REGARDING the Insurance Act, R.S.O. 1990,
Chapter I.8, as amended, in particular section 441
AND REGARDING Unifund Assurance Company
CEASE AND DESIST ORDER
The Superintendent of the Financial Services Commission of Ontario ("Superintendent") is of the opinion that Unifund Assurance Company ("Unifund") committed an unfair or deceptive act or practice by charging rates for coverages or categories of automobile insurance that were not approved by the Superintendent.
Unifund waives the procedural requirements under section 441(2) of the Insurance Act ("Act") for a Notice of Intention to make an order and its right under section 441(3) to request a hearing.
TAKE NOTICE THAT pursuant to section 441(7) of the Act, and with the consent of Unifund, the Superintendent hereby orders that Unifund:
(A) Refund all current and former policyholders who were overcharged ("eligible policyholders") by a date and in a manner acceptable to the Superintendent. The plan for refunding shall include the following features:
(i) Eligible policyholders shall be refunded 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.
(ii) Reimbursement shall be by means of a cheque and/or credit to the policyholder’s account. A letter in a form approved by the Superintendent shall be sent to the policyholder to explain why the policyholder received the refund.
(iii) In any case where the address of a former eligible policyholder is unavailable or a cheque sent to a policyholder is returned, Unifund will make reasonable efforts to verify whether a more up-to-date address can be obtained. The cheque will then be forwarded to the new address.
(iv) The amount, if any, representing the value of cheques that, as of February 15, 2008, have been sent and remain uncashed or have been determined to be undeliverable will be sent to the United Way.
(v) Adequate records shall be maintained to reconcile refunds payable, refunds paid, refunds outstanding (as applicable), and the amounts representing refund cheques that remain uncashed or are determined to be undeliverable in connection with this Order.
(B) Unifund shall not seek to recover amounts from current and former policyholders who were undercharged in connection with the use of unapproved rates. Unifund shall notify current policyholders who were undercharged of the impending rate increase by letter in a form satisfactory to the Superintendent.
(C) At the conclusion of the refunding process and on or before February 15, 2008, Unifund shall provide the Superintendent with a written report providing details of its compliance with the refunding plan in this Order, including a full reconciliation of the refunds payable, the refunds paid and the amounts that remain uncashed or are determined to be undeliverable. The report shall also address any other information relevant to compliance with the refunding plan.
(D) On or before August 31, 2007, Unifund shall provide written confirmation to the Superintendent that its President is satisfied that Unifund has reviewed and amended its current systems and its written internal control procedures to ensure that:
(i) the deficiencies that resulted in, or permitted, the charging of unapproved rates have been appropriately addressed;
(ii) systems and procedures are adequate to ensure that the rates charged to policyholders are those that are approved or authorized by the Superintendent and to prevent future mistakes in the rates charged by the company; and
(iii) a senior company official, with appropriate authority, is given the responsibility and adequate resources to oversee the receipt, investigation and response to any inquiries, complaints and concerns involving rates, classification and billing.
The confirmation shall also include a description of all revisions or amendments that have been made, or will be made, as a result of this review and a description of all new controls or procedures put into place, together with copies of the revised or amended internal control procedures, and will confirm that these revisions have been reported and are satisfactory to Unifund’s Board of Directors.
TAKE NOTICE THAT section 447(2)(b) of the Act provides that any person who fails to comply with any order made under the Act is guilty of an offence and 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 FURTHER TAKE NOTICE THAT section 447(4) of the Act provides 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.
ISSUED AT the City of Toronto, June 6, 2007
Chief Executive Officer and
Superintendent of Financial Services
Unifund Assurance Company
P.O. Box 12049
95 Elizabeth Avenue
St. John’s, Newfoundland
Attention: Mr. Kenneth M. Bennett, President