BAER - Intro to Canadian Insurace Cases Flashcards
List the types of insurance carriers. (4)
- individual U/W
- joint-stock company
- mutual insurance company
- reciprocal/inter-insurance company
Define individual U/Ws.
Like a stock exchange, BUT only open to members (U/W members & non U/W members).
Define joint-stock company.
A for profit company that is owned by shareholders BUT managed by a board of directors. The profits are distributed to the stockholders & investors
Define mutual insurance company.
A company that is owned by its policyholders. The profits are paid to policy holders as dividends.
Define reciprocal/inter-insurance exchange.
An unincorporated ASSOCIATION of subscribers who EXCHANGE contracts of indemnity. These don’t issue policies, and members are individually liable.
Why are insurers partly exempted from anti-trust law?
Because short-term price competition is not in the interest of the consumer: it leads to under pricing which can result in insolvency.
What do rating bureaus do?
Promulgate rates, terms of contracts, etc - it is an APPROVED way for insurers to COOPERATE in setting rates that are adequate.
What is the legal status of Rating Bureaus?
They are authorize and regulated by the Provincial Insurance acts.
How to rating bureaus collect and analyze data?
Provincial Superintendents appoint a STATISTICAL GATHERING AGENCY, which is usually Statistical Division of the IBC.
What does Insurance Forms Manual Services publish?
It publishes standardized version of basis policies and options, so that there is no competition on basis of policies in Canada.
What are IBC’s 5 objectives (formed in 1964).
- STUDY legislation
- COLLECT/analyze data
- ENGAGE in research
- DISCUSS general insurance
- PROMOTE public understanding
What has been the focus of Canadian Insurance regulation since Confederation? (5)
- MARKETING: marketing integrity & improvement of the insurance contract
- OWNERSHIP: encourage Canadian ownership
- TAXES: collection of taxes
- HONESTY: honesty & competence of intermediaries (eg: agents, brokers, etc.)
SOLVENCY: ensure the solvency of insurers in order to protect policyholders
Examples of federal legislation designed to guarantee solvency in insurers. (1-3)
- CREATION: oversee the creation of domestic insurers & licensing of foreign insurers
- INVESTMENTS: restrictions on types of investments that are permitted (in order to reduce risk)
- RATING: authorization of rating bureaus for info-sharing
Examples of federal legislation designed to guarantee solvency in insurers. (4-6)
- COMPLIANCE: give the government departments the authority to enforce compliance with legislation
- ADEQUACY: create boards to oversee and ensure the adequacy of rates
- FILINGS: require the regular filing of Financial Statements
What is an indirect way Canadianization is encouraged in the insurance industry?
- requirements on foreign insurers to maintain sufficient assets IN CANADA
- if a foreign insurer becomes insolvent, THEN a Canadian insurer can assume control over the assets (helps stop the expatriation of capital)
What is the superintendent’s powers over marketing practices?
The superintendent can investigate and order persons to stop offensive practices.
What are the different levels of insurance regulation? (3)
- legislation
- regulations by the lieutenant governor in council
- guidelines by superintendents
Why are uniform guidelines easier to establish than uniform legislation?
Because Guidelines do not need to go through the legislative process (ie: reports and readings in the House of Commons & Senate, Royal Assent).
Cite a case that the Privy Council use against federal efforts at insurance legislation.
Citizen’s Insurance Company v Parsons
Who oversees Canadian SOLVENCY regulation (federal or provincial)?
BOTH - cooperative federalism has been achieved in practice