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Insurance Agents Licensing Regulations

made under subsection 5(3) and Section 52 of the

Insurance Act

R.S.N.S. 1989, c. 231

O.I.C. 93-461A (May 31, 1993), N.S. Reg. 81/93

as amended up to O.I.C. 2013-105 (March 28, 2013, effective April 1, 2013), N.S. Reg. 116/2013


Definitions

1     In these regulations

 

                (a)    “agency” means a sole proprietorship, partnership or corporation which acts as an agent and which effects, negotiates, solicits or places a contract for insurance or renewal thereof;

 

                (b)    “agent” includes broker;

 

                (ba)  “LLQP” means the Life License Qualification Program conducted by an accredited course provider;

Clause 1(ba) added: O.I.C. 2003-50, N.S. Reg. 27/2003.

 

                (bb)  “CAIB Program” means the Canadian Association of Insurance Brokers educational program;

Clause 1(bb) added: O.I.C. 2003-416, N.S. Reg. 172/2003.

 

                (bc)  “CIP Program” means the Chartered Insurance Professionals educational program offered by the Insurance Institute of Canada;

Clause 1(bc) added: O.I.C. 2003-416, N.S. Reg. 172/2003.

 

                (bd)  “supervision” of an individual means the reasonable and prudent oversight of each insurance transaction conducted by the individual;

Clause 1(bd) added: O.I.C. 2006-573, N.S. Reg. 234/2006.

 

                (c)    “trust account” means an account in a bank, trust company, loan company, or credit union which is separate and apart from all other accounts and designated as a trust account in which all monies paid to an agent on behalf of insurers or consumers are deposited and includes a receipt, certificate or other instrument issued by a chartered bank, trust or loan company, credit union, by the Government of Canada or of a province of Canada evidencing a deposit made in trust for a term not exceeding one year if the principal sum evidenced by the receipt, certificate or other instrument is redeemable on demand;

 

                (d)    “trust monies” means all monies received or receivable by an agent or agency in the course of business from the public on behalf of insurers and all monies received by the agency or agent on behalf of the public from insurers.


Life insurance agent licensing

2     (1)    An individual shall not be issued a life insurance license that restricts the licensee to act only as an accident and sickness insurance agent unless the individual

 

                (a)    has passed any qualification examinations prescribed by the Superintendent; and

 

                (b)    has successfully completed the accident and sickness modules of an LLQP or has equivalent qualifications or experience acceptable to the Superintendent.

 

       (2)    An individual shall not be issued a life insurance license authorizing the licensee to act as an agent for life and accident and sickness insurance unless the individual

 

                (a)    has passed any qualification examinations prescribed by the Superintendent; and

 

                (b)    has successfully completed an LLQP or has equivalent qualifications or experience acceptable to the Superintendent.

 

       (3)    Despite subsection (2), an individual may be issued a transitional life insurance license authorizing the licensee to act as an agent for life and accident and sickness insurance if the individual

 

                (a)    has passed any qualification examinations prescribed by the Superintendent;

 

                (b)    has successfully completed the transitional modules of an LLQP; and

 

                (c)    undertakes to comply with the conditions set out in subsection (4).

 

       (4)    A transitional license issued under subsection (3) shall be revoked if the licensee fails to

 

                (a)    enroll, within 180 days from the date of being licensed, to complete the remaining modules of the LLQP;

 

                (b)    work under the supervision of a life insurance agent who has been licensed for 3 years or who has equivalent qualifications or experience acceptable to the Superintendent;

 

                (c)    maintain a record of all life insurance sales supported by a needs analysis which is co-signed by the supervising agent;

 

                (d)    continue to be sponsored by an insurance company which undertakes to ensure the person’s records are kept appropriately; and

 

                (e)    successfully complete the remaining modules of the LLQP within 2 years from the date of being licensed or January 1, 2007, whichever is earlier.

Section 2 replaced: O.I.C. 2003-50, N.S. Reg. 27/2003.


General insurance agent licensing

3     (1)    A general insurance agent shall be licensed, subject to any limits and conditions prescribed by the Superintendent pursuant to subsection 36(3) of the Act, as a Level I, Level II or Level III general insurance agent.

