Ch.3- Role of government in the insurance industry Flashcards

1
Q

Role of federal government

A
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2
Q

Role of provincial governmetn

A
  • supervising terms + conditions of insuance contracts
  • licensing of insurers
  • monitoring financial stability of provincially licenced insurers
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3
Q

solvent

A

able to fulfill fnancial obligations

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4
Q

PACICC

A
  • 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
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5
Q

Fiduciary

A
  • 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
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6
Q

Fiduciary responsibility of insurers

A
  • 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
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7
Q

Fiduciary responsibility of Brokers

A
  • Commisions not fully earned until expiry of policy
  • broker deducts commission from pmt to insurer
  • keeps earned commission only
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8
Q

Insurnace act

A

Legal rules governing operation of insurance industry

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9
Q

Insurance contracts rules (7) List

A
  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
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10
Q
  1. Contents of Insurance Policies legislated
A
  • 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)
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11
Q
  1. Removal coverage legislated
A

?? 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
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12
Q
  1. Limitation of liability clauses
A

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

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13
Q
  1. Right of subrogation
A
  • Subrogations: put yourself in anothers shoes
  • any action taken aainst responsible party is taken in insured name
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14
Q
  1. Waiver of term or condition
A
  • interim changes to policy- only under signature of person authorized for that purpose by insurer (i.e broker -me)
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15
Q
  1. Effect of delivery on policy
A
  • once policy delivered, even if not paid for, its still binding to insurer
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16
Q
  1. Policies insuring fire peril (i) basic coverages legislated

friendly fire vs hostile fire

A
  • 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
17
Q
  1. Policies insuring fire peril (ii) standard exclusions legislated
A
  • 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
18
Q
  1. Policies insuring fire peril (iii) statutory conditions (15)
A
  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
19
Q

Statutory condition #1- Misrepresentaion

A
20
Q

Statutory condition #2- Property of others

A
21
Q

Statutory condition #3- Change of interest

A
22
Q

Statutory condition #4- Material change

A
23
Q

Statutory condition #5- Termination

A
24
Q

Statutory condition #6- requirements after loss

A
25
Q

Statutory condition #7- Fraud

A
26
Q

Statutory condition #8-who may give notice + proof

A
27
Q

Statutory condition #9- Salvage

A
28
Q

Statutory condition #10- Entry, control, abandonment

A
29
Q

Statutory condition #11- Appraisal

A
30
Q

Statutory condition #12- When loss is payable

A
31
Q

Statutory condition #13- replacement

A
32
Q

Statutory condition #14- Action

A
33
Q

Statutory condition #15- Notice

A
34
Q

Mortgagor

A
  • owner
    • lessor
    • bailor
35
Q

Mortgagee

A
  • NOT owner
  • Lessee
  • bailee
    *
36
Q
A