public to be at risk."

The Financial Services Authority says the maximum fine for this type of infraction is $50,000, and in dismissing its appeal says that the $40,000 originally imposed is warranted.

The insurance company now has 30 days to pay up.

To contact a reporter for this story, email Ben Bulmer or call (250) 309-5230 or email the editor. You can also submit photos, videos or news tips to the newsroom and be entered to win a monthly prize draw.

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