Regulator cracks down on auto policy sell-and-cancel schemes

B.C.’s broker regulator and public insurer continue to crack down on brokers who sell and then cancel long-term auto insurance policies instead of properly issuing temporary insurance permits for cars that aren’t intended to be driven on B.C. roads for a year.

The Insurance Council of B.C. has issued several decisions on this topic over the past six months. In its latest decision, issued Feb. 25, the council suspended the licence of a former broker, Megistefi Gjine, for 10 years due to her role in a sell-and-cancel auto policy scheme.

The province’s public auto insurer — Insurance Corporation of B.C. — has already permanently banned Gjine from conducting ICBC Autoplan auto insurance business. Its decision is eligible for reconsideration in 2027.

ICBC’s prohibition led to Gjine’s dismissal from her brokerage in January 2022, the council decision states.

In July 2018, and again in February 2020, ICBC issued bulletins reminding brokers about when to issue temporary operating permits instead of full-year auto insurance policies.

“ICBC reminded Autoplan agents that when a vehicle is licensed, it must be for the purpose of operation on a British Columbia highway [for one year],” as the council’s recent decision states. “If a [broker] is aware that the only reason a policy is being sold is to facilitate the export of the vehicle, and the intention of the customer is to cancel the policy within days of issuance, the customer should only be sold a Temporary Operation Permit [TOP].”

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Despite this guidance and following an ICBC investigation into the matter, the council found Gjine processed 25 AutoPlan policies involving new or newer luxury vehicles between May 1, 2020, and Apr. 12, 2021. Gjine then “cancelled all of the policies within 12 days and then facilitated the transfers of ownership of these vehicles,” the council wrote.

ICBC’s investigation found the vehicles were associated with rental cars requiring more expensive coverage. The average commission paid on these policies was about $600 to $700 per policy, council noted.

Twenty-two of the cancelled one-year Autoplan policies were issued to a numbered company directed by one of Gjine’s relatives.

“As the transactions involved the former licensee’s relative’s company, Council considered it difficult to imagine that the former licensee did not have knowledge or insight as to whether the vehicles were intended to be driven or insured for the time frame in which they were intended to be driven before being sold,” the council’s decision reads.

“Additionally, if Council was to believe that the former licensee did not have such knowledge, the [former broker] should have become aware, after repeatedly issuing and cancelling the one-year Autoplan policies, that the vehicles being purchased were not being used for operation on a B.C. highway for one year.”

The council examined the medical records of the former broker and determined a longer licence suspension would be more appropriate than a fine or ordering the broker to pay costs.

Feature image courtesy of iStock.com/Wasan Tita

David Gambrill

David has twice served as Canadian Underwriter’s senior editor, both from 2005 to 2012, and again from 2017 to the present.