Insurance salesman found to be in ethics breach

A former insurance salesman for Industrial Alliance, whose spouse and daughter were the owners or beneficiaries of life-insurance policies taken out in the names of elderly clients, has been found guilty of ethical breaches by the Chambre de la Sécurité Financière, the organization that oversees financial professionals in Quebec.

A disciplinary committee found a clear conflict of interest in the actions of Attila Szabo, an insurance representative from 2001 until his termination in 2013.

Evidence at the disciplinary hearing showed that Szabo, compensated by commissions, had applied for life insurance policies for five people from 2004 to 2011 with his spouse and/or daughter named as their beneficiaries. The premiums were mostly paid from an account he held jointly with his spouse, or from accounts held solely or jointly by his daughter.

Upon the death of one 74-yearold client, in 2008, Szabo’s spouse received the benefit of $15,013. She received $20,177, and their daughter $10,004, when another woman in her 70s died, and $17.779 and $4,858 after two other deaths, both for reduced amounts because they occurred within two years of the application. His spouse testified her gain from the policies was $14,800.

Szabo, an economist by training with an MBA from École des Hautes Études Commerciales (HEC), told the disciplinary committee he acted professionally and it was the policy holders who suggested that his spouse or daughter be the beneficiaries, to thank them for their friendship and services rendered over the years.

The committee didn’t buy it. “How could elderly people, most of them at the end of their lives and comprehending little of the language (of the contract), envisage such an operation? Only he could be the instigator of an arrangement benefiting himself and his family,” the ruling states.

Sanctions in the matter will be determined at a future hearing.