The Superintendent of Financial Services issued a Prohibition Order against Transamerica, preventing the issuance of a variable insurance contract with a negotiable initial sales charge.
The Superintendent argued this feature could lead to unfair discrimination among insureds of the same class and expectation of life, violating the Insurance Act.
On appeal, the Financial Services Tribunal quashed the order, finding that differences in negotiated charges result from individual consumer choice and market competition, not from discriminatory acts by the insurer.
The Tribunal concluded the Prohibition Order was a disproportionate response to speculative harm and emphasized the need for full disclosure of the negotiable nature of the charges to consumers.
