Rod Finlayson

The best part of being RIBO President is having the opportunity to meet brokers from across the province. This spring I will have plenty of opportunity to do just that at many of the season’s upcoming events. Meeting with brokers face-to-face is an invaluable experience because it offers all of us the opportunity to raise concerns and questions about issues facing our industry.

The RIBO Bulletin is published four times per year in order to keep brokers updated on latest regulatory issues and industry news. Because of the rapid rate of change affecting today’s business environment, I strongly recommend that each of you take the time to read each Bulletin from cover to cover to ensure that you don’t miss any important information.

Below is a list of a few important items in this edition of the Bulletin:

MVR contact finalized

In February all Principal Brokers were mailed a letter informing them that the new MVR contract has now been finalized and that both IBC and CGI were in the process of mailing out enrollment packages. For more information, please refer to the Update in this bulletin.

Automobile Insurance Changes

Please see below for an updated Consumer Advisory from the Financial Services Commission highlighting recent changes in auto insurance.

Branch Offices

All branch offices must be reported to RIBO. For more information please see below.

Separate Premium Financing Companies

Brokers who set up separate Premium Financing Companies need a Secondary Business Exemption. Please see below for details.

For those of you involved in your local broker associations, I would like to remind you that Council and staff members are always happy to address your group.

If you would like us to attend your local meeting, speak at a particular event, or just voice your opinion, please contact Susan MacKenzie (susan@ribo.com) at the RIBO office.

I look forward to the opportunity to meet with many of you over the next few months.

Jack Baizana
Chairperson

I hope you’ve all survived our long winter in time to enjoy the nice spring weather.

We would like to take the opportunity to remind you of the proper process for the following items:

Non-active member firms registration:

This class of registration was developed to meet the demands the changing environment has placed on our business. Many of our members are entering new corporate structures such as clusters and shell or tax corporations. In keeping with RIBO’s mandate to protect the public and regulate the profession, this means those individuals currently having commissions paid into tax sheltered corporations will have to register these corporations with RIBO.

For more information on this class of registration, refer to the Broker Resources/Broker Licensing section of the RIBO website or call the office to request a non-active business registration kit.

Individual/Corporate Name

Over the last few months staff reviewed a few cases where corporations and individuals were holding themselves out in a manner other than the name in which they were registered. This is an act of misconduct under Regulation 991 Section 15 (1) 6. which states:

“15. (1) 6. Holding oneself out or advertising by means of advertisements, cards, circulars, letterheads, signs, or other methods, or carrying on business in any other manner than the name in which the individual or the corporation or partnership of which the individual is the designated representative is registered.”

If you are in any doubt on how to hold yourself out, please contact Lilian Croucher or Vivian Lee.

Over the last three months, the Qualification and Registration Committee reviewed 41 requests for secondary business exemptions. The exemption breakdown was as follows: eight individuals were granted exemptions to sell financial products, 33 individuals were granted other secondary business exemptions. The Committee conducted four hearings appealing prior decisions.

Best wishes for a safe and happy spring to you and your family.

Yours truly,

Jack Baizana

The IBC Website link to the MVR authorized Insurers is http://www.ibc.ca/mvr.asp. Please note that this is separate from, and unrelated to, the IBC Member company list. As insurance companies are approved by MTO they will be added to the list on a regular basis.

It is important to note that the contractual requirement for brokers to only send MVRs to Authorized Insurers comes into effect April 1, 2004. Prior to that date it is business as usual. If starting April 1, 2004, a particular insurer does not appear on the list brokers should contact IBC at mvr@ibc.ca to confirm the status of that company.

Any insurer requesting removal of the Broker Indemnity Clause will be identified by a red asterisk (*) which will appear to the left of the insurer’s name.

Please refer to the reprinted articles from the Spring 2000 Bulletin on below.
It has come to our attention that Ian Stuart (Smith) continues to conduct business in Ontario. Please exercise extreme caution when using unlicensed and unregulated intermediaries.

