Requirements for Mortgage Brokerages and Administrators
Under the Mortgage Brokerages, Lenders and Administrators Act, 2006, all Mortgage Brokerages and Administrators are required to carry Errors and Omissions Insurance (E&O Insurance) with extended fraud coverage in a form approved by the Superintendent, or another form of approved assurance. Without this insurance, Mortgage Brokerages and Administrators cannot carry on business.
The E&O Insurance must cover a minimum of $500,000 in respect of any one occurrence and $1 million in respect of all occurrences in a given year. Extended fraud coverage is included in the overall minimum policy limit.
E&O Insurance Providers
FSCO has established guidelines that set out the minimum requirements that E&O insurance with extended fraud coverage must meet to be recognized for licensing purposes. The guidelines were developed in consultation with insurance companies who are interested in offering the coverage to Mortgage Brokerages and Administrators.
Insurers that are interested in offering E&O insurance to Mortgage Brokerages and Administrators may refer to the attached FSCO E&O guidelines. The guidelines outline the process that each E&O policy must follow in order to be approved by the Superintendent. FSCO will post the names of all additional insurers who qualify for recognition under the guidelines. FSCO will also notify the mortgage brokering industry of new providers through its Mortgage Broker.
The following is a list of associations, insurers and brokers who have undertaken to offer the required insurance in the approved form. Insurers have requested that all E&O inquires be made directly to their representing insurance brokers.
Associations
Canadian Association of Accredited Mortgage Professionals – CAAMP Plan for Members
http://www.caamp.org/e-o_insurance.htm
Independent Mortgage Brokers Association of Ontario – IMBA Plan for Members
http://www.imba.ca/membership/insurance_programs
Insurers/ Insurance Brokers
- Encon Insurance Managers Incorporated
Rocca Dickson Andreis Inc.
Anthony Ambrosino
(800) 479 6450 ext 247
- Echelon General Insurance Company
LMS Prolink Ltd.
Andrew Spencer
(866) 663 6828 ext 7745
- GCAN Insurance Company
Purves Redmond
Andrew Reid
(800) 465 1137 ext 223
- AXA Pacific Insurance Company
IDRIS Insurance Brokers Ltd.
Reg Tiegs
(800) 461 7737 ext 222
Forms of Assurance Other Than E&O Insurance
Finance Companies
FSCO has agreed to accept another form of assurance for finance companies provided that the following criteria are met:
- The Mortgage Brokerage is a finance company and is either the lender for all the mortgages arranged by the brokerage’s authorized Mortgage Brokers or Agents, or is an affiliate of the lender.
- The Brokerage submits audited financial statements that confirm that the level of surplus is at least $500,000.
For the purposes of this assurance, a finance company is defined as a corporation or partnership, other than a financial institution, that satisfies the following:
- A material business activity of the corporation or partnership involved making or refinancing loans, or entering into other similar arrangements for advancing funds or credit;
- The share of ownership interests of the corporation or partnership or another person or entity with which it is affiliated, are listed on a stock exchange in Canada or outside Canada that is a prescribed stock exchange for the purposes of the Income Tax Act (Canada).
Other brokerages and administrators
Although it is expected that most brokerages and administrators will obtain the approved form of insurance, it may be that some brokerages and administrators will seek approval for an alternative form of assurance. Any such assurance must be comparable to the approved form of insurance in terms of monetary equivalence and coverage. The brokerage or administrator must be able to demonstrate that this comparable form of assurance is continuously maintained and accessible at all times. Applicants considering this are required to provide a full description of any such proposed arrangement with their licensing application. All proposed alternative forms of assurance must be acceptable to the Superintendent and the obligation will be on the applicant to satisfy the requirements of the Superintendent. FSCO will contact such applicants to discuss the proposal.
Financial Services Commission of Ontario