Book 1 Study 2

Question 1

Mention 4 things an agent or broker can do to get the best service after a claim.

Answer 1

1. Notify the insurer properly of all the reported losses.
2. Appoint an adjuster promptly.
3. Use a follow up system.
4. Tell the client when there clearly is no coverage.
5. Protect both client and insurer from unreasonable demands.

Question 2

What are the three kinds of insurance intermediaries?

Answer 2

1. Broker
2. Agent
3. Direct Writer

Question 3

a) Who would use a cover note?
b) To whom would it be given?
c) What would it tell the recipient?

Answer 3

a) An agent/broker
b) Mail a copy to the insurer
c) Notice and conformation to the insurer that it has been bound to a contract.

Question 4

Explain binding authority.

Answer 4

Capacity to confirm to applicants that they have coverage against certain happenings or events which if occur may cause financial loss.

Question 5

Name 3 responsibilities of an agent/broker.

Answer 5

1. Act within the terms of the contract between them.
2. Follow instructions as to types of business which may be written.
3. Collect premiums and hold these amounts in trust until they are remitted to the insurer.
4. Advise the insurer promptly of all claims notified to the agent/broker.

Question 6

Who are the sales people of insurance companies?

Answer 6

Agents/Brokers

Question 7

What are two essentials necessary to build a profitable agency/brokerage organization?

Answer 7

1. Production: the volume of sales must be consistent and dependable.
2. Service: must be well managed and efficiently organized.

Question 8

In the principle-agent relationship it is important to understand the following terms. Supplied are the terms in the Common law code, what are the corresponding terms in the civil code?

1. Contract
2. Principal
3. Agent

Answer 8

1. Mandate
2. Mandator
3. Mandatory

Question 9

Name two elements of good client service.

Answer 9

1. Reputation (as a dependable source of insurance advice)
2. Adequate Capacity and Range of Coverage
3. Good claim handling.

Question 10

Where do agents/brokers get their authority?

Answer 10

Obtain their authority from the agreement or contract.

Question 11

State the three ways in which an agent/broker can increase their business.

Answer 11

1. New business from new clients
2. Renewal business
3. Additional business from existing clients

Question 12

What is meant by adequate capacity?

Answer 12

Is the ability to provide a full range of insurance protection to it’s clients.

Question 13

What is the difference between ordinary commission and profit commission?

Answer 13

1. Commission is the share of the premiums allowed to the broker/agent for having produced the business.
2. Profit commission is an extra commission paid annually to a broker/agent.

Question 14

Name four areas in which insurance intermediaries are regulated.

Answer 14

1. Qualification : knowledge of business
2. Licensing : required to operate
3. Operating requirements
4. Renewal of license

Question 15

Who regulates insurance intermediaries?

Answer 15

Provincial governments and self regulation

Question 16

What is the purpose of a trust account?

Answer 16

To deposit premiums collect and from which the insurers would be paid for policies insured.

Question 17

There are two legal systems in Canada. The 1.____________ applies to Quebec and the 2.____________ applies in the rest of the country.

Answer 17

1. Civil Code

2. Common Law.