Because Ontario does not require wholesalers to be licensed (the only province in Canada), it is necessary to exercise the appropriate diligence when investigating the credentials of unlicensed and unregulated intermediaries (wholesale brokers) before they place business.

We suggest you use our online database (www.ribo.com) to check for registration, contact your local association, or if possible, get a list of reputable references. It is your professional responsibility to ensure you provide clients with the best overall service!

If placing business with an unlicensed insurer, please ensure that you comply with Regulation 991, Section 10, and have your client read and sign the unlicensed insurance client consent form.

For reference, see the article below and the article by South Western Group.

Reprinted with permission from the March 6, 2000 issue.

A WHOLESALE broker in Ontario for whom an arrest warrant has been issued in B.C. says the original cease and desist order against him there was based on false information.

Ian Stuart Smith of Heritage International is also the subject of an investigation in Alberta, Insurance Council GM Joanne Abram said. She said it deals with unlicensed activity.

An Ian Stuart, who said he does not go by the name Ian Stuart Smith, said the B.C. order will be fought and that "this could turn out to be a very, very nasty situation for the superintendent of insurance (in B.C.)."

B.C. Financial Institutions Commission investigator Ken Fraser said Mr. Stuart had 14 days to appeal the days to appeal the order but did not do so. Mr. Stuart Smith said he did appeal in time but received no response from the regulator.

To challenge it now, he will have to go to court in B.C.

Last month, an arrest warrant was issued in B.C. for Ian Stuart Smith on eight counts under the province's Financial Institutions Act.

Mr. Fraser said he would be picked up if returned to the province. Mr. Stuart said he did not know of any warrant for his arrest.

Four of the counts relate to acting as an insurance agent without being licensed and the other four to failing to comply with an order under the Act.

FICOM's Mr. Fraser said Ian Stuart Smith of Heritage International was using another broker as an intermediary. He was selling general and professional liability, including directors' liability.

While as a wholesale broker he is not required to be licensed in Ontario, he is in all other provinces.

RIBO GM Jeff Bear said the question of not requiring registration of wholesale brokers is being discussed with the Financial Services Commission of Ontario.
He added: "in our opinion they should all be registered."

Mr. Bear said Ian Stuart Smith's license as a broker was revoked in 1997 by that organization's discipline committee. Mr. Stuart said he is not aware of any complaints in Ontario and that he had never been registered in that province.

Mr. Stuart told Thompson's the B.C. cease and desist order claims that four brokers said they were solicited by Heritage when, in fact, it was the brokers who approached the wholesaler.

Two of these brokers, he said, have come forward to correct this false information.
"When they start issuing documents based on false, testimony, that's a problem." He said he believes FICOM has "exceeded its authority," because neither Heritage nor the companies insuring the risk are based in B.C.

Heritage has always been based in Ontario, he said, and the insurer and clients it works with are American.

Placing Business with Intermediaries
by South Western Group

There seems to be more and more Insurance Intermediaries springing up across Canada. Some are acting exclusively as an Intermediary, and some are Insurance Retailers moving into the wholesale end of our business.

Intermediaries are generally managing agencies (MGAs), underwriting managers, or wholesalers, and offer a variety of products and markets to the insurance broker and the end user, your client.

When dealing with an intermediary it is of utmost importance to:
1. Ensure the intermediary carries Errors and Omissions Insurance and Fidelity Insurance with a recognized, licensed insurer for substantial limits.
2. Check on the markets they represent. Solid, well known, and licensed insurers should indicate credibility and strength of the intermediary.
3. Be extremely careful if an intermediary is using non-admitted or unlicensed markets, particularly for business of a general nature.
4. Insist on only licensed markets being used for your business. Imagine the potential situations that could arise when placing business with an unlicensed market through an intermediary who does not carry Errors and Omissions!

