Licensee Responsibilities

Please review the licensee responsibilities below for compliance in your daily insurance activities and business practice.

Licensees who have business activities other than those authorized under their licences, must:

  • Keep themselves up-to-date on Council’s decisions and its Conflict of Interest Guidelines.
  • Modify insurance activities accordingly.
More information is available under Other Business Activities.
  • A licensee must hold in strict confidence all information acquired during the professional relationship concerning the personal and business affairs of a client.
  • A licensee must not divulge or use any such information other than for that transaction, or for 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.
See Appendix B of Council's Code of Conduct for details.

The nominee is responsible for all insurance activities of the agency or firm as per Council Rule 7(6).  This includes making sure all insurance activities of the agency or firm are appropriately supervised; there are sufficient procedures to facilitate compliance with Insurance Council's requirements; and the public’s interest is properly served. This includes ensuring:

  • Agency staff are appropriately licensed, as required.
  • Corporate errors and omissions insurance is maintained.
  • Notifications are provided to Council within five business days when a licensee ceases to represent an agency, the agency is disciplined by another regulator or other notifications, as required. 
  • Level 1 general insurance salespersons abide by their licence restrictions.
  • Appropriate supervision is in place regardless of whether oversight is provided on the agency's premises and/or off-site.
  • Adequate steps are taken to ensure clients are immediately notified about a lack of insurance coverage.

A licensed level 3 general insurance agent must actively supervise all the insurance activities of every general insurance salesperson and agent authorized to represent the agency.

As each agency differs in size, nature of the business conducted, and experience of licensees, nominees must determine an appropriate supervision approach. The Insurance Council holds nominees accountable for their decisions and may require them to clearly demonstrate the appropriateness of the supervision provided.

To determine the appropriate amount of supervision, consider:

  • How many level 3 and level 2 agents are in the office.
  • How many level 1 salespersons are operating from the office.
  • The experience and qualifications of the licensees.
  • The nature of the business conducted.
  • The hours of operation.

More information on how to determine appropriate supervision can be found in the Guidelines for Supervision of General Insurance Level 1 Salespersons.

The Insurance Council acknowledges the demands and challenges nominees can face and that it may not always be possible to foresee or prevent non-compliant insurance activities. However, as nominees are ultimately responsible for the insurance activities of the agency or firm, if the Insurance Council becomes aware of activity that is contrary to the Financial Institutions Act, it will be up to the nominee to demonstrate that sufficient procedures and oversight were, and are, in place.

If appointing more than one nominee:
Every agency or firm is required to nominate one nominee. The nominee is responsible and accountable to the Insurance Council for all activities of the agency or firm. Where an agency or firm has more than one nominee, it is at the agency or firm’s discretion how the responsibilities are assigned and carried out by the nominees. The agency or firm should be able to demonstrate which nominee is responsible for each area of the agency or firm. 

If it is determined that a nominee’s actions or inactions are unsuitable, and/or in breach of Council Rules, Code of Conduct or the Financial Institutions Act, even if it involves an area of responsibility that the agency or firm did not assign to the nominee, a nominee may still be held responsible and subject to disciplinary action by the Insurance Council. Where the agency or firm is unable to demonstrate which nominee(s) is responsible for a particular area of the agency or firm, all nominees share joint responsibility to the Insurance Council. 

Where the overall agency or firm’s activities are impacted, all nominees would be held jointly responsible and accountable to the Insurance Council. These include, but are not limited to: reporting requirements to the Insurance Council and ensuring the agency or firm maintains errors and omissions insurance. 

If appointing a temporary nominee: 

In exceptional circumstances, where an insurance agency or adjusting firm ceases or will cease to have a nominee, the insurance agency or adjusting firm may apply to nominate, on a temporary basis to be determined by Council if accepted, an individual who does not meet the requirements under Council Rule 2(11). The temporary nominee is responsible for all insurance activities of the agency or adjusting firm per Council Rule 7(6). Insurance Council staff may approve a temporary nominee for a maximum period of one month with an option to extend to three months upon request to be reviewed by the Licensing Committee or for a period determined by Council. If an insurance agency or adjusting firm requires an extension to the one-month appointment, a request must be made in writing.

Licensees must honestly represent themselves and the services and products they provide (“hold themselves out”) so as not to mislead the public and so that the public knows with whom they are dealing.

Licensees must disclose that they are an insurance agent prior to conducting insurance activities with the public. Licensees must not represent themselves as having specific expertise in a given area of practice or industry designations unless suitably qualified by virtue of experience, training or both. You must be licensed the way you are doing business and do business the way you are licensed including use of licensed corporate or trade names:

  • A licensee’s name, as well as the agency or firm the individual is authorized to represent, as it appears on the licensee’s licence and Licensee Directory, must accurately be reflected in all insurance business materials, including business cards, letterhead, signage, email signatures, websites, promotional materials and all forms of advertising.  
  • Agents and salespersons who primarily deal with a single product or product line should be careful not to use the product name in their marketing strategies in a way that may mislead a member of the public into believing it is a trade name — such as answering a phone call with a product name.

Licensees are reminded that Rule 2(18) requires that all names under which insurance business is conducted, other than an individual’s own name, must be registered with the BC Corporate Registry, must be a name that will not likely be confused with the name of another licensee, and be registered with the Insurance Council in the form approved by the Insurance Council. 

