Interim Cease And Desist Order Against Bryan Holstrom And Jill Hunter Operating As "United Freight Carriers Of North America" ("UFCNA")

REGARDING the Insurance Act, R.S.O. 1990,
Chapter I.8, as amended, in particular
sections 40, 393 and 441

AND REGARDING a Notice of Proposed Cease
and Desist Order Against Bryan Holstrom and
Jill Hunter operating as “United Freight
Carriers of North America” (“UFCNA”)

AND REGARDING an Interim Cease and Desist
Order Against Bryan Holstrom and Jill Hunter
operating as “United Freight Carriers of North
America” (“UFCNA”)

NOTICE OF PROPOSED CEASE AND DESIST ORDER

- and -

INTERIM CEASE AND DESIST ORDER

The Superintendent is of the opinion that Bryan Holstrom and Jill Hunter, operating as UFCNA, have committed, and are committing, unfair or deceptive acts or practices by contravening section 393(23) of the Act by acting as insurance agents without the licence required under the Act, or by contravening section 40(2) of the Act by carrying on business as an insurer without the licence required under the Act. The particulars are set out in the Report of the Superintendent appended as Appendix "A" to this Notice.

TAKE NOTICE THAT pursuant to section 441(2) of the Act, the Superintendent intends to order Bryan Holstrom and Jill Hunter, operating as UFCNA, to:

(a) cease or refrain from holding themselves out as insurance agents or as an insurer;

(b) cease or refrain from using any business name containing the words “insurance”

or "assurance";

(c) cease or refrain from soliciting insurance on behalf of an insurer or on behalf of the Facility Association under the Compulsory Automobile Insurance Act;

(d) cease or refrain from engaging in any form of advertisement, advice,

Notice of Proposed C&D & Interim C&D solicitation or negotiation relating to the sale of insurance to the public;

(e) cease or refrain from transmitting, for a person other than himself or herself an application for, or a policy of insurance to, or from, an insurer or the Facility Association;

(f) immediately notify, in writing, all persons who have purchased or are purchasing any form of insurance, as defined in the Act, that they are not authorized to provide or sell any form of insurance and provide such persons with a copy of this Interim Cease and Desist Order;

(g) provide copies of every notification sent to such person to the Superintendent forthwith.

WITHIN 15 DAYS after receiving this notice, you may request in writing, that the Financial Services Tribunal hold a hearing on whether the Superintendent should issue a permanent cease and desist order.

IF NO HEARING is requested within 15 days, the Superintendent may make an order in accordance with this notice.

Your written request for a hearing should be directed to:

Financial Services Tribunal
5160 Yonge Street, Box 85
14th floor
Toronto ON M2N 6L9

Attention: Rhonda Booth
Registrar

INTERIM CEASE AND DESIST ORDER

Section 441(4) of the Act provides that if the Superintendent is of the opinion that the interests of the public may be prejudiced or adversely affected by any delay in the issuance of a permanent order under section 441(2), the Superintendent, without prior notice, may make an interim order as described in section 441(2) which shall take effect immediately on its making, and which shall become permanent on the 15th day after its making unless within that time the person requests a hearing before the Financial Services Tribunal.

The Superintendent is of the opinion that the interests of the public may be prejudiced or Notice of Proposed C&D & Interim C&D adversely affected by any delay in the issuance of a permanent order under section 441(2) for the following reasons:

(a) the Superintendent has reasonable grounds for belief that Bryan Holstrom and Jill Hunter, operating as UFCNA, are currently offering auto, property and cargo insurance for sale in Ontario, even though they are not licensed as agents or as an insurer in Ontario;

(b) the Superintendent has reasonable grounds for belief that Ontario residents who have purchased auto, property or cargo insurance from Bryan Holstrom and Jill Hunter, operating as UFCNA, are at risk of not having any insurance at all or of not having adequate insurance;

(c) the Superintendent’s counterpart in the state of Oregon issued a Cease and Desist Order against UFCNA under the Oregon Insurance Code on February 20, 2004. The Order prohibits UFCNA from transacting insurance from within Oregon to persons located outside of Oregon. The Order was based in part on evidence of an insurance transaction with one trucking company in Ontario, and on evidence of a solicitation of insurance to another trucking company in Ontario.

TAKE NOTICE THAT pursuant to sections 441(2) and 441(4) of the Act, the Superintendent orders that Bryan Holstrom and Jill Hunter operating as, UFCNA, to:

(a) cease or refrain from holding themselves out as insurance agents or as an insurer;

(b) cease or refrain from using any business name containing the words "insurance" or "assurance";

(c) cease or refrain from soliciting insurance on behalf of an insurer or on behalf of the Facility Association under the Compulsory Automobile Insurance Act;

(d) cease or refrain from engaging in any form of advertisement, advice, solicitation or negotiation relating to the sale of insurance to the public;

(e) cease or refrain from transmitting, for a person other than himself or herself or itself, an application for, or a policy of insurance to, or from, an insurer or the Facility Association.

(f) immediately notify, in writing, all persons who have purchased or are purchasing any form of insurance, as defined in the Act, that they are not authorized to provide or sell any form of insurance and provide such persons with a copy of this Interim Cease and Desist Order;

(g) provide copies of every notification sent to such person to the Superintendent forthwith.