Changes to Automobile Insurance

Below are highlights to recent changes resulting from auto insurance reform:

· The deductibles that apply to pain and suffering claims court awards have increased from $15,000 to $30,000 ($7,500 to $15,000 for dependants’ awards). Changes effective October 1, 2003.
· Changes to the auto policy so that if your car is stolen and not found the deductible will apply. This is in effect on all policies renewed and new business on or after October 1, 2003.
· Clarify that if a car is a total loss your deductible will apply. This is also effective October 1, 2003.
· A code of conduct is introduced for paralegals working in the auto insurance system effective November 1, 2003.
· The standard collision deductible changes to $500 for contracts issued or renewed on or after April 15, 2004.
· Payment for towing is limited to $300. This change applies to policies issued or renewed on or after April 15, 2004 and does not apply in Northern Ontario.
· The availability of income benefits and attendant care benefits for those with whiplash injuries changes for accidents occurring on or after April 15, 2004.

Brokers who set up separate Premium Financing companies need a Secondary Business Exemption

If a Broker sets up a separate business entity for the purposes of premium financing, a Secondary Business Exemption from the Qualification and Registration Committee is required. A condition of such an exemption will be the right for RIBO to examine the books and records of the loan business with respect to transactions involving the insurance premiums of the Broker’s clients.

Premiums being financed by clients under loan agreements with the separate financing company must be paid promptly by the lender to the Broker for deposit to the trust account. Subsequent collections, and any collection problems, remain with the financing company. However, with proper documentation in hand, the premium lender can request cancellation for non-payment.

The Broker and trust account must be insulated from any financial problems, employee dishonesty or other difficulty encountered by the legally separate lending company.

Note: Brokers wishing to apply for a Secondary Business Exemption concerning the operation of a separate premium financing business should request a “Premium Financing Business Questionnaire” which will assist them in making their submission to the Qualification and Registration Committee.

Code of Conduct Considerations:

The requirements of candour, honesty and professional integrity extend to any premium financing operation in which a Broker is involved.

Clients must be advised of available alternatives, including low cost or no-cost premium payment plans, which may be offered by insurers for the class of business involved.

The availability of insurance through the Broker must not be made contingent upon the client agreeing to use the Broker’s premium financing terms.

The cost of borrowing and service charges must be clearly stated, as required by the Consumer Protection Act of Ontario (members may wish to discuss the requirements of that Act with their legal advisors).

Decision of the Discipline Committee

CAUTION: While the information contained below is public, members should take caution that inappropriate use of this information may be considered to be an act of misconduct.

Frank Patafio
Registration Number: R09096
Concord, Ontario

MISCONDUCT: Ont. Reg. 991, s. 14(1), (3)

PARTICULARS OF THE COMPLAINT

· Frank Patafio failed to discharge his duties to a client with integrity and failed to serve a client in a conscientious, diligent and efficient manner and failed to provide a quality of service at least equal to that which members would generally expect of a member in a like situation.
· Mr. Patafio attempted to arrange replacement coverage for a client whose automobile insurance policy had been cancelled by the insurer for non-payment. However, Mr. Patafio failed to advise the client of a change in premium rating, nor was the new application submitted to the insurance company in a timely fashion, resulting in a gap in coverage.

DISCIPLINE COMMITTEE’S DISPOSITION (11/27/03)

· The Discipline Committee found Mr. Patafio guilty of the alleged misconduct.
· Mr. Patafio was reprimanded for his conduct in this matter and his Certificate of Registration continues to be restricted to acting under supervision.
· In addition, Mr. Patafio was fined $1,000.

