Cease and Desist Order Against RBC General Insurance Company ("RBC General")

REGARDING the Insurance Act, R.S.O.1990, Chapter I.8, as amended (the "Act"), in particular, sections 441 and 447, and the Automobile Insurance Rate Stabilization Act, 2003, S.O.2003, Chapter 9, as amended (the "AIRSA"), in particular, sections 11 and 12 

AND REGARDING RBC General Insurance Company

CEASE AND DESIST ORDER

The Superintendent of Financial Services (the "Superintendent") is of the opinion that the RBC General Insurance Company ("RBC General") committed an unfair or deceptive act or practice by failing to comply with an approved automobile insurance rate filing regarding ratable lapses of insurance coverage between 2003 and 2007.

RBC General waives the procedural requirement under section 441(2) of the Act for a Notice of Intention to make an order and its right under section 441(3) to request a hearing.

RBC General waives its right to request reconsideration of this order under section 11(2) of the AIRSA.

TAKE NOTICE THAT pursuant to sections 441(2) and 441(7) of the Act and section 11(1) of the AIRSA, and with the consent of RBC General, the Superintendent orders that:

A. RBC General shall reimburse all current and former affected policyholders who were overcharged ("eligible policyholders") by a date and in a manner acceptable to the Superintendent.  The plan for reimbursement shall include the following features:   

(i) eligible policyholders shall be reimbursed the amount that was paid in excess of the approved rate plus interest of 5% calculated annually from the date of the payment for the policy to the date that RBC General issues the reimbursement

(ii) reimbursement shall be by means of a cheque and/or credit to the eligible policyholder’s account.  A letter in a form approved by the Superintendent shall be sent to the eligible policyholder to explain why the policyholder is being reimbursed;

(iii) RBC General will complete, by December 31, 2008, the reimbursements to eligible policyholders that it commenced on March 18, 2008;

(iv) in any case where the address of an eligible policyholder is unavailable or a cheque sent to an eligible policyholder is returned, RBC General will make reasonable efforts to contact the broker of the eligible policyholder to determine whether an up-to-date address can be obtained.  If RBC General is unable to contact the broker it will attempt to locate a new address for the eligible policyholder from publicly available sources.  If a valid address can be obtained, the reimbursement cheque will be mailed to that address by March 31, 2009;

(v) the amount, if any, representing the value of reimbursement cheques that as of September 30, 2009, have been sent and remain uncashed, or have been determined to be undeliverable, will be donated to charity;

(vi) RBC General shall maintain a database through which all accounting of funds in connection with this Order shall be administered, including full reconciliations of reimbursements due, reimbursements paid, reimbursements outstanding, and reimbursement cheques that remain uncashed or are determined to be undeliverable.

B. On or before November 2, 2009, RBC General shall provide the Superintendent with a written report providing details of its compliance with the reimbursement plan in this Order, including a full reconciliation of the reimbursements due, the reimbursements paid, and the reimbursements that remain uncashed or are determined to be undeliverable.  The report shall also address any other issues relevant to compliance with the reimbursement plan.

C. The President and Chief Executive Officer of RBC General Insurance shall provide on or before November 3, 2008, written confirmation to the Superintendent that he is satisfied that RBC General’s written internal control procedures with respect to its operating processes have been reviewed and amended so that the deficiencies that resulted in, or permitted, non-compliance with an approved automobile insurance rate filing have been appropriately addressed.  The confirmation shall also include a description of any revisions or amendments that are made as a result of this review, together with copies of the revised or amended internal control procedures.

AND TAKE NOTICE THAT section 447(2)(b) of the Act and section 12(1) of the AIRSA provide that any person who fails to comply with any order made under section 441(7) of the Act or section 11(1) of the AIRSA respectively, is guilty of an offence.

AND TAKE NOTICE THAT section 447(3) of the Act and section 12(1) of the AIRSA provide that a person guilty of an offence under section 447(2) or section 12(1) of the AIRSA respectively, is liable on a first conviction to a fine of not more than $100,000, and on each subsequent conviction to a fine of not more than $200,000.

AND TAKE NOTICE THAT section 447(4) of the Act and sections 12(2) and 12(3) of the AIRSA provide that every director, officer and chief agent of a corporation who caused, authorized, permitted or participated in a corporation committing an offence, or who fails to take reasonable care to prevent a corporation from committing an offence, is also guilty of an offence and is liable on a first conviction to a fine of not more than $100,000 and on each subsequent conviction to a fine of not more than $200,000.

AND TAKE NOTICE THAT section 447(5) of the Act and section 12(4) of the AIRSA provide that if a person is convicted of an offence under their respective statutes, the court making the conviction may, in addition to any other penalty, order the person convicted to make compensation or restitution in relation to the offence.

DATED at Toronto, July 7, 2008

Robert E. Christie
Superintendent of Financial Services

TO:    

RBC General Insurance Company
Attention:  Françcois Boulanger,
President and CEO, RBC General Insurance Company