AND FURTHER TAKE NOTICE THAT this Interim Cease and Desist Order shall become permanent unless within fifteen (15) days you have requested a hearing before the Financial Services Commission as to whether the Superintendent should issue a permanent cease and desist order.

AND FURTHER TAKE NOTICE THAT if you request a hearing before the Financial Services Tribunal, the Superintendent may extend the Interim Cease and Desist Order until the hearing is concluded.

AND FURTHER TAKE NOTICE THAT clause 447(2)(b) of the Act provides that anyone who fails to comply with any order made under the Act is 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.

ISSUED AT the City of Toronto, this day of March, 2005.

Bryan P. Davies
Chief Executive Officer and
Superintendent of Financial Services

TO:

Bryan Holstrom and Jill Hunter operating as United Freight Carriers of North America

1879 NW Commerce Court
Troutdale OREGON 97060-8510
Superintendent of surintendant des
Financial services
Services financiers

Appendix “A”

1. The Ontario Insurance Act requires that any person carrying on business as an insurer, or acting as an insurance agent, have a licence issued pursuant to the provisions of the Act.

2. The Act defines an insurer as: “insurer” means the person who undertakes or agrees or offers to undertake a contract; ("assureur") "contract" means a contract of insurance, and includes a policy, certificate, interim receipt, renewal receipt, or writing evidencing the contract, whether sealed or not, and a binding oral agreement; ("contrat")

3. Section 40(2) and section 447(2)(d) of the Act make it an offence to carry on business as an insurer in Ontario without the licence required under the Act.

4. The Act defines an insurance agent as: "agent" means a person who, for compensation, commission or any other thing of value,

(a) solicits insurance on behalf of an insurer who has appointed the person to act as the agent of such insurer or on behalf of the Facility Association under the Compulsory Automobile Insurance Act, or

(b) solicits insurance on behalf of an insurer or transmits, for a person other than himself, herself or itself, an application for, or a policy of insurance to or from such insurer, or offers or assumes to act in the negotiation of such insurance or in negotiating its continuance or renewal with such insurer, and who is not a member of the Registered Insurance Brokers of Ontario.

5. Section 393(23) and section 447(2)(d) of the Act make it an offence to act as an insurance agent without the licence required under the Act.

6. Ontario Regulation 7/00 makes it an unfair or deceptive act or practice to commit any act prohibited under the Act.

7. A complaint that UFCNA had issued policies of automobile insurance to trucking companies in Ontario was received by the Financial Services Commission of Ontario (FSCO) in March 2004. An investigation was conducted by the Investigations Unit of FSCO.

8. I have reviewed the Investigation Report.

9. As a result of the information set out in the Investigation Report I am satisfied as to the following:

(a) Bryan Holmstom and Jill Hunter formed UFCNA in April 2003, inter alia, “to work to meet the needs of members to obtain an affordable alternative to insurance coverage”.

(b) according to records at the Oregon Corporation Commission, Bryan Holstrom and Jill Hunter jointly registered the business name of UFCNA on May 12, 2003. Bryan Holstrom is the President.

(c) the last known mailing address of UFCNA is:

1879 NW Commerce Court
Troutdale OR 97060-8510

(d) a person may become a full member of UFCNA if the person owns, operates or controls a business that is involved in the movement of freight.

(e) neither Bryan Holstrom nor Jill Hunter are licensed as agents or as an insurer in Ontario.

(f) since May 2003, UFCNA has been soliciting persons to become members of UFCNA, and offering to provide to them a “Group Purchase Liability [Insurance] Plan”.

(g) UFCNA issued a “Certificate of Liability Insurance” to each of “WMILI”†and “WGTL”† in Ontario, effective from July 1, 2003 to July 1, 2004. Each certificate stated that Policy #GT 60000012a provided insurance coverage for general liability, automobile liability, and cargo.

(h) the certificate issued to “WMILI” misrepresented that the purchase plan for the insurance was backed by RLI Transportation, meaning the Transportation Division of RLI Insurance Company, which is headquartered in Peoria, Illinois.

(i) in July 2003 RLI Insurance Company sent a written request to UFCNA, asking it to cease and desist using the name of RLI Insurance Company or RLI Transportation in any manner.

(j) in November 2003 UFCNA faxed a written offer of insurance coverage to "MLTL"† in Ontario. "MLTL" declined the offer.

(k) on March 1, 2004, the Ontario Ministry of Transportation notified FSCO staff that several commercial vehicles which Ministry inspectors stopped recently produced insurance documentation which stated that UFCNA had brokered the policy. In some cases, the documentation misrepresented that the insurance was underwritten by Lloyd’s, RLI Insurance Company, or an unspecified insurer of the AIG International Group.

(l) the Director of the Oregon Department of Consumer and Business Services issued a Cease and Desist Order to UFCNA under the Oregon Insurance Code on February 20, 2004. The order prohibits UFCNA from transacting insurance from within Oregon relative to persons located outside of Oregon.

(m) Bryan Holstrom and UFCNA are unwilling to respond to inquiries by an Investigator of the Financial Services Commission.

(n) the Superintendent is of the opinion that anyone who purchases insurance from UFCNA is at risk, because the Superintendent is unable to determine whether UFCNA is willing or able to pay claims.

ISSUED AT the City of Toronto, this day of March, 2005.

Bryan P. Davies

Chief Executive Officer and

Superintendent of Financial Services