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Down with Gaps in Insurance Coverage!

Publication date: August 31, 2017 | Last update: April 26, 2020

If there is one thing that embodies the very essence of what it means to be a damage insurance representative, it is the act of finding insurance coverage for a client who requests it. However, failure to follow up on the client’s instructions is a shortfall that the Syndic’s Office of the Chambre de l’assurance de dommages (ChAD) encounters far too often during its investigations.

​Here is what section 26 of the Code of ethics of damage insurance representatives has to say on this issue:

​26. A damage insurance representative must, without delay, follow up on the instructions that he receives from a client or notify him that he is unable to do so. He must also inform his client of any impediment to the continuation of his mandate.

​The ChAD’s Discipline Committee has ruled many times on this type of shortcoming. In each of the following three recent disciplinary cases, the investigation started after the professional under investigation had left the firm where he had been working. Let’s look at the rulings and the sanctions imposed in each case.


​In this case, the professional failed to issue endorsements for the existing insurance contracts of about ten insureds, thus creating gaps in insurance coverage that ranged from 25 days to two years. Following the ethical investigation conducted by the Syndic’s Office, two formal complaints were filed.

​On April 21, 2017, the Discipline Committee found the respondent guilty of having violated section 26 of the Code of ethics of damage insurance representatives. Certain counts resulted in the respondent being fined a total of $14,000 while the others resulted in his being temporarily struck off the membership roll for either one or two months.

​The Discipline Committee of the ChAD stressed the following aggravating factors as justification for imposing these sanctions:

  • the nature and objective seriousness of the violations;
  • the length of time of the violations and the fact that they recurred;
  • the fact that the respondent’s acts endangered the protection of the public.


​In another case, the Syndic’s Office was called upon to investigate the actions of a damage insurance broker who was responsible for gaps in insurance coverage ranging ten days to five months on five different occasions. Following this investigation, the Syndic’s Office filed a formal complaint before the Discipline Committee.

​On January 9, 2017, the Discipline Committee duly noted that the respondent had been found guilty of having violated section 37 (1) of the Code of ethics of damage insurance representatives. The Discipline Committee imposed fines totalling $10,000 as well as a reprimand. Contrary to the preceding case, the respondent was still active and working in the industry when the fines were imposed.

​While noting the significant length of time the gaps in insurance coverage lasted, the Discipline Committee took into account a mitigating circumstance: the fact that when the violations were committed, the respondent was under stress and tension due to overwork.


In the last case, the Syndic’s Office conducted an investigation that revealed that the personal-lines damage insurance broker in question had failed to bring the insurance contracts into force which caused gaps in insurance coverage lasting respectively 15 and 45 days. Moreover, while uninsured, one client had his car stolen. Fortunately, an insurance contract was issued retroactively, and the insured was spared any harm.

​In light of these facts, a formal complaint was filed before the Discipline Committee. The Committee found the respondent guilty of violating section 37 (1) of the Code of ethics of damage insurance representatives. One charge resulted in his being temporarily struck off the membership roll while the other resulted in his being struck off the roll for six months. In this case too, when the sanctions were handed down, the respondent was inactive and had no method of practice.


​Sanctions imposed by the Discipline Committee are meant to have a dissuasive effect on the professional and serve as an example to other members of the profession. The Discipline Committee takes a number of factors into account when rendering a decision, as in the case where the violations occurred repeatedly and the gaps in insurance coverage were quite long.

​Moreover, we must not forget that when a representative agrees to find insurance coverage for a client, he must follow the instructions he was given. If he cannot carry out these instructions—for example, if the risk cannot be covered by the requested date—the professional must notify his client as soon as possible. Acting otherwise constitutes not only an ethical violation; it also weakens the bond of trust between the client and the professional.

By ​​Me Marie-Josée Belhumeur, LL.B., syndic

1. Chambre de l’assurance de dommages v. Roch, 2017 CanLII 30959 (QC CDCHAD).
2. Chambre de l’assurance de dommages and Daoust, 2017 CanLII 3835 (QC CDCHAD).
3. Chambre de l’assurance de dommages and Rigas, 2016 CanLII 53907 (QC CDCHAD).