 

       (2)    An individual shall not be issued a license as a Level I general insurance agent unless the individual

                (a)    has passed any of the following, or has equivalent experience acceptable to the Superintendent:

 

                         (i)     the Fundamentals of Insurance course offered by the Canadian Association of Insurance Brokers,

 

                         (ii)    Parts I and II of the General Insurance Essentials program offered by the Insurance Institute of Canada,

 

                         (iii)   Part I of the CAIB Program,

 

                         (iv)   CIP Program courses C11 and C130,

 

                         (v)    a course that is equivalent to one specified in subclauses (i) to (iv) and that is acceptable to the Superintendent.

Clause 3(2)(a) replaced: O.I.C. 2006-573, N.S. Reg. 234/2006.


Clause 3(2)(b) repealed: O.I.C. 2006-573, N.S. Reg. 234/2006.

 

                (c)    works under the supervision of a Level II or Level III general insurance agent or, if the individual is not resident in Nova Scotia, under the supervision of a general insurance agent holding an equivalent license in the province where the individual and supervising agent are resident.

 

       (3)    A general insurance agent who supervises a Level I general insurance agent is responsible for overseeing the professional conduct and business activities of the Level I general insurance agent and must review and approve applications for insurance completed by the Level I general insurance agent.

Subsection 3(3) amended: O.I.C. 2006-573, N.S. Reg. 234/2006.

 

       (4)    An individual shall not be issued a license as a Level II general insurance agent unless the individual

 

                (a)    has previously been issued a license as a Level I general insurance agent, or has equivalent qualifications acceptable to the Superintendent; and

 

                (b)    has passed any of the following, or has equivalent experience acceptable to the Superintendent:

 

                         (i)     Parts I, II and III of the CAIB Program,

 

                         (ii)    CIP Program courses C11, C130 and C131,

 

                         (iii)   a course that is equivalent to one specified in subclause (i) or (ii) and that is acceptable to the Superintendent.

Clause 3(4)(b) replaced: O.I.C. 2006-573, N.S. Reg. 234/2006.

 

       (5)    An individual shall not be issued a license as a Level III general insurance agent unless the individual

 

                (a)    has previously been issued a license as a Level II general insurance agent, or has equivalent qualifications acceptable to the Superintendent; and

 

                (b)    has passed any of the following, or has equivalent experience acceptable to the Superintendent:

 

                         (i)     Parts I, II, III and IV of the CAIB Program,

 

                         (ii)    CIP Program courses C11, C130, C131 and C132,

 

                         (iii)   a course that is equivalent to one specified in subclause (i) or (ii) and that is acceptable to the Superintendent.

Clause 3(5)(b) replaced: O.I.C. 2006-573, N.S. Reg. 234/2006.

Section 3 repealed: O.I.C. 2003-50, N.S. Reg. 27/2003; added: O.I.C. 2003-416, N.S. Reg. 172/2003.

 

4     (1)    Despite subsections 3(2), (4) and (5), an individual who is licensed as a general insurance agent on December 31, 2006, is deemed to be licensed, subject to any limits and conditions prescribed by the Superintendent under subsection 36(3) of the Act,

 

                (a)    as a Level I general insurance agent, if the individual has held a license as a general insurance agent for fewer than 2 years,

 

                (b)    as a Level II general insurance agent, if the individual has held a license as a general insurance agent for 2 or more years but fewer than 4 years, or

 

                (c)    as a Level III general insurance agent, if the individual has held a license as a general insurance agent for 4 or more years.

 

       (2)    An agency that is licensed on December 31, 2006, is deemed to be licensed as an insurance agency, subject to any limits and conditions prescribed by the Superintendent under subsection 36(3) of the Act.

Section 4 repealed: O.I.C. 2003-50, N.S. Reg. 27/2003; added: O.I.C. 2003-416, N.S. Reg. 172/2003; replaced: O.I.C. 2006-573, N.S. Reg. 234/2006.


License applications

5     No person shall apply for an insurance agent's license unless the person is at least nineteen years of age.

Subsections 5(1) and 5(3) repealed; subsection 5(2) renumbered as Section 5: O.I.C. 2003-50, N.S. Reg. 27/2003.


Examinations

6     No applicant for an insurance agent's license shall be permitted to write an agent's qualifying examination or supplemental examination unless the applicant

 

                (a)    registers for the qualifying examination or supplemental examination with the Service Nova Scotia and Municipal Relations; and

 

                (b)    pays upon registration a fee of $64.40 for each qualifying examination and $32.20 for each supplemental examination.

