Licensee Responsibilities

Licensees have a number of responsibilities that they must be aware of and integrate into their daily business requirements. Failure to do so could result in the licensee being in breach of the legislation which could result in disciplinary action. This section provides an outline of those responsibilities, however, it is important that in addition to reviewing this section, licensees download and review Council Rules and Code of Conduct (see menu on the left). If you cannot access these sections for any reason or if you have questions after reading the Rules and Code, then contact our office.

Below outlines responsibilities that apply to all licensees. At the bottom of the page are links to additional requirements based on the class of licence held.

1. Mandatory Reporting to Council

Discipline, Judgements and Criminal Charges or Convictions: A licensee must notify Council within 5 business days where the licensee, or any business the licensee owns or has participated in as a director, officer or partner:

is disciplined by any financial sector regulator, or any professional or occupational body;

declares bankruptcy;

has any judgement rendered in relation to any insurance activities, fraud or breach of trust; or

is charged or convicted of any criminal offence or any offence under any law of any jurisdiction, excluding traffic offences resulting in monetary fines only.

Loss of Authorization to Represent an Agency or Firm: A licensee must notify Council within 5 business days where a licensee is no longer authorized to represent an insurance agency, adjusting firm or general insurance direct writer. This condition applies to both the individual licensee whose authorization has been withdrawn, AND the insurance agency, adjusting firm or nominee of the general insurance direct writer involved. In addition, if the reason for withdrawing the authorization relates to the individual’s suitability or conduct as a licensee, Council must be provided with the reasons for the withdrawal.

Change of Name: A licensee must notify Council within 5 business days where there is any change to the name, including trade names. More information on name changes may be found under the specific licence class in LICENCE QUALIFICATIONS.

Address Changes: It is a condition of all insurance licences that the licensee notify Council of changes to their address and other contact information within 30 days. To make a change to contact information, send a letter or fax requesting the change and provide the file number, along with the new information, including postal code, telephone and fax number. There is often confusion as to what each address is used for, in particular the service address. The following provides information on addresses maintained by Council and how they are used.

Service Address: is one where once a document is delivered to that address, it is deemed received by the licensee. This is often misunderstood and licensees frequently provide Council with their business address. This can cause a problem when a licensee leaves an agency or firm. Businesses normally use their head office address or that of legal counsel.
Residential Address: is the address of the licensee’s primary legal residence (usually the residence address used for taxation purposes).
Business Address: should reflect the office (including branch offices for agencies and firms) from which the licensee conducts insurance business.

IMPORTANT NOTE: If you hold more than one licence and you are changing your business address, confirm which licence the address change applies to.

2. Confidentiality of Customer Information

Maintaining the confidentiality of customer information is a condition of all licences issued by Council. A licensee must hold in strict confidence all information acquired in the course of the professional relationship concerning the personal and business affairs of a client, and must not divulge or use any such information other than for the purpose of that transaction or of a similar subsequent transaction between the licensee and the same client unless expressly authorized by the client or as required by law to do so.

3. Holding Out as an Insurance Licensee

Licensees are required to hold themselves out to the public in the manner in which they are licensed. This assists in assuring that the public knows with whom they are dealing. This means that letterhead, business cards, signage and advertising must properly reflect the name(s) shown on the licensee’s licence, or the agency or firm the individual is authorized to represent. Agents and salespeople who primarily deal with a single product or product line should be careful when determining how to use the product name in their marketing strategies. Do not use the name in a manner that may mislead a member of the public (such as answering telephones with a product name) into believing it is a trade name. See also: FINANCIAL PLANNING NOTICE and Disclose You Are An Agent below.

4. Referral Fees

The rules on finder or referral fees (“referral fee”) differ depending on whether or not the person receiving the compensation is an appropriately licensed insurance agent and what insurance activities the third party has conducted.

Appropriately Licensed Third Party: It is common for insurance agents to work together in the marketing of insurance products to a client. More than one appropriately licensed insurance agent may share commissions earned as a result of a joint venture, therefore, the sharing of commissions between appropriately licensed agents is allowable.

