March 2025
It is never okay to forge a client’s signature on any insurance document under any circumstances. This is illegal and unethical and has serious legal consequences. This, of course, should go without saying. Alas, in light of a spate of cases that the IA has recently taken enforcement action against, this very obvious statement needs to be reiterated.
In December 2024, the IA banned a former technical representative (broker) for 21 months for fabricating a client’s signatures on insurance application forms. The case involved the arrangement of a savings insurance policy that was being purchased with a premium financing loan from a bank. Initially, the former technical representative believed the client had signed all the relevant insurance application forms, but he later realized that certain documents critical to the process had not been signed, one being the Financial Needs Analysis. Instead of informing the client and seeking to obtain the outstanding signatures, however, the technical representative signed the documents as if he was the client, thereby fabricating the client’s signature.
The matter came to light when the client received the policy documents. At that point, the former technical representative sought to blame his personal assistant (who turned out not to exist!). Eventually, however, the former technical representative admitted what he had done. He sought to explain his actions by suggesting that he had acted out of a sense of urgency, knowing that the client was due to meet with the bank. He felt confident that the client would have signed the documents in any event (so he did not see the harm in what he was doing) and he did not wish to undermine the good relationship established with the client.
Any logic that sees fabricating a client’s signature (without the client’s knowledge) as a means of maintaining a good relationship with that client, is demonstrative of a moral and ethical compass so twisted and subverted, that it undermines the very foundation of trust and integrity essential for any professional relationship. Such reasoning not only jeopardizes the fitness and properness of the individual concerned, but also risks damaging the overall reputation of the organization he represents and the wider insurance (and in this case banking) industry.
In the IA’s enforcement case count, four licensed insurance intermediaries have been banned for forging client signatures for periods ranging from 6 to 21 months. A strict zero-tolerance approach will continue to be maintained until this disgraceful activity is drummed out of the market altogether.
In November 2024, the Insurance Appeals Tribunal affirmed the IA’s decision to suspend a technical representative (agent) for 8 months for failing to exercise the requisite level of care, skill and diligence when advising on and arranging an employee’s compensation insurance policy (“EC Policy”) for a client who was running a butcher’s shop.
The technical representative had initially arranged an EC Policy for the client with a particular insurer, when working at a broker company. The following year, the technical representative moved to an insurance agency and, on expiry of the original EC Policy, arranged a new EC Policy for the client and his butcher’s shop with his principal insurer (different from the insurer which had underwritten the expiring EC Policy).
Unlike the previous year’s EC Policy, the new EC Policy contained an exclusion clause which excluded coverage for bodily harm arising from the use of electronic machinery. A few months later, an employee at the butcher’s shop had part his finger severed in an electric meat grinder. When the claim was submitted under the new EC Policy, by reason of the exclusion clause, coverage was denied..
In sourcing an EC Policy with an exclusion clause for electrical equipment in its terms, for a butcher’s shop which had electric meat grinders, the technical representative had fallen well below the level of skill and competence expected of an insurance intermediary. He had failed to ascertain the circumstances of the client – in particular the presence of the electric meat grinders at the butcher’s shop – and as a result had obtained an EC Policy that failed to address those circumstances of the client. Further, he had failed to bring the client’s attention to the exclusion clause or explain its effect to the client at the time of placement (which would likely have uncovered the fact that the EC Policy was unsuitable).
The insurance regulatory framework includes prescriptive processes for insurance intermediaries to ascertain a client’s circumstances when carrying on regulated activities in relation to life insurance products (i.e. the financial needs analysis). However, even though the same level of prescriptive processes do not exist for general insurance business, General Principle 6 of Codes of Conduct for both Licensed Insurance Agents and Licensed Insurance Brokers, which applies to all types of insurance, requires an insurance intermediary to carry out a suitability assessment to ascertain the client’s circumstances and to base a recommendation on an insurance policy on those circumstances. This, in fact, is the core skill-set that every licensed insurance intermediary must have and the reason why members of the public use insurance intermediaries to procure their insurance and seek advice on such matters.
A failure by an insurance intermediary to meet these standards will render the intermediary in breach of the insurance regulatory framework which must be complied with as a baseline. If this results in severe prejudice to policyholders (as it did in this case) proportionate enforcement must be the result in order to send the message that standards of competence will be upheld in this market.
For the latest news on our enforcement work, please check out details of the other disciplinary actions taken by the IA which can be found on “Enforcement News” of the IA’s website.