Licensees are also reminded that they must not present themselves to the public in such a manner as to suggest that they are a registered insurance company, rather than an agency. Section 12.1 (b) of the Financial Institutions Act states "a person commits an offence" when they "give a false impression that the person is a trust company or an insurance company." It is the Insurance Council's position that these requirements also extend to corporate logos and that the agency's registered legal name or trade name should always accompany the logo. 

Rules on finder or referral fees (“referral fee”) differ depending on whether the person receiving the compensation is an appropriately licensed insurance agent, and what insurance activities the third party has conducted:

  • Appropriately Licensed Third Party: Insurance agents commonly work together to market insurance products to a client. More than one appropriately licensed insurance agent may share commissions earned resulting from a joint venture. Therefore, the sharing of commissions between appropriately licensed agents is allowable.
  • Unlicensed Third Party: 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. 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:
    • 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 an insurance product or the client’s insurance needs.
    • 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; for example, where a general insurance agent refers a client to a life insurance agent, the general insurance agent is considered an unlicensed person.

Licensees must sell insurance products and services on their own merits:

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

Licensees must maintain proper records and accounting books relating to their insurance activities, and where funds belonging to or received from a client are received, 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.
  • Records should also show that certain licence conditions and the licensee’s duty to the client have been met. Depending on the type of business being conducted, licensees should consider maintaining detailed records of:
    • 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
    • Requirements of insurers
  • How long should licensees keep books and records? This will vary depending on the nature and complexity of the transaction; for 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 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 advice before finalizing retention policies.

Insurance agents are required to comply with the disclosure requirements contained in the Financial Products Disclosure Regulation under the Financial Institutions Act. The disclosure requirements apply every time an insurance transaction takes place. The disclosure requirements must include the following:

  • The name of the insurance company whose service or product is being provided.
  • Any relationship (over and above the contractual relationship to represent) between the insurance company and the licensee offering to provide the service or product (e.g., a financial institution has loaned funds to the licensee to finance his or her insurance or other business).
  • Whether a commission or compensation is to be paid by the financial institution to the licensee offering to provide the service or product.
  • Before acting as an insurance agent, disclosure to the public that the licensee is an insurance agent.
Licensees who are engaged in strata insurance business have additional disclosure requirements which are specific to the sale of strata insurance. These requirements apply to all strata property insurance business regardless of the size of the strata (e.g., small residential stratas, duplexes, and large commercial strata properties). The requirements are outlined within the Financial Products Disclosure Regulation and more information can be found within Insurance Council Notice ICN-20-003 Requirements for Strata Insurance Business.

Every agent is required to publicly disclose that they are an insurance agent, prior to conducting insurance activities and prior to soliciting any insurance business. To assist with meeting this licence condition, all insurance agents should:

  • Include in advertising, and on letterhead and business cards, a reference that clearly identifies they are an insurance agent.
  • Address this condition in verbal communications with the public; for example, the public is not always familiar with insurance designations (e.g. CLU or CAIB).
  • Periodically review each form of communication to ensure the spirit of this licence condition is being met in all circumstances.
  • Periodically review procedures and practices in relation to how they conduct business, to ensure prudent and proactive steps to meet the spirit of this condition are in place.

In a sub-brokered transaction, both brokers have responsibilities to the client and the insurance company:

  • Both brokers must ensure all aspects of the insurance transaction are conducted properly.
  • Both brokers must be licensed and satisfy themselves that the other broker is properly licensed.
  • Both brokers must satisfy themselves that the other broker can fulfil their obligations.

Agents replacing existing insurance policies must ensure the replacement is genuinely beneficial to the interests of the insured. Where replacement could be detrimental to the interests of an insured, an agent must make every reasonable effort to maintain the existing policy in force. See Council Notice ICN #12-003

The Replacement Regulation is intended to ensure the client receives full disclosure of the details, including the advantages and disadvantages of both policies, to allow an informed decision on whether to replace existing insurance.

When does a replacement occur? When, because of the purchase of a life insurance policy, any existing life insurance contracts are:

  • Rescinded, lapsed or surrendered.
  • Changed to paid-up insurance, or continued as extended term insurance, or under automatic premium loan.
  • Changed to reduce benefits or release over 50% of the cash values.
  • Subjected to substantial borrowing.

When does the Replacement Regulation apply? When the policy to be replaced is:

  • A life insurance contract.
  • A temporary or “interim” life insurance contract.*
  • A rider to a life insurance contract.

*A temporary or “interim” contract exists where a client has applied for insurance with and paid money to an insurer. Agents replacing such a contract must comply with the Replacement Regulation.

When does the Replacement Regulation not apply? When:

  • The existing policy is an annuity.
  • The new or existing policy is group insurance.
  • The new policy is an exercise of a contractual privilege under an existing policy with the same insurer.
Life insurance companies, brokers and agents must fulfill specific obligations and duties as required by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated regulations to help combat money laundering and terrorist activity financing in Canada.

As outlined by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), life insurance broker and agent duties include developing and maintaining a compliance program, a "know your client" program, reporting transactions, and maintaining records. On June 1, 2021, regulatory amendments came into force which created or changed obligations for all reporting entities and include guidance requiring that clients’ identities be verified under specific conditions or transactions.

Certain financial entities, including life insurance brokers or agents that offer loans or prepaid payment products to the public, or maintain related loan or prepaid payment product accounts have additional financial entity obligations.