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St. John's, Newfoundland and Labrador, Canada

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Revised Statutes of Newfoundland 1990


CHAPTER L-13

AN ACT RESPECTING THE LICENSING OF LIFE AND ACCIDENT INSURANCE AGENTS

Analysis

1. Short title

2. Definitions

3. Agents to be licensed

4. Licensing of agents

5. Licence may be limited or conditional

6. Appeal

7. One year prohibition after revocation

8. Agent receiving premiums

9. Acting as agent without licence

10. Fraudulent representation

11. No compensation to be paid

12. Returns to minister

13. Privileged information

14. Twisting life insurance policies prohibited

15. List of licences

16. Unlicensed insurers

17. Penalties

18. Disposal of fines and fees

19. Limitation to prosecution


Short title

1. This Act may be cited as the Life and Accident Insurance Agents Licensing Act.

RSN1970 c204 s1

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Definitions

2. In this Act

(a) "agent" means

(i) in respect of insurance of the class transacted by insurers licensed under the Insurance Companies Act to carry on life insurance, an authorized or acknowledged agent of an insurer who acts as such in the solicitation of, negotiation for, or procurement or making of an insurance or annuity contract, and

(ii) in respect of insurance of a class transacted by insurers licensed under the Insurance Companies Act to carry on accident insurance, a person, not being a person acting under the authority of subsection 4(11), (12) or (13), who, with the knowledge and consent of an insurer and for compensation or otherwise, solicits on behalf of the insurer or transmits, for a person other than himself or herself, an application for or a policy of insurance to or from the insurer or offers or assumes to act in the solicitation and negotiation of the insurance or in negotiating its continuance or renewal;

(b) "company" means a corporation, society or association whether incorporated or unincorporated or a partnership;

(c) "insurer" means a company licensed to transact the business of insurance under the Insurance Companies Act;

(d) "minister" means the Minister of Justice; and

(e) "person" includes company.

RSN1970 c204 s2; 1973 No39 Sch C;
1975-76 No58 s4; 1981 c4 Sch C; 1984 c41 Sch C; 1989 c19 Sch B

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Agents to be licensed

3. A person shall not act as an agent without first being licensed to do so by the minister in the manner prescribed by this Act.

RSN1970 c204 s3

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Licensing of agents

4. (1) The minister may issue to a person who has complied with the requirements of this Act a licence authorizing that person to carry on business as an agent subject to the provisions of this Act and to the terms of the licence.

(2) Upon written notice to the minister that an insurer has appointed a person to act as its agent in the province or that the agent of an insurer licensed to transact the business of accident insurance in the province under the Insurance Companies Act has appointed a person to act as his or her subagent in the province and upon application of that person upon a form prescribed by the minister and payment by him or her of the fee that the Lieutenant-Governor in Council prescribes by regulation, the minister shall, if he or she is satisfied that the applicant is a suitable person to receive a licence and intends to hold himself or herself out publicly and carry on business in good faith as an agent, issue to the applicant a licence which shall state in substance that the holder is, during the term of the licence, authorized to carry on within the province the business of an agent, but where the minister is of the opinion that an applicant is not a suitable person to receive a licence, he or she may refuse him or her a licence.

(3) Notice of appointment by an insurer or agent under subsection (2) shall be upon a form prescribed by the minister and shall state that the applicant has been authorized in writing by the insurer or agent to act as agent or subagent respectively in the soliciting of and negotiating for insurance and shall be accompanied by a sworn statement of the applicant on a form prescribed by the minister which shall give the name, age, residence and present occupation of the applicant and his or her occupation for the 5 years immediately preceding the date of the notice and particulars of other employment in which he or she may be engaged and the other information that the minister may require.

(4) Licences so issued shall be of 2 classes:

(a) licences covering insurance transacted by insurers licensed to carry on life insurance under the Insurance Companies Act; and

(b) licences covering insurance transacted by insurers licensed to carry on accident insurance under the Insurance Companies Act.

(5) The licence issued shall expressly limit the authorization of the agent to the class of insurance for which the licence is granted, but nothing prevents the issue to the same applicant of 2 licences if application has been made for 2 licences.

(6) Where the agency, upon notice of which a licence is issued, is terminated, notice in writing shall immediately be given by the insurer or agent to the minister of the termination, with the reason for the termination, and then the licence shall be automatically suspended, but the licence may be revived, subject to the approval of the minister, upon filing of notice of a new agency appointment and upon payment of a fee of $1.

(7) An insurer or agent who fails to notify the minister within 30 days of the termination of an agency appointment as required by subsection (6) is guilty of an offence.

(8) A licence issued under this section may be revoked or suspended by the minister if after investigation and a hearing he or she determines that the holder of the licence

(a) has been guilty of misrepresentation, fraud, deceit or dishonesty;

(b) has made a material misstatement in the application for a licence;

(c) has violated this Act or a law of the province relating to the class of insurance covered by his or her licence;

(d) has unreasonably failed to pay over to the insurer or agent entitled to it money collected by him or her retained beyond the term stipulated in his or her agency contract or agreement;

(e) has placed insurance with insurers other than those licensed in the province;

(f) has demonstrated his or her incompetency or untrustworthiness to transact the business of an agent for which the licence was granted, by reason of anything done or omitted in or about that business; or

(g) has employed upon salary or otherwise a person whose application for licence as an agent has been refused or whose licence has been revoked or suspended under this Act without having first obtained the written approval of the minister.

