Professional Conduct, Broker Standards and Ethics
The conduct baseline
RIBO's Code of Conduct and by-laws require brokers to act with integrity, honesty and good faith, in the client's best interest, and with the competence expected of a licensed professional. A broker must disclose material information, explain coverage and exclusions, avoid misrepresentation, protect confidential client information and avoid or disclose conflicts of interest. The duty runs to the client, but the broker must also deal fairly with insurers and cooperate with RIBO.
Money, records and competence
- Premiums and refunds are trust-like funds. They must be handled through the required trust account, kept separate from operating money and remitted promptly; using client premium for brokerage expenses is a serious breach.
- Brokers must maintain errors and omissions insurance, keep records that allow reconstruction of advice and transactions, and complete required continuing education.
- A broker must not handle a risk outside their competence without obtaining help or referring it.
- Complaints must be handled fairly and RIBO investigations cooperated with; discipline can include conditions, suspension or revocation.
- Privacy law, including consent and safeguards for personal information, applies throughout the relationship.
Worked example
A client pays a $2,400 annual premium by cheque. The broker deposits it in the trust account and remits the net premium to the insurer. The policy is cancelled after four months, and the insurer returns unearned premium. The broker must account for the refund and return the client's portion promptly, less any disclosed brokerage fee. Moving the refund into the brokerage's general account to cover payroll is a fiduciary breach, even if the brokerage intends to repay it later.
Traps
A commission is not a licence to put the broker's interest first. A conflict is not cured by silence. Confidentiality does not end when the policy is issued. E&O insurance does not cover deliberate wrongdoing. 'The insurer approved it' does not displace the broker's duty to the client.