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President´s Message
Joanne Brown
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 please find a list of a few important items brokers should be aware of that have occurred in the past few months:
Now that spring is here, plans are already underway for RIBO to attend and participate in various broker association and industry events across the province. This allows us the opportunity to meet face-to-face and connect with members and discuss issues relevant to different regions. 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 at the RIBO office. I look forward to the opportunity to meet with many of you over the next few months.
 Qualification and Registration Report
Art LangleyChairperson I hope everyone has enjoyed our balmy winter and you are now looking forward to spring. Now, on behalf of the Qualification and Registration Committee and staff I would like to update you on a few items: Management Exam Our volunteer sub-committee reviewed the exams in conjunction with the Broker Skills Report and updated relevant information. The new exams are now in circulation. Level II Technical Exam We are now in the process of revising the Level II Technical Exam. Reciprocity Agreement We reported in the Fall Bulletin that we were working on a reciprocity agreement with the Financial Services Commission of Ontario. Unfortunately this has not been finalized. We will keep you updated as this develops. Unlicensed Employees We receive enquiries from brokers on a regular basis asking us to provide outlines of duties for unlicensed staff. Section 2(F) of the RIB Act permits unregistered employees of a member to engage in the performance of clerical or administrative duties in a brokerage office. Unregistered individuals should not be employed to speak with the public to obtain and record information which is required for insurance decisions or actions, such as applications, policy changes or loss reports; nor should they be involved in giving advice or confirming insurance coverage, providing insurance quotations or dicsussing claims matters with clients. To avoid conflict with the requirements of the Act, unregistered employees should be instructed to limit their involvement with the public to taking messages, which can then be dealt with by registered brokers Please take the time to read the articles on "Current Information Summary" and "Guidelines for Resigning as a Broker of Record." Over the last three months we've had 28 requests for secondary business exemptions. All were granted. The exemption breakdown was as follows: six individuals were granted exemptions to sell financial products, 22 individuals were granted other secondary business exemptions. There were no requests to waive the Level I or Level II exams.
Both the Qualification and Registration staff and I would be pleased to assist you at any time. Please do not hesitate to contact us.
BRANCH OFFICES
RIBO bylaws provide that where any firm (sole proprietorship, partnership or corporation) operates from a branch office or offices, meaning any location other than the head office of the firm the Principal Broker shall either:
or A branch office would include any remote location where business is conducted on a regular basis. For example, this requirement would apply to any firm that permits associates to operate from their homes, or any other premises remote from the head office of that firm. A plan of supervision should outline the method by which the Principal Broker intends to carry out his or her supervisory responsibilities over personnel and control any financial obligations undertaken by the branch.
Quebec-Ontario Reciprocal Continuing Education Agreement
In March, RIBO and Quebec's regulatory body la Chambre de l'Assurances de Dommages (ChAD), signed an agreement regarding the reciprocity of continuing education credits towards each jurisdiction's respective continuing education requirements. In the agreement both parties agreed that continuing education credits obtained in accordance with ChAD's requirements in Quebec will be accepted in Ontario toward compliance with RIBO's continuing education requirements, and vice versa on a reciprocal basis (credit for credit). Procedures for both provinces are essentially the same with the exception of:
PROVINCIAL LICENSING TELEPHONE NUMBERS
We see an increase in requests from brokers who will be handling national programs in which the association's head office is located in Ontario. Regardless of the associations head office is located, a brokers must be licensed in each and every province when dealing with any member of the public. For your reference, the following are the provincial licensing telephone numbers:
"Resigning" as a Broker from a Single Client
We have recently received a number of enquiries regarding the regulatory ramifications involved where a broker wishes to cease doing business with a specific client. In many cases, the situation follows the same pattern, that is, where the client has systematically and repeatedly abused each staff member who has attempted to assist them, to the point that it seems impossible to satisfy them. In "resignation" situations, brokers must remember that they are required to conduct themselves in compliance with applicable laws and professional obligations. For example, it should be noted that for auto insurance in Ontario, brokers are required by law to provide access to insurance for consumers. For this product, if a client insists that your firm provide an application for auto insurance, brokers must comply with the requirements of the Compulsory Automobile Insurance Act. With that exception noted, RIBO regulations do not prohibit "resignation" where a broker-client relationship has deteriorated beyond repair. There are, however, a number of factors or considerations arising from the Code of Conduct that are important to keep in mind in these situations. The Code of Conduct (Section 15, Paragraph 13) requires that "a member's conduct towards other members, members of the public, insurers and the corporation (RIBO) shall be characterized by courtesy and good faith." Keeping that in mind, a broker should only refuse to continue to provide services to a client where there is a good faith reason supporting the decision to terminate the relationship. In addition, brokers are obliged to give the client adequate notice so as not to prejudice the client's interest. Brokers must also use best efforts to ensure that the client's (?) needs are adequately looked after notwithstanding the withdrawal of services. This obligation can be fulfilled in some circumstances by finding another broker to look after the client or at least referring the client to other brokers who can appropriately service the client. In general, the following are suggested as the minimum practical steps in a "resignation":
IMPORTANT INFORMATION REGARDING REFERRAL FEES
Due to some recent requests from brokers for information regarding RIBO's policy on referral fees, below is a reprint of an excerpt from RIBO's Spring 2001 Revised Guidelines on Marketing Practices*:
REFERRAL FEES TO/FROM OTHER FINANCIAL SERVICE SECTORS Brokers may pay or receive referral fees from other intermediaries in the following financial services: life agents/brokers, mutual funds, financial planners, investment dealers, mortgage brokers, and real estate brokers, premium financing organizations and organizations that deal with products that reduce insurance risk (e.g. alarm systems). They are subject to the following conditions: There must be full disclosure and receipt of written consent from a client in advance of the referral (see enclosed sample client consent form). The broker does not give advice or participate in any sale of a product unless properly licensed to do so. Any permission necessary has been received from all appropriate regulatory organizations (e.g. Financial Services Commission, etc.). Note: Referral fees to non-financial industry parties are not permitted. *A complete version of the Spring 2001 Revised Guidelines on Marketing Practices is available here.
