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6_S24 > Baer.Intro > Flashcards

Baer.Intro Flashcards

1
Q

Identify the 5 objectives of IBC (Insurance Bureau of Canada).

A
  1. STUDY legislation
  2. COLLECT/analyze data
  3. ENGAGE in research
  4. DISCUSS general insurance
  5. PROMOTE public understanding
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2
Q

Identify 6 areas of Canadian legislations (federal/provincial) that promotes financial soundness of insurance companies. (Hint = CIRCA-F)

A
  1. CREATION: oversee creation of (domestic) & licensing (foreign) of insurers
  2. INVESTMENTS: restrictions on types of investments that are permitted (to
    reduce risk)
  3. RATING: authorization of rating bureaus for info-sharing
  4. COMPLIANCE: give Govt depts authority to enforce compliance with
    legislation
  5. ADEQUACY: create boards to oversee and ensure adequacy of rates
  6. FILE F/S: require regular filing of Financial Statements
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3
Q

What has been the 5 focus areas of Canadian Insurance regulation since Confederation (Hint = MOTHS)

A
  1. Marketing integrity & improvement of insurance contract
  2. Encourage Canadian ownership
  3. Collection of taxes
  4. Honesty & competence of intermediaries (Ex: agents)
  5. Keep insurer’s solvent to protect policyholders
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4
Q

What is the ‘principle of indemnity’

A

After covered loss, return insured to former financial position (before loss), and neither penalize nor reward

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5
Q

What is a ‘contract of indemnity’

A

Contract where amount recoverable is measured by insured’s pecuniary loss

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6
Q

Briefly explain the important intent of doctrine of subrogation

A

Prevent over-compensation of insured

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7
Q

Identify 2 ADVANTAGES and 2 DISADVANTAGES of foreign participation in the Canadian insurance industry

A

Advantages:
1. COMPETITION: produces (lower prices, higher availability) for Canadians
2. INNOVATION: good for consumers

Disadvantages:
1. Foreign parent failure is the main cause of Canadian insolvency
2. Take market share from domestic insurers

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8
Q

Briefly discuss whether a life insurance contract is considered an indemnity policy.

A

No, because the amount recoverable is not measured by the loss.
The amount payable is fixed and written into the contract.

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9
Q

Identify 2 conditions that an insurer must establish to be entitled to recover under an indemnity insurance contract.

A
  1. Event must be covered
  2. Requires proof of AMOUNT of loss
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10
Q

Briefly describe how a ‘valued policy’ differs from a typical insurance policy.

A

Proof of amount of loss not required because compensation is pre-determined by contract

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11
Q

What conditions (3) eventually led to public control regarding solvency

A
  1. Insurer bankruptcies in the 1860s/70s
  2. The recognition short-term price competition is bad
  3. Insurance involves a significant savings component (prepaid premiums) & policy holders must be protected
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12
Q

Briefly explain the difference between guidelines & legislation for insurance regulation

A

Guidelines are more flexible than legislation

Legislation must go through senate, house of commons, and get royal approval

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13
Q

Briefly describe two mandates of the Canadian Council of Insurance Regulators

A
  1. Legislation Axis:
    Ensure adequacy of Provincial Regulation
  2. Practices Axis:
    Consumer protection
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14
Q

How does federal legislation protect Canadian insureds of foreign insurance companies (2)

A
  1. Foreign insurers must maintain sufficient assets IN CANADA (for recovery from insolvency)
  2. If foreign insurer goes insolvency then a Canadian insurer can assume control over assets (helps stop expatriation of capital)
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15
Q

Who oversees the Canadian
a) Solvency regulation
b) Rate regulation
(Federal or Provincial)

A

a) both - cooperative federalism has been achieved in practice
b) provincial

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16
Q

Identify the 3 different levels of insurance regulation

A
  • legislation
  • regulations by lieutenant governor in council
  • guidelines by superintendents
17
Q

Identify the 2 necessary conditions for reimbursement under ‘valued’ insurance policy.

A
  1. Event must be covered
  2. Requires PROOF of loss, but not amount of loss
18
Q

Define the standard of absolute liability

A

IF settlement possible BUT rejected by insurer THEN insurer is liable for all costs (even in excess of policy limit)

19
Q

What are the 3 different possible standards for liability

A
  1. Absolute liability
  2. Liability for not acting reasonably
  3. Liability for bad faith (builds on lack of reasonableness)
20
Q

identify DIFFERENCES between private & social insurance

A

SELECTIVITY: (private insurers are MORE selective, social insurance is LESS selective)
SOLVENCY: (private companies monitored by superintendent, social insurance underwritten by govt)
EMPLOYEES: (private insurers have private employess, social insurance has civil servants)
FRAUD PROTECTION: (yes for private insurers, not as much for social insurance)

21
Q

identify SIMILARITIES between private & social insurance

A
  • both PROTECT insurance fund
  • both PREVENT over-compensation
  • both need to define ‘covered event’
  • both need to determine ‘covered losses’
  • both need claims & reserving functions
22
Q

Glynn vs Scottish : Facts

A

Glynn injured in auto accident
- was reimbursed by other driver’s insurer (including medical)
- Glynn sued to DOUBLE-RECOVER medical from own insurer

23
Q

Glynn vs Scottish : Issue

A

Does Glynn’s insurer have right to subrogation?

24
Q

Glynn vs Scottish : Issue

A

RULING 1: for insured: Glynn gets double-recovery
RULING 2: for insurer
- subrogation concept applies becasue auto policy is contract of indemnity
- so Glynn’s insurer does NOT have to pay

25
Q

Fletcher v MPIC: Facts

A

Fletcher was in serious accident, person responsible was underinsured. Fletcher has requested max coverage but MPIC employee didn’t provide UMC. Customer relied on MPIC..

26
Q

Fletcher v MPIC: Issues

A

SSUE 1:
→ is a government insurer responsible for informing customers of available coverages?
ISSUE 2:
→ what is the extent of the government’s liability should it fail to do so?

27
Q

Fletcher v MPIC: Ruling 1,2,3

A

Ruling T/A/SC: Insured / Insurer / Insured
Final Interpretation:
→ both private agents and government institutions owe a duty of care
→ but private agents owe a higher duty-of-care because of their promised expertise

28
Q

Dillon v Guardian Ins Co: Facts

A
  • Guardian rejected a settlement that was LESS THAN the policy limit
  • subsequent jury award GREATER THAN policy limit
  • insured sued insurer for excess amount of award above policy limit
29
Q

Dillon v Guardian Ins Co: ruling

A

Ruling: In favour of insured. (Standard of absolute liability)

6_S24 (56 decks)

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