(9) A licence issued under this Act shall expire on December 31 in each year unless automatically suspended by notice under subsection (6) or unless revoked or suspended by the minister under subsection (8), but the licence may, in the discretion of the minister, be renewed for the succeeding year upon application upon a form prescribed by the minister giving the information that he or she requires, accompanied by a certificate of agency appointment of an insurer or agent and payment of the fee prescribed under subsection (2).

(10) A life insurance agent shall not be licensed to act as agent for more than 1 insurer transacting life insurance, and the name of the insurer shall be specified in the licence and an agent shall not represent himself or herself to the public by advertisement or otherwise as the agent of more than 1 insurer, but where an agent is unable to negotiate insurance on behalf of an applicant for insurance with the insurer for which he or she is an authorized agent, that agent shall have the right to procure the insurance from another insurer if the other insurer obtains in each case the consent in writing of the insurer for which the agent is the authorized agent, and files a copy of the consent with the minister.

(11) A collector of insurance premiums, who does not solicit applications for or the renewal or continuance of insurance contracts or act or aid in negotiating those contracts or the renewal of them, may carry on that business without a licence therefor, but the collection fee shall not exceed 5% of an amount collected.

(12) A member of a fraternal, sororal or mutual benefit society, other than one who devotes or intends to devote more than 50% of his or her time to the solicitation and procurement of insurance contracts for the society and who receives or intends to receive a commission or other compensation directly dependent on the amount of insurance solicited and procured by him or her, may, without a licence, solicit persons to become members of that society, but a person who in the preceding calendar year has solicited and procured insurance contracts on behalf of a society in an amount of insurance in excess of $20,000 shall be presumed to be devoting or intending to devote more than 50% of his or her time to the solicitation or procurement of insurance contracts for such society.

(13) Unless the minister otherwise directs, a salaried employee who does not receive commissions, or an officer of an insurer, or an employee of a licensed agent who does not receive commissions and who acts only in the name and on behalf of the licensed agent may, without a licence, act for the insurer or agent in the negotiation of a contract of insurance or in the negotiation of the continuance or renewal of a contract which the insurer or agent may lawfully undertake, but an officer or salaried employee whose application for licence as an agent has been refused or whose licence has been revoked or suspended may not so act without the written approval of the minister.

(14) A person who assumes to act as an agent without the licence required by this section, or while his or her licence as such is suspended, is guilty of an offence.

(15) The minister may refuse to issue a licence to or renew the licence of or may suspend for a stated period or without limit of time or revoke the licence of a person who is a non-resident of the province unless that person can furnish evidence satisfactory to the minister that he or she is an actually licensed insurance agent, subagent or broker in the jurisdiction in which his or her principal place of business is located.

(16) For the purposes of subsection (15), a non-resident is a person who has not been ordinarily resident in the province for a period of at least 12 consecutive months immediately preceding the date of application for a licence under subsection (2).

RSN1970 c204 s4

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Licence may be limited or conditional

5. A licence may be issued to an agent subject to the limitations and conditions that the minister may prescribe.

RSN1970 c204 s5

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Appeal

6. The holder of a licence which has been revoked or suspended under subsection 4(8) and an applicant for a licence or renewal of licence whose application has been refused under subsection 4(2) or (9) respectively may appeal against the revocation, suspension or refusal to the minister who shall either confirm or nullify the revocation, suspension or refusal.

RSN1970 c204 s6

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One year prohibition after revocation

7. A person whose licence has been revoked shall not be entitled to a new licence for 1 year after the revocation and then only at the discretion of the minister.

RSN1970 c204 s7

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Agent receiving premiums

8. Payments in cash in whole or in part to an agent of an insurer of the amount of a premium or assessment due in respect of a contract issued by the insurer shall be considered a payment to the insurer, notwithstanding a condition or stipulation to the contrary.

RSN1970 c204 s8

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Acting as agent without licence

9. A person who, not being licensed as an agent under this Act, represents or holds himself or herself out to the public as being an agent, or as being engaged in the insurance business, by means of advertisements, cards, circulars, letterheads, signs or other methods, or being licensed as an agent, advertises or carries on that business in another name than that stated in the licence, is guilty of an offence.

RSN1970 c204 s9

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Fraudulent representation

10. An agent who knowingly procures by fraudulent representations, payment or the obligation for payment of a premium on an insurance policy is guilty of an offence.

RSN1970 c204 s10

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No compensation to be paid

11. (1) An insurer and an officer, agent or employee of an insurer shall not, directly or indirectly, pay or allow, or offer or agree to pay or allow, a commission or other compensation or anything of value to a person for acting or attempting or assuming to act as an agent in respect of insurance in the province or for having or claiming or appearing to have an influence or control over the insured or solicit insurance unless that person holds at the time a subsisting agent's licence or is a person acting under the authority of subsection 4(12).

