RIBO frequently receives enquiries regarding the regulatory ramifications involved where a broker wishes to cease doing business with a specific client. In many cases, the situation follows the same pattern, that is, where the client has systematically and repeatedly abused each staff member who has attempted to assist them, to the point that it seems impossible to satisfy the client. In “resignation” situations, brokers must remember that they are required to conduct themselves in compliance with applicable laws and professional obligations. For example, it should be noted that for auto insurance in Ontario, brokers are required by law to provide access to insurance for consumers. For this product, if a client insists that your firm provide an application for auto insurance, brokers must comply with the requirements of the Compulsory Automobile Insurance Act by providing an application and submitting it to a carrier. Failure to do so may result in complaint proceedings. With that exception noted, RIBO regulations do not prohibit “resignation” where a broker-client relationship has deteriorated beyond repair. There are, however, a number of factors or considerations arising from the Code of Conduct that are important to keep in mind in these situations.
The Code of Conduct (Section 15, Paragraph 13) requires that “a member’s conduct towards other members, members of the public, insurers and the corporation (RIBO) shall be characterized by courtesy and good faith.” Keeping that in mind, a broker should only refuse to continue to provide services to a client where there is a good faith reason supporting the decision to terminate the relationship. In addition, brokers are required to give the client adequate notice so as not to prejudice the client’s interest. Brokers must also use best efforts to ensure that the client’s needs are adequately looked after notwithstanding the withdrawal of services. This obligation can be fulfilled in
some circumstances by finding another broker to look after the client or at least referring the client to other brokers who can appropriately service the client.
The following steps are merely suggestions and the minimum practical steps. Compliance with these steps/suggestions does not automatically mean that a broker’s conduct meets the standards set out in the Code of Conduct. If a consumer complains, each case will be reviewed based on the facts and circumstances of that case.
1. Makes sure your file is well documented with dates, times etc.
2. Resigning from a client should be a management decision and should have full and
unqualified support of management. All staff must be told of the decision and the fact that it is final.
3. Think in terms of a six-month notice. The biggest exposure in this process is being accused of giving a client insufficient notice of the client’s newfound “brokerless” state.
4. Send a registered letter to the customer stating the intention to resign as his/her broker effective the expiry date of the policy. Ensure that the letter makes references to the specific policy numbers and expiry dates of the policies in question.
5. Within the letter, simply state that management has concluded that to continue the professional relationship further is not in the mutual interest of either party. Use plain polite language to say that you will be resigning as their broker effective the expiry of the policies and that you will no longer be placing any insurance coverage for them after that date. Also, use caution in your choice of words and be careful not to use words that may be considered inflammatory.
6. Continue to provide the best possible service to the client until the policy expires.
7. Send another registered letter 45 days in advance of the expiry date, enclosing a copy of the original letter and reminding the customer that effective the renewal date they must seek coverage elsewhere.
8. Send another registered letter one week prior to the renewal date confirming that your brokerage has not placed any insurance on their behalf.
As we are still in the pandemic, brokers should consider whether or not Registered Mail is the best and the most practical way to ensure that their client receives the broker’s letters. In some situations, other forms of written communications may be better suited. All communications should be in writing and the broker should be able to provide confirmation that the communications were received by the client and not just sent by the broker.