Unlicensed Third Party: Referral fees may be paid to an unlicensed person. However, both the person paying the referral fee and the person being paid must meet certain requirements. When making a referral, an unlicensed person can direct a client to a licensed agent or, at the direction of the client, provide the client’s name to a licensed agent. Before paying a referral fee, certain conditions must be met:

Licensees must be satisfied that the person to whom they are paying the referral fee did not engage in any insurance activities with the client. Insurance activities include discussing the merits of a particular insurance product or the client’s insurance needs; and
Once satisfied the third party did not act as an insurance agent, a written disclosure must be provided to the client stating that the person is being compensated for the referral. The written disclosure is to be provided before arranging an insurance transaction. It is strongly suggested that licensees maintain a copy of the written disclosure in their files as proof of meeting this licence condition.

Note: If the person being paid the referral fee is licensed with Council, but not in the category of insurance that relates to the referral fee, then that person should be considered unlicensed for the purposes of the referral fee. As an example, where a general insurance agent refers a client to a life insurance agent, the general insurance agent is considered to be an unlicensed person.

5. Sale of Product or Service on its Own Merits

It is Council’s position that the usual practice of the business of insurance requires licensees to sell insurance products and services on their own merits. This means among other things, that licensees:

may not discredit another licensee, an insurance company or person;
may not make any false or misleading statements or representation when conducting insurance activities; and
may not coerce a prospective buyer in any manner including through the influence of business or professional relationships.

6. Proper Books and Records

All licensees are required to maintain proper records and accounting books relating to their insurance activities as a condition of licensing. Where funds belonging to or received from a client are received, the licensee is required to keep proper accounting records. Such accounting records are expected to be maintained in accordance with Generally Accepted Accounting Principles. Licensees who do not have the required skill to maintain proper accounting records should seek professional expertise. Licensees are also expected to meet any requirements outlined in their contracts with insurers.

Licensees should maintain their records in sufficient detail to ensure customer protection. Council recommends that records be kept by licensees to show that certain licence conditions and the licensee’s duty to the client have been met. Although the exact nature of the documents to maintain will differ depending on the type of business being conducted, licensees should give consideration to the following:

various disclosures provided to a client;
client consents;
details regarding sub-brokering of business;
correspondence between the licensee and the client;
detailed notes on meetings or conversations with clients, insurers or adjusters; and
requirements of insurers.

How long books and records should be kept will vary depending on the nature and complexity of the transaction. As an example, the duty to maintain records on a six month ICBC policy for a “transient” client would be lower than that of long term clients for a property and casualty or whole life insurance contract. Licensees are cautioned that they may be subject to requirements under various legislation including the Insurance Act, tax legislation and the Companies Act and may wish to obtain professional legal or accounting advise before finalizing their retention policies.

7. Disclosure Requirement Prior to the Sale of an Insurance Product

The Marketing of Financial Products Regulation requires that prior to the sale of an insurance product disclosure be provided to the customer that outlines the following information:

that the transaction is between the customer and a named insurance company;
the particulars of the relationship between the licensee and the insurance company;
the nature and extent of any business or financial interest, if any, the licensee has in the insurance company and the insurance company has in the licensee;
the nature and extent of whatever interest, if any, the licensee has in the transaction, including, but not limited to, whether he or she has the right to receive a commission or other remuneration in respect of the transaction (the amount of remuneration or commission does not have to be disclosed); and
where a commission or remuneration is payable, the identity of the company or person paying it.

Such disclosure is required on every initial transaction with a client and every subsequent transaction where there is a change in the information contained in the original disclosure. As an example, if a product is being placed with a new insurer, another disclosure is required.

8. Requirement to Disclose You are an Insurance Agent

Prior to conducting insurance activties, every agent is required to disclose to a member of the public that he or she is an insurance agent. This includes prior to soliciting any insurance business and therefore should be kept in mind when advertising. It is recommended that all insurance agents include on their letterhead and business cards a reference that clearly identifies them as an insurance agent to assist in meeting this licence condition. Agents are cautioned, however, that this should not be interpreted as the only action required. Council recommends insurance agents periodically review their procedures and practices in relation to how they conduct business to ensure prudent steps to meet the spirit of this condition are in place. Procedures should also address verbal communications with the public. As the public is not always familiar with insurance designations (e.g. CLU or CAIB), this will not convey that you are an agent. Usually any one thing will not result in an agent meeting this licence condition in all circumstances. Each form of communication should be reviewed to ensure the spirit of this licence condition is being met.

9. More Based on Your Class of Licence

Click on the class of licence you hold below for more on your responsibilities:

GENERAL INSURANCE LIFE INSURANCE INSURANCE ADJUSTING A&S INSURANCE TRAVEL INSURANCE