Ch.3- Role of government in the insurance industry

Question 1

Role of federal government

Question 2

Role of provincial governmetn

Answer 2

• supervising terms + conditions of insuance contracts
• licensing of insurers
• monitoring financial stability of provincially licenced insurers

Question 3

solvent

Answer 3

able to fulfill fnancial obligations

Question 4

PACICC

Answer 4

• Property And Casualty Insurance Compensation Corp
• if insurer goes bankrupt-> PACICC pays all VALID claims
  
  • Max $250,000 on all claims from single occ.
  • refund up to 70% unearned premiums

Question 5

Fiduciary

Answer 5

• a person who handles other ppls money
• i.e insurers, brokers
• comsumers expect premiums paid fwd to insurer + that they keep portion to pay claims

Question 6

Fiduciary responsibility of insurers

Answer 6

• premiums paid not fully earned till expiry of policy (held in trust)
• if only 1 mth of policy has passed, then only 1/12th earned, the rest is UNEARNED and held in trust

Question 7

Fiduciary responsibility of Brokers

Answer 7

• Commisions not fully earned until expiry of policy
• broker deducts commission from pmt to insurer
• keeps earned commission only

Question 8

Insurnace act

Answer 8

Legal rules governing operation of insurance industry

Question 9

Insurance contracts rules (7) List

Answer 9

1. Contents of insurance policies legislated
2. Removal coverage legislated
3. Limitation of liability clauses- Usage legislated
4. Right of subrogation legislated
5. Waiver of term/condition
6. Effect of delivery of policy
7. Policies Insuring fie peril
   
   • basic covergaes legislated
   • standard exclusions legislated
   • Statutory conditions

Question 10

1. Contents of Insurance Policies legislated

Answer 10

• parties to the contract (insurer/insured)
• policy period (start/end date, effective time)
• Loss payable/Payee (if any)
• Types of insurance Coverages + amts
• rate premium charged (amount + method/rate)
• Sunjectb matter of insurnce (items insured, location of insured items)

Question 11

2. Removal coverage legislated

Answer 11

?? insert pic ??- imnsured property can be removed to protect it???

• conditions applying to removal clause
  
  • insurer extend coverage to a location NOT insured when property necessarily removed from locations to prevent loss/destruction/damage
  • amt of ins left for any loss @unamed location is reduced by amt paid for loss at original location
  • obligation of insurer to extend insurnace to property at unanmed location is oy for 7 days or expiration of polciy

Question 12

3. Limitation of liability clauses

Answer 12

requires contract to be stamped/printed on its face in red ink:

“this policy contains a clause that may limit amount payable”

clauses cause amot for loss tp be less thaan what it was purchased for

Question 13

4. Right of subrogation

Answer 13

• Subrogations: put yourself in anothers shoes
• any action taken aainst responsible party is taken in insured name

Question 14

5. Waiver of term or condition

Answer 14

• interim changes to policy- only under signature of person authorized for that purpose by insurer (i.e broker -me)

Question 15

6. Effect of delivery on policy

Answer 15

• once policy delivered, even if not paid for, its still binding to insurer

Question 16

7. Policies insuring fire peril (i) basic coverages legislated

friendly fire vs hostile fire

Answer 16

• basic coverages legislated (statutory)
  
  • ​fire
  • lightning (direct only)
  • Explosion of natual gas/coal)
• 2 sources of fire:
  
  • friendly fire (contained)
  • hostile fire (Escapes/spreads)
    
    • hostile fires covered
• fire not defined, req ignition or burning

Question 17

7. Policies insuring fire peril (ii) standard exclusions legislated

Answer 17

• application of heat (if directly applied; resulting damage covered)
• lightning damage to electrical devices/appliances (only direct damage by actual lightning)
• electrical currents (other): no coverage if caused by artificially generated sources of electricity like hydro
• contamination by radioactive materail
• war
  
  • ​see list in book

Question 18

7. Policies insuring fire peril (iii) statutory conditions (15)

Answer 18

1. Misrepresentation
2. property of others
3. change of interest
4. material change
5. termination
6. requirements after loss
7. fraud
8. who may give notice + proof
9. salvage
10. entry/control/abandonment
11. appraisal
12. when loss is payable
13. Replacement
14. action
15. Notice

Question 19

Statutory condition #1- Misrepresentaion

Question 20

Statutory condition #2- Property of others

Question 21

Statutory condition #3- Change of interest

Question 22

Statutory condition #4- Material change

Question 23

Statutory condition #5- Termination

Question 24

Statutory condition #6- requirements after loss

Question 25

Statutory condition #7- Fraud

Question 26

Statutory condition #8-who may give notice + proof

Question 27

Statutory condition #9- Salvage

Question 28

Statutory condition #10- Entry, control, abandonment

Question 29

Statutory condition #11- Appraisal

Question 30

Statutory condition #12- When loss is payable

Question 31

Statutory condition #13- replacement

Question 32

Statutory condition #14- Action

Question 33

Statutory condition #15- Notice

Question 34

Mortgagor

Answer 34

• owner
  
  • lessor
  • bailor

Question 35

Mortgagee

Answer 35

• NOT owner
• Lessee
• bailee
  *