Insurance company operating in BC ordered retraining of Ontario agents

A life insurance agency operating five branches in BC has been sanctioned by Ontario’s financial regulator for potentially deceptive sales tactics.

Agents of Greatway Financial Inc. they can be located in offices in Abbotsford, Kelowna, Surrey, Burnaby and Victoria. While their counterparts in Ontario face forced retraining, in B.C.

However, the Insurance Board of BC told Glacier Media that it is conducting a “compliance review regarding the subject matter listed in the regulation issued by the Financial Services Regulatory Authority of Ontario,” but offered few details.

Greatway contracts with life insurance companies and acts as an intermediary between insurers and its agents. Such agencies are regulated by the Board.

Ontario charges

Last month, Ontario’s Financial Services Regulatory Authority (FSRA) ordered Greatway to retrain its agents in Ontario and send existing Ontario policyholders who used Greatway’s agents information to re-evaluate their policies.

Ontario’s Dec. 16, 2022 order also requires the company to take additional measures “to ensure that consumers who purchase Universal Life policies in Ontario are provided with information and advice that is appropriate and accurate.”

The Ontario authority alleged that “Greatway-trained agents may provide information and advice to consumers that is inappropriate, inaccurate or misleading regarding the terms, benefits or advantages of certain policies, including universal life policies sold under an insured retirement plan strategy.”

It was a universal life insurance product that agents sold (Insured Retirement Plan, IRP for short) that required additional money to be set aside as a tax-deferred fund when the cost of insurance increases as the insured ages.

An IRP is suitable for higher net worth individuals, such as those who have reached the maximum RRSP; However, the FSRA found that the company was training agents to resell the product to all customers regardless of their financial situation.

Agents were found to build IRP as a savings account rather than an insurance expense.

FSRA’s Notice of Proposal (NOP) stated: “For example, the training instructs agents: ‘Rule: do not enter sum insured’; “don’t focus on life insurance”; “remove the insurance mindset and let the client focus on saving/investing”; and “Do not enter Face Number yet. Use it as a ‘jackpot’ moment.”

The compliance order states: “Greatway disagrees with some of the allegations in the NOP, but wishes to work with the FSRA to address the alleged training deficiencies.

Greatway released a statement following the order: “As leaders in our industry, Greatway Financial is committed to continuous improvement and providing high quality service to our clients. All Greatway agents licensed in Ontario are required to complete the revised training by March 31, 2023.”

The Ontario Authority noted that Greatway has “grown rapidly” in recent years: in 2018, Greatway had 1,400 licensed agents across Canada and sold approximately 13,000 policies. In 2021, Greatway had 3,490 agents across Canada and sold approximately 25,000 policies.

Behavior under control in BC

It is unclear how many Greatway agents operate in BC and how many policies were potentially sold in that province under the circumstances outlined by the FSRA.

Glacier Media sought answers to what is being done to protect BC consumers.

British Columbia’s main financial regulator, the BC Financial Services Authority (BFSA) is FSRA’s provincial sibling, which bills itself as “BC’s single integrated regulator of the financial services sector overseeing credit unions, trust and insurance companies, mortgage brokers, pension plans and real estate services.” “

However, in these circumstances, the BCFSA told Glacier Media that it only regulates insurance companies and not agencies like Greatway; that task remains with the Insurance Board of BC.

As such, the BCFSA has not yet issued any similar enforcement action, nor has it issued a statement to alert BC consumers to the potential issue raised by the Ontario Authority.

The Board notified Glacier Media that a compliance review was initiated on October 22, 2022 following FSRA’s notification of the proposal.

“This type of review looks at whether licensees’ conduct and underwriting practices comply with the requirements of the Insurance Council’s rules, the Code of Conduct and the Financial Institutions Act,” spokeswoman Melinda Lau said.

Lau also noted that the Canadian Council of Insurance Regulators (CCIR) conducted a joint review of Greatway and three other agencies, which occurred in the first half of 2022.

However, the Council is not a member of the CCIR; rather, the BCFSA is, and the FSRA led that review and published its findings on its website on 28 September 2022. The findings formed the basis of Greatway’s announcement the following month. The BCFSA is said to be a “passive participating authority”.

Glacier Media reached out to Greatway for comment but did not receive a response.

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