Clause 6(b) replaced: O.I.C. 2013-105, N.S. Reg. 116/2013.

 

7     Where an applicant fails to write an insurance agent's qualifying examination or supplemental examination within sixty days from the date of registration, the registration shall thereupon be null and void.

Subsection 7(1) renumbered Section 7; subsection 7(2) repealed: O.I.C. 2003-50, N.S. Reg. 27/2003.

 

8     Any person who fails to attain the pass mark for an insurance agent's qualifying examination and any supplemental examination after three successive attempts shall not be permitted to write another examination unless

 

                (a)    the person successfully completes a course as may be approved by the Superintendent; or

 

                (b)    a period of not less than 6 months has elapsed since the date on which the person last wrote an examination.

Subsection 8(1) repealed; subsection 8(2) renumbered as Section 8 and amended: O.I.C. 2003-50, N.S. Reg. 27/2003.


Fees for licenses

9     (1)    The fees payable upon application for or renewal of a three year license are as follows:

 

                (a)    where the applicant is an individual...................................................$386.50

Clause 9(1)(a) amended: O.I.C. 2013-105, N.S. Reg. 116/2013.

 

                (b)    where the applicant carries on business as a partnership,

corporation or under a business name.................................................$386.50

Clause 9(1)(b) amended: O.I.C. 2013-105, N.S. Reg. 116/2013.


Clause 9(1)(c) repealed: O.I.C. 2000-235, N.S. Reg. 81/2000.

 

       (1A) The fee payable upon application for a license determined by the Superintendent to expire in 2 years or less is $257.65

Subsection 9(1A) added: O.I.C. 2003-50, N.S. Reg. 27/2003; amended: O.I.C. 2013-105, N.S. Reg. 116/2013.

 

       (2)    Subject to subsections (3) and (4), a fee paid for a license shall be refunded in respect of any unexpired second and third years of the license in the following circumstances:

 

                (a)    where the licensee is an individual, upon the death, retirement or withdrawal of sponsorship of the licensee, unless a new application has been received by the Superintendent within twenty (20) days of the sponsorship termination date;

 

                (b)    where the licensee carries on business as a partnership, corporation or under a business name, upon sale of the business, partnership or corporation.

 

       (3)    The amount of any refund pursuant to subsection (1) shall be one-third of the license fee for each full unexpired year of the term of the license.

 

       (4)    No refund is payable pursuant to subsections (2) and (3) unless

 

                (a)    an application for the refund is made in writing within a period of not later than one year immediately following the date of death, retirement, withdrawal of sponsorship or sale mentioned in subsection (2);

 

                (b)    the license is returned to the Superintendent before or upon the application for the refund;

 

                (c)    the license has not otherwise been suspended, cancelled or revoked by the Superintendent; and

 

                (d)    a new license application has not been received by the Superintendent reflecting a change in sponsorship.

 

       (5)    The fee payable on application for a transfer of sponsorship of an agent or agency is $64.40

Subsection 9(5) added: O.I.C. 2000-235, N.S. Reg. 81/2000; amended: O.I.C. 2013-105, N.S. Reg. 116/2013.

 

       (6)    The fee payable for a certificate of status respecting a license is $12.90.

Subsection 9(5) added: O.I.C. 2013-105, N.S. Reg. 116/2013.


Non-resident licenses

10   (1)    Despite Sections 2, 3, and 4, the Superintendent may issue an insurance agent or agency license to an applicant who resides outside of Nova Scotia if the applicant holds a valid license in good standing for the same class of insurance issued by the jurisdiction in which the person resides as evidenced by a certificate of authority issued by that jurisdiction.

Subsection 10(1) amended: O.I.C. 2003-416, N.S. Reg. 172/2003.

 

       (2)    If an applicant holds a valid license in good standing issued by a jurisdiction where there is no level licensing system, the applicant will be assessed using the criteria set out in Sections 2, 3, and 4 of these regulations to determine the level of license to be issued.

Subsection 10(2) amended: O.I.C. 2003-416, N.S. Reg. 172/2003.


Licensed agent required for agency license

11   (1)    Every licensed insurance agency shall have an agent licensed to sell the class or classes of insurance offered by the agency.

Section 11 renumbered subsection 11(1): O.I.C. 2003-416, N.S. Reg. 172/2006.

 

       (2)    Every licensed insurance agency shall appoint an agent in charge who shall either be a Level III general insurance agent or be acceptable to the Superintendent on the basis of the agent’s experience and qualifications.