ADDITIONS
3099	SOUND INSURANCE SOLUTIONS INC.	OWEN SOUND
3100	PATRICIA HALES 872734 ONTARIO INC.	CANNINGTON
3101	NORTHBROOK INSURANCE GROUP INC.	WOODBRIDGE
3102	SHIELD FINANCIAL SERVICES (CANADA) INC.	TORONTO
3103	JONES DESLAURIERS PERSONALIZED INSURANCE BROKERS LTD.	TORONTO
3104	MIRACORE LTD.	MISSISSAUGA
3105	INSURANCE EXECUTIVES BROKERS & CONSULTANTS INC.	MISSISSAUGA
DELETIONS
253	RON BRILLINGER INSURANCE BROKER LTD.	RICHMOND HILL
646	PRATTE-MORRISSETTE INC.	TORONTO
920	HARE INSURANCE BROKERS DIV.OF MCDERMOTT INS. BROKERS LTD.	ALLISTON
1050	FRUITMAN INSURANCE BROKERS(BRAMPTON) LTD.	BRAMPTON
1472	FRED D.(TED)MCTAVISH INSURANCEBROKER LTD.	FLESHERTON
2941	FIRST METROPOLITAN FINANCIAL CORP.	MISSISSAUGA

 

President	Past President
Rod Finlayson CG & B Group Inc. 120 South Town Centre Blvd. Markham, ON L6G 1C3 Tel: (905) 479-6670 Fax: (905) 479-9164 Email: finny@cgbgroup.com	Arthur Langley Tel: (705) 474-2420 Demarco-Lucenti Insurance Brokers Limited 669 Cassells Street North Bay, Ontario P1B 4A1 Fax: (705) 474-9089 Email: d-linsurance@on.aibn.com
Vice President	Secretary
Jack Baizana Tel: (613) 225-7722 Jack Baizana Insurance Brokers Ltd. 1390 Prince of Wales Dr. Ottawa, Ontario K2C 6N6 Fax: (613) 226-2781 Email: jack@baizanainsurance.com	Toots Everley Tel: (807) 727-3336 Canada Brokerlink (Ontario) Inc. 179 Howey Street, Box 39 Red Lake, Ontario P0V 2M0 Fax: (807) 727-3750 Email: twoee@nwconx.net, teverley@brokerlink.ca
Treasurer
Bonnie Warder Davis & McLay Insurance Brokers Limited Box 12, R.R. #1 2845 HWY #6 Lion's Head, Ontario NOH 1WO Tel: (519)793-3322 Fax: (519)793-3901 Email: emclay@amtelecom.net
Members
Caroline Anne Benedict PSA Insurance Services Limited 7699 Yonge Street Thornhill, Ontario L3T 1Z5 Tel: (905) 889-4933 Fax: (905) 889-0205 Email: cbenedict@psains.com	Barry Downs Tel: (416) 366-5243 Partners Indemnity Insurance Brokers Ltd. 10 Adelaide St. East, Suite 400 Toronto, Ontario M5C 1J3 Fax: (416) 862-2416 barry@partnersindemnity.com
*Al J. Hawco Tel: (613) 826-2804 3311 Warner Way Osgoode, Ontario K0A 2W0	*Hassan A. Jaffer Tel: (905) 415-2511 2750 Fourteenth Avenue, Suite 307 Markham, Ontario L3R 0B6 Fax: (905) 415-2011 hassan@nvcallp.com
Byron Moffitt Erb and Erb Insurance Brokers Ltd. 30 Queen St., P.O. Box 2670 Kitchener, Ontario N2H 6N2 Tel: (519) 579-4270 Fax: (519) 745-5607 Email: byron@erb-erb.com	*Gloria Shan Tel: (416) 365-1900 ext. 202 P.O. Box 45, 401 Bay Street, Suite 1200 Simpson Tower, Toronto, ON M5H 2Y4 Fax: (416) 365-7664
Joanne Brown Tel: (416) 394-4503 Marsh Canada Limited 70 University Ave., Suite 800 Toronto, Ontario M5J 2M4 Fax: (416) 815-3361 Email: Joanne.C.Brown@marsh.com

*Public members are appointed by the Lieutenant Governor-in-Council to represent the public interest.