This summary does not constitute a legal opinion. The information it contains may not reflect the current state of the law.
By Carole Chauvin, Syndic (2013)
Taking the Issue to Its Logical Conclusion
In follow-up to the column on jurisprudence published in the last ChADPresse where was discussed several recent civil court rulings related to an insured’s criminal record1, I felt it would be useful to review the basic ethical principles that govern the professional practice of damage insurance representatives who have clients with criminal records.
In 2006 and 2011, we dealt with two separate complaints regarding representatives who had not disclosed a criminal record to the insurer.
The Mason’s Story (2006)
The insured owned an extremely successful masonry company; however, in order to take on larger-scale restoration projects, he needed to significantly improve his insurance portfolio. Realizing that he had to disclose his past criminal activities to his insurer, the insured told each representative with whom he met that he had a record and opted for the least expensive quote.
When the insured requested that an additional vehicle be added to his fleet, the insurer learnt of his record (which the representative had failed to send in) and terminated all the contracts in force. The insured was forced to cease all professional activities, temporarily lay off his employees and stop work on all his job sites until he was able to secure new commercial-lines insurance for his business and his vehicles. His business was put on hold for three weeks, even though he had taken it upon himself to disclose his criminal record.
The ethical investigation we carried out following the mason’s complaint revealed that his damage insurance representative had actually forwarded his client’s record, along with the commercial-lines applications, to a second representative attached to a larger firm that did business with a greater number of insurers. It was this second representative who told us that he had placed the risk without sending the client’s record to the insurer.
The Farmer’s Story (2011)
The insured owned a farm and also operated a small horse-drawn carriage business. When his insurance portfolio came due for renewal, he was approached by a local representative to whom he disclosed his criminal record. Since the premium was competitive, he agreed to the contracts she offered. However, the insured wanted the representative to confirm in writing that she had notified the insurer of his record. Indeed, he reminded her of this request a number of times. While chatting with another representative from the same firm, the farmer learnt that there was nothing in his file to indicate that his record had been disclosed to the insurer. In fact, when the insurer became aware of the record, it cancelled the contract in force. The farmer was forced to re-contact his former insurer, who agreed to take him back with a slight increase in premium. And all of this occurred, despite the fact that the insured had taken it upon himself to disclose his criminal record.
During the ethics investigation carried out following the farmer’s complaint, the farmer’s damage insurance representative stated that she had asked one of the insurer’s underwriters whether or not— generally speaking —a criminal record dating back twenty years would have an impact on the premium and on whether or not the risk would be accepted. The underwriter had responded that, under such circumstances, it probably would not have any impact. Since she felt that her client’s criminal record was quite old, the representative decided not to disclose it.
The Formal Complaints
I was responsible for filing a formal complaint2 in 2007 (the mason’s complaint) and another in 2012 (the farmer’s complaint) against the two representatives. Since the facts of the two cases were similar and the ethical transgressions were identical, I felt it important to discuss the issue here and urge you to be vigilant and act professionally in order to avoid such situations recurring.
The offences in question are based on section 29 of the Code of Ethics of Damage Insurance Representatives:
A damage insurance representative must give insurers the information that it is common practice for him to provide.
The Annotated Code of Ethics of Damage Insurance Representatives stresses the importance of disclosing, amongst other things, a criminal record to the insurer.
When a client has the foresight to openly disclose his criminal record to you, you must notify the insurer. No matter what the reason, you must never withhold this crucial information.
1. "Guilty or Presumed Innocent", Jurisprudence, the ChADPresse, Summer 2013.
2. 2012-12-02 (C); 2007-10-06 (C).