(2) Subsection (1) shall not affect the payment or allowance by an agent of part of his or her commission to agents outside the province.

(3) An insurer or agent shall not pay or allow, or agree to pay or allow, directly or indirectly, a commission or compensation instead of commission to an agent or subagent in connection with an application or contract for insurance on the life of the agent or subagent or of a member of his or her immediate family until the agent or subagent has within 12 calendar months negotiated at least 3 contracts of insurance on the lives of persons other than those of the classes mentioned in this section, and the 1st premiums have been fully paid to the insurer.

(4) An insurer or agent shall not pay or allow or agree to pay or allow a commission or compensation instead of commission to an agent or subagent in connection with an application or contract of insurance, other than life insurance, in respect of any property or risk with which the agent or subagent is directly associated until the agent or subagent has within 12 calendar months negotiated additional contracts of insurance, other than life insurance, involving at least an equal premium value in respect of property or risks with which he or she is not directly associated and the premiums have been paid in whole or in part.

(5) For the purposes of subsection (4), an agent or subagent is considered to be directly associated with

(a) the property covered by an application or contract of insurance if the property is owned by him or her or by a member of his or her immediate family or by a company of which he or she is a director, officer or employee; and

(b) the risk covered by an application or contract of insurance if the risk is one in which he or she or a member of his or her immediate family or a company of which he or she is a director, officer or employee is financially interested.

(6) The minister may refuse to renew the licence of an agent or subagent if he or she has failed to negotiate the additional contracts of insurance as prescribed by subsections (3) and (4) within the period of 12 months stated in those subsections.

(7) The minister's decision is final as to whether or not the property or risk covered by an application or contract of insurance is one with which an agent or subagent is directly associated.

(8) Unless the minister otherwise decides, subsections (4), (5), (6) and (7) are not applicable to agents or subagents licensed to carry on business in Newfoundland before June 20, 1963.

(9) Nothing in this Act shall affect a payment by way of dividend, bonus, profit or savings which is provided for by a contract of insurance or be construed so as to prevent an insurer compensating an actual salaried employee of the head or a branch office of the insurer in the province in respect of insurance issued by the employing insurer upon the life of that employee or so as to require that that employee shall be licensed as an agent to effect that insurance.

RSN1970 c204 s11

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Returns to minister

12. An insurer and an agent shall make a return under oath to the minister in the form and at the times that the minister requires, showing all persons authorized as agents or subagents respectively in the province, and of persons to whom he or she has paid or allowed or agreed to pay or allow directly or indirectly compensation for placing or negotiating insurance in the province, or the continuance or renewal of insurance, or for attempting to do so.

RSN1970 c204 s12

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Privileged information

13. An information, document, record, statement or other thing made or disclosed to the minister concerning a person licensed or applying for licence under this Act shall be absolutely privileged and shall not be used as evidence in an action or proceedings in a court brought by or on behalf of such person.

RSN1970 c204 s13

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Twisting life insurance policies prohibited

14. A person licensed as an agent for life insurance under this Act who induces, directly or indirectly, an insured to lapse, forfeit or surrender for cash, or for paid up or extended insurance, or for other valuable consideration, his or her contract of life insurance with 1 insurer in order to effect a contract of life insurance with another insurer, or makes a false or misleading statement or representation in the solicitation or negotiation of life insurance, or coerces or proposes, directly or indirectly, to coerce a prospective buyer of life insurance through the influence of a business of a professional relationship or otherwise, to give a preference in respect to the placing of life insurance which would not be otherwise given in the effecting of life insurance contracts, is guilty of an offence.

RSN1970 c204 s14

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List of licences

15. The minister may prepare, or direct to be prepared, published and distributed, annually or at more frequent intervals, a list of persons to whom licences have been issued under this Act.

RSN1970 c204 s15

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Unlicensed insurers

16. A director, officer, agent, employee or other person representing or purporting to represent an insurer who is not licensed under the Insurance Companies Act or whose licence has been suspended or cancelled without revival, and who undertakes or affects or agrees or offers to undertake or effect or solicit a contract of insurance or collect premiums on behalf of that insurer is guilty of an offence.

RSN1970 c204 s16

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Penalties

17. An insurer, agent or other person who is guilty of an offence against this Act or who acts in contravention of or fails to comply with a provision of this Act or neglects or refuses to do so is liable on summary conviction before a Provincial Court judge to imprisonment for a term not exceeding 6 months or to a fine not exceeding $200 or to both a fine and imprisonment.

RSN1970 c204 s17; 1979 c38 s7

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Disposal of fines and fees

18. All fines and licence fees shall when received be paid into the Consolidated Revenue Fund.

RSN1970 c204 s18

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Limitation to prosecution

19. A prosecution for an offence against this Act shall be commenced within 2 years of the commission of the offence.

RSN1970 c204 s19

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