February 9, 2005 Insurance

Québec City – Québec Superior Court Judge Jean Lemelin upheld the position of the Autorité des marchés financiers (AMF) by ordering RBC Life Insurance Company, formerly known as Westbury, to pay the amount of $32,520.30 claimed by the AMF.

Back in January 1992, Denise Toutant-Gingras purchased a life insurance policy from Westbury through the intermediary of Gilles Grenier, a personal insurance representative. In April 1994 and April 1997, Mr. Grenier requested a cash withdrawal in the amount of $32,520.30 from her life insurance contract and did so without her knowledge. Further to the request, Westbury sent a cheque directly to Mr. Grenier to the order of Ms. Toutant-Gingras. The representative then forged her signature for the purpose of depositing the cheque in his personal bank account.

On December 4, 1998, Ms. Toutant-Gingras filed a claim with the Fonds d'indemnisation des services financiers (FISF), the financial services compensation fund that is now part of the AMF. It granted her claim and paid her an indemnity in the amount of $32,520.30 in compensation for the harm incurred as a direct result of Mr. Grenier's fraudulent conduct. Subrogated in the rights of the victim, the FISF obtained a judgment against Mr. Grenier and subsequently launched a recourse in subrogation against RBC Life Insurance Company.

The dispute essentially focused on whether an insurance company may be held liable in the event a representative embezzles for his own personal benefit sums of money intended for an insured. The Judge concluded that an insurance representative who receives from the insurer sums of money on behalf of an insured thereby acts as the representative of the insurer. The Court therefore ruled that an insurer is liable for any fraud committed by its representatives in the performance of their duties and ordered RBC Life Insurance Company to pay back the amounts embezzled by its representative.

The Autorité des marchés financiers is the regulatory and oversight body for Québec's financial sector.

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