CAIB 1 Chapter 7 Questions and Answers Already Passed

CAIB 1 Chapter 7 Questions and Answers Already Passed Who is responsible for the administration of the insurance act in your province? MB Government Outline the initial licensing requirements, whether there are different levels of licenses, the supervision requirements, and license terms in your province. Insurance license required. CAIB 1 with supervision Outline the class of license issued in our province and whether this license would be valid in other provinces. CAIB, this is transferable to other provinces Define "Ethics the principles of conduct governing an individual or a group Identify 3 temptations that could cause a broker to act unethically. 1. Sell more insurance than is needed 2. Sell higher priced coverage when equivalent coverage is available at a lower price 3. Recommend the policy with the highest commission percentage Identify 6 reasons why your licence to practice as an insurance broker may be revoked 1. Guilty of misrepresentation, fraud, deceit or dishonesty 2. Contravenes any provision of The Insurance Act or its equivalent 3. Fails to pay to an insurer premiums collected and retained beyond the term stipulated 4. Places insurance with unlicensed insurers without complying with legislation 5. Incompetent to transact insurance agency business for which the licence was granted 6. Untrustworthy to transact insurance agency business for which the licence was granted Professional brokers association at both the provincial and national levels are governed by codes of conduct which set ethical standards of a level than more compliance with the law. Outline three duties brokers owe to each of the following: Clients Insurers Fellow Brokers Clients - Provide coverage best suited to the client's needs - Hold the affairs of a client in strict confidence - Be competent to perform the services undertaken on the clients behalf Insurers - Abide by the terms of the Agency Agreement - Adhere to the binding authority granted by the insurer - Deal honestly with monies held in trust for the insurer - Disclose to the insurer all material facts about a risk even if such information might jeopardize the placement of the risk Fellow Brokers - Use fair methods of competition in solicitation of the business, consistent with the honor and dignity of the profession - Encourage public respect for and endeavor to improve the practice of the broker's vocation - Co-operate in every reasonable way for the betterment of the industry - Treat fellow brokers with respect - To not harm the reputation of a fellow broker Outline 3 characteristics showed by all professions, including brokers i. a commitment to high ethical standards ii. A high standard of educational preparedness and training iii. A formal association or society with regulating power over its members There have been a number of Canadian court decisions that have imposed upon brokers a standard of duty of care to clients approaching perfection. Briefly outline the facts and decisions of the "Fine Flowers" case. Broker was negligent in his failure to warn his client of exposures for which no coverage was available. The broker's reassurance of everything being "fully covered" had misled his client into a false sense of security. Even if the coverage had been provided, the policy contained a normal wear and tear exclusion. Identify the 6 common causes of broker errors and omissions claims. Which of these 6 is by far the largest cause of errors and omissions in claims? 1. Inadequate Coverage 2. Misrepresentation and Description Errors 3. Cancellation/Renewal Errors 4. Policy Change Errors 5. Processing Delays 6. Agency Agreement Violations - Inadequate coverage Explain 3 examples identified in common causes of broker errors and omissions claims. 1. Failure to provide proper coverage. Example. Brokers would be remiss in not pointing out the potential of a sewer back-up loss to clients who store property in their basements. 2. Placing coverage too late. Example. Loss occurs after the application for insurance has been taken. The broker may be liable for the amount of loss