Floods, wildfires: How an incorrect address cost a broker his job

Insurance Council of British Columbia has fined a former broker $1,500 for failing to notify his commercial client that the company’s address change — which located the business in a floodplain — triggered a lack of coverage during a subsequent wildfire evacuation.

The brokerage, unnamed in the council’s decision, terminated ex-broker Brian Liam Jackson’s employment on Aug. 31, 2021.

The province’s broker regulator notes Jackson is no longer in the property and casualty insurance business. The fine must nevertheless be paid before Jackson can apply for a broker license in the future.

What started as a simple address correction in September 2020 morphed into a major lack of coverage issue during wildfire season in July 2021.

“Council believes that the former [broker] did not act with integrity, good faith, or in the client’s interest by allowing the [client] to believe they had insurance coverage when the former [broker] was aware no coverage was in place.

“Additionally, when the [client] was finally advised that no insurance coverage was in place, it occurred at a time when the location of the property was under an evacuation alert, leaving the [client] with no opportunity to purchase alternative insurance,” the decision reads.

“Council further notes that the former [broker’s] inexperience at the time of the incident likely contributed to this unfortunate circumstance… Additionally, the incident occurred during the COVID-19 pandemic, and the former [broker] may not have had the proper support required to complete this transaction.”

The client, an unnamed business in the council’s decision, approached the brokerage to buy insurance for its commercial property on Sept. 15, 2020. Previously, the company’s commercial property was purchased and insured through a different broker at the same brokerage.

On Sept. 29, 2021, Jackson told the client its previous policy had been insured under the wrong address. The client instructed the broker to proceed with binding the quoted coverage, except with the new address and a new company name.

Jackson sent the client’s new name and address to the brokerage’s national insurance operations (NIO) division. The next day, on Sept. 30, the client received an invoice of $3,997, which it paid, and the client received a cover note of insurance.

The trouble was, on Feb. 4, 2021, one of the brokerage’s employees reached out to the brokerage’s national representative about outstanding documents required to close the file.

“The agency NIO representative responded indicating that the offer for insurance had been rescinded on Sept. 30, 2020, because the new address was located on a flood plain,” the Insurance Council’s decision states.

Twenty days later, Jackson attempted to obtain insurance coverage for the client’s property.

“The other insurance companies declined coverage due to the location of the property,” the Insurance Council decision reads. “There was no documented communication from the former licensee [Jackson] to the [client] from Sept. 30, 2020, to Feb. 24, 2021.”

In May, the wildfires hit B.C. At this point, the brokerage’s nominee got involved in the file.

However, “due to the extreme weather events in B.C. and the location of wildfires relative to the property, the property could not be insured,” council’s decision states. “[Jackson] was directed to advise the [client] of the situation. During the period of Feb. 21, 2021, to July 5, 2021, [Jackson] stated that he forgot or put off the situation regarding the [client’s lack of coverage].”

Finally, on July 5, 2021, under the direction of the brokerage’s nominee, Jackson told the client the brokerage had not placed coverage back in September 2020 due to a “last minute change in address and postal code.”

The client was concerned coverage was not offered because of the wildfires in the area, as opposed to the change in postal code. Jackson said the issue was the postal code, since it indicated the property was located on a flood plain.

Meanwhile, the wildfires raged on. In July 2021, the province issued an evacuation alert for the area where the client’s property was located. Shortly afterwards, the brokerage’s nominee called to advise the client about the issue with the new address being declined for coverage in September 2020. The nominee confirmed to the client no coverage was in place.

“This was during the period in which there was an evacuation alert, and no insurance was available to be purchased for properties in the area,” the council’s decision states.

As it turned out, the client did not suffer any damage loss or make a claim during the period it was uninsured. The brokerage refunded the client’s premium payment in August 2021, and nine days later, terminated its employment contract with Jackson.

 

 

Feature image courtesy of iStock.com/Oleksandr Hruts