Subsection 11(2) added: O.I.C. 2003-416, N.S. Reg. 172/2003; replaced: O.I.C. 2006-573, N.S. Reg. 234/2006.


Errors and omissions and fidelity insurance required

12   (1)    Every general insurance agent or agency which holds a general insurance license shall have and maintain

 

                (a)    errors and omissions insurance to a minimum amount of not less than $500,000.00 in coverage with extended coverage for loss resulting from fraudulent acts of employees; or

 

                (b)    some other form of financial guarantee as approved by the Superintendent of not less than $500,000.00 in coverage in respect of any one occurrence.

 

       (2)    Every general insurance agency which holds a general insurance license shall maintain fidelity insurance against losses arising from dishonesty of employees, a proprietor or partners, directors and officers in a form approved by the Superintendent for an amount of not less than $100,000.00 in coverage.

 

       (3)    Every insurance policy referred to in subsections (1) and (2) shall contain an endorsement stipulating that the Superintendent shall be given written notice by certified mail by the insurer of any cancellation or non-renewal of the policy and that the cancellation or non-renewal of the policy shall not become effective until thirty days after actual receipt of the notice by the Superintendent.

 

       (4)    Subject to subsection (3), a general insurance agent's or agency's license expires on the date of the effective cancellation or non-renewal of an errors and omissions or fidelity policy referred to in subsections (1) and (2) unless before that date the insurance is replaced or the agent or agency otherwise satisfies the Superintendent that the insurance agent or agency is in compliance with subsections (1) and (2).


Annual filings

13   (1)    Every general insurance agency, or general insurance agent not representing an agency holding a general insurance license and receiving insurance premiums, shall file with the Superintendent within 120 days of the fiscal year end of the agency or agent a trust account reconciliation worksheet in Form 1 of these regulations in order to maintain the current status of their license.

 

       (2)    Despite subsection (1), where a general insurance agent referred to in subsection (1) does not have a fiscal year end, the trust account reconciliation worksheet shall be filed by April 30th of the immediately following year.

 

       (3)    Where the holder of a license referred to in subsection (1) fails to file the trust account reconciliation worksheet in compliance with this Section, the Superintendent may cancel the license.

 

       (4)    This Section shall not come in force until the expiration of twenty-four months following the effective date of these regulations.


Trust accounts

14   (1)    In this Section, any reference to “agent” or “agency” means agent or agency referred to in Section [subsection] 13(1) of these regulations.

 

       (2)    Subject to Section [subsections] 26(1) and (2) of the Act, every insurance agent or agency shall maintain, for all trust monies received or monies deemed to be trust monies, a trust account, separate and apart from all other accounts, at any Nova Scotia branch of

 

                (a)    a chartered bank;

 

                (b)    a trust or loan company; or

 

                (c)    a credit union;

 

and the account shall be kept in the name of the agent or agency and shall be designated as a trust account.

 

       (3)    Despite subsection (2), an insurance agent or agency holding a license in Nova Scotia but operating in another jurisdiction may be permitted by the Superintendent, in the discretion of the Superintendent, to maintain a trust account in that jurisdiction at a branch of

 

                (a)    a chartered bank;

 

                (b)    a trust or loan company; or

 

                (c)    a credit union;

 

but the Superintendent may impose terms and conditions as the Superintendent deems appropriate and may revoke the permission at any time.

 

       (4)    All trust monies received by an insurance agent or agency, whether by cash or by cheque or otherwise, payable to the agent or agency, shall be deposited in the agent's or agency's trust account without delay, and in any case shall not knowingly be deposited later than three banking days after the day the monies were received, but money belonging to the agent or agency may be withdrawn from the trust account once received from an applicant for an insurance contract.

 

       (5)    No insurance agent or agency shall disburse or withdraw any monies held in trust except in accordance with the terms and conditions upon which the monies were received or as otherwise provided in Section 18 of these regulations, and every cheque drawn on the trust account shall have the words “trust account” and the name of the agent or agency in whose name the trust account is kept imprinted thereon.

 

       (6)    At all times an insurance agent or agency shall maintain in its trust account monies that are sufficient, together with trust monies receivable, to meet all its trust obligations, but thirty-three percent of the total accounts receivable over ninety days from the insurer's billing date shall not be considered a trust asset.