FROM THE FILES
By Nadine Austin, Senior Investigator
A broker sold a client car insurance, took the file back to the office and left for vacation. The client called the broker at home some three weeks later to report an accident. The broker went to his office to review the client file and discovered that the application and cash down payment were still in the file in a stack on his desk. Binding authority only extended to three days. However, upon review of the application, the broker discovered that the policy period remained blank. He called the client to explain the situation. The client was furious. The broker then told the client that he would enter an effective date two days prior to the accident on the application, upload it to the insurer, then report the accident. He instructed the client as to what to say to the insurer. Several days later, the insurer called the broker asking questions about when the application was completed. The broker confirmed that he met the client for the first time on a later date. The broker was unaware that the client had already given fill disclosure of the actual facts to the insurer. In addition, the policy information on the police report confirmed that the coverage had been bound on an earlier date. The principal broker and the insurer confronted the broker who made full disclosure. The broker agreed to plead guilty to misconduct. The Discipline Committee accepted the plea and ordered the broker be formally reprimanded for his conduct and fined $500.
REMINDER: THE ANTI-TERRORISM ACT (BILL C-36) IS NOW LAW
Members are reminded that Bill C-36, the Anti-Terrorism Act, is now in force. As we printed in the Winter 2001 Bulletin, the provisions of the Bill amending the Criminal Code that are of the most interest to members are as follows: S. 83. 08 No person in Canada and no Canadians outside Canada shall knowingly
Members should be aware that the penalty for failing to comply with any of these obligations is, on summary conviction, a fine of not more than $100,000 or imprisonment of not more than one year, or both, or on conviction on indictment, imprisonment for a term of not more than ten years. Please govern yourselves according accordingly. For more information on the Act, please see the Winter Bulletin.
IMPORTANCE OF BROKER-CLIENT COMMUNICATION
Due to current markets RIBO has seen an increase in calls about rate increases. Accordingly we would like to reemphasize the importance of broker-client communication and specifically of advising clients about the possibility and reasons for future rate increases. As a rule of thumb, a rate increase of more than ten percent is considered to be a material change in the risk. Brokers are requested to advise clients of all material changes.
Addition & Deletions from the RIBO Register
November 28, 2001 - March 1, 2002
Additions
IMPORTANT NOTICE TO PRINCIPAL BROKERS
Along with the Form 1 (Position Report) we provide a "current information summary" which outlines all the current information we have recorded on your file. In the past few months we have found information missing from these reports. It is important to review this summary and update us on all relevant information. A key item on the summary is section C "Insurance Markets". It is a requirement that you provide us with all general insurance markets for the purpose for of assisting the public and the broker, particularly in cases when solvency of an insurer is in question. Please take the time to update this key information document to benefit all concerned.
Members of Council - Registered Insurance Brokers of Ontario
Member Assistance Directory
RIBO Office: (416) 365-1900 or 1-800-265-3097 Fax: (416) 365-7664
P.O. Box 45, 401 Bay Street, Suite 1200, Simpson Tower, Toronto, ON M5H 2Y4 Receptionist - Madeline Ross Chief Executive Officer - Jeff Bear (jeff@ribo.com) Secretary - Lise Clements (lise@ribo.com) ADMINISTRATION & FINANCE Manager - George Martin (george@ribo.com) Accounting & Data Supervisor Registration/Data Entry - Irene Chung (irene@ribo.com), Erica Lo (erica@ribo.com), Karla Poirier (karla@ribo.com), Teresa Novak (teresa@ribo.com) COMPLAINTS & INVESTIGATIONS Manager - Tim Goff (tim@ribo.com) Complaints Officer - Sharon Bentley (sharon@ribo.com) Senior Investigators - Nadine Austin (nadine@ribo.com), Crystal Skyvington (crystal@ribo.com) Secretary - Angela Daley (angela@ribo.com) Co-ordinator - Diana Campoli (diana@ribo.com) Financial Investigators - Michael Buck (michael@ribo.com), Filomena Scampoli (filomena@ribo.com) CORPORATION LEGAL SERVICES In-house Legal Counsel - Bradley Nairn (bradley@ribo.com) Secretary - Angela Daley (angela@ribo.com) MARKETING & COMMUNICATIONS Communications Co-ordinator - Susan MacKenzie (susan@ribo.com) QUALIFICATION & REGISTRATION Manager - Lilian Croucher (lilian@ribo.com) Assistant - Vivian Lee (vivian@ribo.com) Secretary - Sonia Lyew Garcia (sonia@ribo.com) Clerk - Laurie Reynolds (laurie@ribo.com)
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