B.C. broker disciplined for scheme related to luxury car exports

B.C.’s broker regulator has been widening its dragnet of brokers caught selling auto insurance policies for cars slated for export out of Canada, and then cancelling the coverage soon afterwards, instead of properly selling temporary operating permits (TOPs).

In the most recent example, the Insurance Council of B.C. suspended Dawei (David) Diao’s broker license for 18 months and added it would not consider license reinstatement for a year. It also fined the former broker $10,000.

Council’s investigators found the broker had processed 137 auto insurance transactions between June 2019 and December 2020, all involving new or newer luxury vehicles. The broker issued one-year insurance policies and then cancelled them within seven days.

Diao “stated that the exporter Company TT would contact him and provide him with the vehicle information,” as the Insurance Brokers Council of B.C. explained the transaction in a decision released Mar. 13. “The licensee would then prepare the paperwork, attend the [auto] dealership, meet the owner for signatures and provide the licence plates.

“Occasionally, the licensee would meet the exporter at the dealership with the client. The client, not the exporter, would sign the paperwork.”

Diao also forged documents to show the insured vehicles were leased instead of fully paid for, the council’s decision notes. His brokerage, which made the complaint to the regulator, found he had given the forged document to the auto dealership for their records, and then filed the unaltered document with his brokerage.

“[Diao] stated that he altered the documents by paying $18 per month for editing software,” the Insurance Council of B.C. decision reads. “[He] further stated that he worked with [vehicle export] Company TT and [auto dealership] Company DA because they referred a large amount of business to him.

“The [broker] confirmed that he earned commissions from the transactions but stated that he did not receive any additional money or incentives from conducting these transactions.”

In this case, Diao told the regulator he simply wanted to grow his business and ‘Company TT’ was bringing him clients to process transactions. Diao “explained that he did not realize that what he was doing was illegal and stated that because ICBC was such a large corporation, he did not feel that conducting the transactions in this way was a ‘big deal.’”

He added he didn’t tell anyone at his brokerage about the transactions.

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Diao went on to tell council investigators he simply wasn’t aware of the ICBC’s two broker bulletins, posted in July 2018 and February 2020, in which the province’s public insurer reminded Autoplan brokers that when a vehicle is licensed, it must be for the purpose of driving on a British Columbia highway.

The ICBC bulletins make clear that if brokers become aware the only reason an auto insurance policy is being sold is to facilitate the export of the vehicle, and the intention of the customer is to cancel the policy within days of issuance, the customer should only be sold a TOP.

“Council determined that the [former broker] repeatedly processed and collected commissions for one-year Autoplan insurance policies when [he] knew the transactions were suspicious and were not intended for the purpose of operating a vehicle on a BC highway.

“The [broker], by his own admission, was aware that the vehicles were being exported and would not be driven for a one-year period. Council found this to demonstrate that the [broker] made false declarations to ICBC and deliberately misled ICBC as to the intentions of the policyholders when the licensee processed the Autoplan policies.

“Additionally, Council was troubled that [Diao] did not make any efforts to read the ICBC bulletins relating to TOP, especially since [his] insurance business was heavily focused on ICBC policies.”

Feature image courtesy of iStock.com/Aziz Shamuratov