 

       (7)    When requested in writing by the Superintendent or the representative of the Superintendent, every agent or agency shall, within thirty days after the request, account for all trust monies received by the insurance agent or agency.

 

15   Every insurance agent or agency required by these regulations to maintain a trust account shall maintain accounting records in accordance with generally accepted accounting principles, and shall maintain books, records and accounts in connection with the business of the agent or agency to record

 

                (a)    all money received in trust for insurers or members of the public;

 

                (b)    all disbursements out of money held in trust; and

 

                (c)    all specifically identified property, other than money held in trust including marketable debentures, deposit receipts, treasury bills or other negotiable

instruments and any other thing of value; and

 

                (d)    any instrument that could be negotiated by the agent or agency.

 

16   As a minimum requirement to comply with Section 16 [15] of these regulations, every insurance agent or agency who is required by these regulations to maintain a trust account shall maintain, on a current basis, and in chronological order, books of account recording

 

                (a)    all receipts and disbursements of money, distinguishing therein between

 

                         (i)     the receipt of money in trust for insurers and members of the public and disbursements out of money held in trust, and

 

                         (ii)    money received and money paid on the account of the agent or agency;

 

                (b)    books of account including a record in the form of a revenue journal;

 

                (c)    a file or copies of billings showing all commissions or fees charged or billings to members of the public;

 

                (d)    bank statements or pass books, cashed cheques and detailed deposit slips for the trust account, giving information pertaining to each entry comprising the deposit;

 

                (e)    a monthly bank reconciliation or reconciliations which correctly reconcile the statement or pass book figures of the depository with the figures shown as on deposit in trust according to the agent or agency's books of account;

 

                (f)    a listing or other record showing all specifically identified property held in trust from time to time for insurers or members of the public;

 

                (g)    a record showing the monthly totals of the trust assets and trust liabilities as they appear from the books and records of the agent or agency.

 

17   Where these regulations require a record to be kept by an agent or agency for the purpose of the Act and subject to other statutory requirements, the agent or agency shall preserve the record for a six year period previous to the most recent fiscal year end of the agent or agency.

 

18   An agent or agency shall only withdraw funds from a trust account for the following reasons:

 

                (a)    a refund of premiums to the insured;

 

                (b)    a payment to the insurer of premiums owed;

 

                (c)    a payment of claims to an insured which have been authorized by the insurer;

 

                (d)    for the purpose of an investment referred to in Section 1(c) of these

regulations; or

 

                (e)    a payment of commission owed to the agent or agency.

 

19   The regulations respecting insurance agents made by the Superintendent of Insurance on the 11th day of April, 1990, and approved by the Governor in Council by Order in Council 90-628 made the 22nd day of May, 1990, are repealed.

 

 ________________________________________________________________ 

Form I - Trust Account Reconciliation Worksheet

Nova Scotia Insurance Act

 

TO: The Superintendent of Insurance

Nova Scotia Insurance Act

 

In accordance with the requirements of Regulations [Sections]14 to 18 inclusive of the [Regulations Respecting Insurance Agents made under the] Nova Scotia Insurance Act, the following trust account reconciliation worksheet with respect to the trust account maintained by _________________________ (name of agency or agent) has been prepared and is submitted, in accordance with Regulation [Section] 13:

 

Assets:

1     Cash on hand and bank balances

                of trust accounts                                             ____________

2     Total premiums receivable                                      ____________ 

3     Less 1/3 of premiums over 90 days from

                insurer's billing date                                       ____________

4     Allowable premiums receivable

                ([line] 2 minus [line] 3 = [line] 4)                                                   _____________

5     Investments held in trust as allowed by

                regulations                                                                                       _____________

6     Total assets (Lines 1 + 4 + 5) =                                                               _____________

 

Liabilities:

7     Payables to insurance companies and

                other brokers                                                                                   _____________

8     Deferred premiums*                                                                                _____________

9     Refunds due to insureds                                                                           _____________

10   Total liabilities (Lines 7 + 8 + 9)                                                            _____________

 

       Net trust position (Line 6 minus line 10)                                               _____________

 

*     Deferred premiums are premiums paid towards a policy by the insured for

which the insurance agent or agency has not been billed by the insurer.

 

The information contained in this report is correct to the best of my knowledge and belief.

 

_______________________________                    _________________________________

Date of application                                                    Authorized signature

 

_________________________________

Name/title (please print)