Financial Services Tribunal & Pension Commission of Ontario Case Summaries/
Summaires des dcisions du Tribunal des services financiers et de la Commission des rgimes de retraite de l'Ontario

Case Name/nom du dossier:Universal Settlements Inc., Tony Duscio & Derek O’Brien v. Superintendent - I0151-2001

Type/type:Insurance/Assurance

Decision Date/Date de la dcision:2001-01-14

Tribunal/tribunal:FST/TSF

 



Franais

Universal Settlements Inc., Tony Duscio and Derek O’Brien v. (Ontario) Superintendent of Financial Services

FST File No.: I0151-2001

Date of Decision: January 14, 2002

Panel Members: Kathryn M. Bush, Chair, Martha Milczynski, Joseph Martin

Parties to hearing: Universal Settlements Inc.
Tony Duscio
Derek O’Brien
The Superintendent of Financial Services

Subject: CEASE AND DESIST ORDER
TRAFFICKING IN INSURANCE POLICIES WITHOUT A LICENCE

Summary:

The Superintendent issued a Notice of Proposed Cease and Desist Order based on Investigative Findings alleging that Universal Settlements Inc. (“Universal”) was contravening s. 115 of the Insurance Act by trafficking in insurance policies without a licence. Universal was involved in the sale to Ontario residents of a financial product known as a viatical settlement purchase program. Universal’s participation was limited to viatical settlement purchase programs originating in the United States; it did not market viatical settlement purchase programs that are based on Ontario life insurance policies. The issue for the Tribunal turned on the definition of “insurance” set out in s. 1 of the Insurance Act.

The Tribunal found that the viatical contract was not a contract of insurance. The contract was more akin to an assignment of an insurance contract which, in order to be considered as insurance, must be an assignment of the entire policy or contract rather than an assignment of the benefits or proceeds under the existing contract. The assignee must step into the shoes of the insured under the contract rather than becoming a substituted beneficiary. The viatical settlement purchase agreement was held to be an assignment of the benefits under an insurance contract. The Tribunal concluded that the only rights being dealt with that were subject to an agreement connected with Ontario were the right to designate who will receive proceeds from the benefits of an American life insurance contract. The agreement evidencing the exercise of such a right is not insurance. Consequently the Tribunal did not have jurisdiction to determine the matter and it held that the Superintendent’s Notice of Proposal was of no force or effect.

Cases referred to:

Yellow Cab Ltd. v. Alberta (Board of Industrial Relations) (1980), 114 D.L.R. (3d) 427 (S.C.C.)
St. John’s (City v. Gosse (1995), [1996] I.L.R. 1-3294 (Nfld. C.A.)
Sanderson v. Halstead [1968] 1 O.R. 749 (H.C.)

Related Proceedings:

Universal Settlements International, Inc. v. Ontario (Superintendent of Financial Services) [2001] O.J. No. 4301 (S.C.J). Motion by the Superintendent of Financial Services and the Ontario Securities Commission granted, quashing the application by Universal for declaration that neither the Securities Act nor the Insurance Act applied to Universal’s business in Ontario.

This summary is offered as a public service and should not be relied upon as legal advice. Many factors unknown to us may affect the applicability of any statement or comment made in the summary to your particular circumstances.

Universal Settlements Inc., Tony Duscio et Derek O’Brien c. (Ontario) Surintendant des services financiers


No de dossier du TSF : I0151-2001

Date de la dcision : Le 14 janvier 2002

Groupe d’experts : Kathryn M. Bush, prsidente, Martha Milczynski, Joseph Martin

Parties B l’audience : Universal Settlements Inc.
Tony Duscio
Derek O’Brien
Surintendant des services financiers

Objet : ORDONNANCE DE CESSER ET DE S’ABSTENIR
TRAFIC DE POLICES D’ASSURANCE SANS PERMIS

Sommaire :

Le Surintendant a mis un avis d’intention de rendre une ordonnance de cesser et de s’abstenir suite aux constatations d’une enquLte allguant que Universal Settlements Inc. ( Universal ) enfreignait l’article 115 de la Loi sur les assurances en faisant le trafic de polices d’assurance sans permis. Universal vendait aux rsidents de l’Ontario un produit financier appel programme d’achat de l’assurance-vie de personnes en phase terminale. La participation de Universal se limitait B de tels programmes offerts aux tats-Unis; la socit ne commercialisait pas de programmes fonds sur des contrats d’assurance-vie souscrits en Ontario. Le Tribunal devait se pencher sur la dfinition du terme assurance nonce B l’article 1 de la Loi sur les assurances.

Le Tribunal a conclu que le contrat d’achat de l’assurance-vie d’une personne en phase terminale n’tait pas un contrat d’assurance. Il s’apparentait plutt B une cession d’un contrat d’assurance qui, pour Ltre considre comme une assurance, doit Ltre une cession de la police ou du contrat tout entier plutt qu’une cession des avantages ou des produits au titre du contrat existant. Le cessionnaire doit prendre la place de l’assur et non pas devenir un bnficiaire substitut. L’entente relative B l’achat de l’assurance-vie de personnes en phase terminale a t juge Ltre une cession des avantages prvus au contrat d’assurance. Le Tribunal a conclu que le seul droit trait qui tait assujetti B une entente relie B l’Ontario tait celui de dsigner le bnficiaire des produits d’un contrat d’assurance-vie amricain. L’entente attestant l’exercice d’un tel droit n’est pas de l’assurance. Par consquent, le Tribunal n’avait pas comptence pour juger l’affaire et il a conclu que l’avis d’intention du Surintendant n’avait aucune force excutoire.

Jurisprudence :

Yellow Cab Ltd. v. Alberta (Board of Industrial Relations) (1980), 114 D.L.R. (3d) 427 (S.C.C.)
St. John’s (City v. Gosse (1995), [1996] I.L.R. 1-3294 (Nfld. C.A.)
Sanderson v. Halstead [1968] 1 O.R. 749 (H.C.)

Instances connexes :

Universal Settlements International, Inc. v. Ontario (Superintendent of Financial Services) [2001] O.J. No. 4301 (S.C.J). RequLte du Surintendant des services financiers et de la Commission des valeurs mobiliPres de l’Ontario accueillie, infirmant la demande prsente par Universal pour obtenir une dclaration que la Loi sur les valeurs mobiliPres et la Loi sur les assurances ne s’appliquent pas aux activits exerces par Universal en Ontario.


Ce sommaire est offert B titre de service public et ne saurait constituer des avis juridiques. Nombreux sont les facteurs que nous ignorons et qui peuvent avoir une incidence sur l’application de nos commentaires B votre cas particulier.