CH.4 - RULES AND PRINCIPLES GOVERNING THE ACTIVITIES OF LIFE INS AGENTS + A&S INS AGENTS Flashcards
PROV+TERR regulatory authorit licenced by ies
Fed supervision under ins. companies act + OSFI : detemine financil soundness of fed inc life ins co’s
prov+terr: determine finan cial soundness + licensing ins agents + reguating licencing of insurers + market conduct
prov+terr ins regulators: Ontario
life ins agents , a&s agents + corp agencies licenced by FSRA (REPLACED FSCO) + also regulates insurers
GOVERNED BY Insurance Act
FSRA
FINANCIAL SERVICES REGUKATORY AUTHORITY
FSCO
FINANCIAL SERVICES COMMISION
CISRO
- canadian insurane services regulatory organizations
CISRO , what do they do?
- primary responsibility: admminister regulatory system, applicable to ins intermediaries, under their auth
Other authorities providing client protection (5)
- Office of the privacy comissioner of canada
- FINTRAC (Financial txs and reports analysis centre of canada)
- ASSURIS
- OLHI (Ombudservice for life and health insurance)
- CCIR (Cdn council of insurance reguators)
Office of the privacy commissioner Of canada
- administers enforcement of PIPEDA + protects and promotes privacy rights of individuals
- except– BC, AB, QC
FINTRAC
- Financial Txs and Reports Analysis Centre of Canada
- ## ensures life ins agents , etc, comply w canadas proceeds of crime (money laundering) and terrorist financing act
FINTRACT focus (4+1)
- Ascertain each clients identity and confirm existence of entities
- 3rd party determination
- determination of the purpose
- determination of politically exposed ppl + head of intl orgs
- obligation to report suspicious txs, terrorist property, large cash txs
Ascertaining each clients identity
- under FINTRAC, 3 ways to verify identity
- GOV issued photo ID
- Credit on file method
- Dual process method
pg 106– skipped some, add later if need to
3rd party determination
applicant on behalf of 3rd party (POA or nominee)—> must keep 3rd party determination record specifying:
- 3rd party -individual: name, add, DOB, biz/occ
- 3rd party entity: name, add, nature of bizz, inc #, place of corp
- relationship btwn 3rd aprty and client
determination of PEP (politically exp persons) and heads of intl org.s( HIO)
PEP, HIO, OR FAMILY MEMBER OF
If makes lump sum $100k or more, establish source of fuds
Determination of the purpose
- client must indicate pupose of product purchasing + how will be used
obligation to report suspicious txs
- all conducted or attempted sus txs –> report FINTRAC)
- SUS TXS INDICATRS— pg 109
- report terroist property: report to RCMP + CSIS
OBLIGATION TO REPORT LARGE CASH TXS
- report: single dep of $10k or more or 2 or mroe $10,000 dep. w/in 24 hr
dep of $100k or mroe:
- check is PEP w/in 15 days
-
POLITICALLY EXPOSED PERSON (PEP)
FOREIGN PERSON who held gov or legal position in foreign country, incls their spouse or close family
Assuris
not for profit org protecting PH’s if ife ins company fails
all fed reg insurers must be part of assuris
assuris: see table pg 111
OLHI ( OmbudService FOR LIFE AND HEALTH INS)
A national independent complaint resoution org proiding clients w assistance to enquiries/ complaints
CCIR (Cdn council of insurance regulators) pg 111
facilitates and promotes efficient and effective insurance regulatory system in cda to serve public interest
Professional associations (5 CAICF)
- CLHIA
- advocis
- IFB
- CAILBA
- FPSC
THEY PROMOTE PROFESSIONAL QUALIFICATIONS, continuos professional development, ethical behaviour
IAIS (International association of insurance supervisors )
- represents insurance regulators
- promotes effective and globally consistent supervision of ins industry
- conteibutes to global financial stability
ICP 18 and 19 of IAIS
Insurance Core Principles
18: intermediaries: supervision of life ins agents
19: conduct of business: activities and behaviour of life ins agents
Acfing in good faith (3)
- duty of care
- integrity
- competence
Duty of care
Avoid careless acts or omissions
Integrity (6 HTFRDR)
Be:
- honest
- trustworthy
- fair
- reliable
- dependable
- respectful
Competence
Only conduct business for products/services licenced for (have competence)
Conflicts of interest
Agent motivated to take action for own interest
- prioritize clients interest
- Disclose conlfixts or potential conflicts
- product stability
Produxt suitability (NPD)
Agent must:
- perform needs analysis
- recommemd produxts to meet needs
- explain + document products recommended
Product suitability: beet practices (DCFNRP)
Disclosure Client expectations Fact finding Needs assessment Recommend/advise Product info
Conflict of interest occupations
Must not be engaged in any biz/occupation that would jeopardize applicants integrity/independence/competence
- clergyman, police officer, liquor store employee
Must bot be in position to use coercion/undue influence to control, direct, secure biz
Tied selling
Making purchase of 1 product required to purchase another
Churning
Encourage client to guve uo 1 produ t for another to earn commission (with same insurer)
Twisting
Convincing clinet to end 1 policy to replace with another (different insurer)
Premium rebating
Agent gives back portion of premium
Trafficking in insurance
Agent helps pilicyhilder sells their polocy (or abs. Assignment) to buyer
Inducing to insure
Cannot use gift or offer payment to convince client to purchase insurance
Fronting
Allowimg someone else to solicit business and submit to insurer under another agents name thAt sidnt meet client
Unnecessary delay in delivering policy
Must not hold/retain documents for delivery
Misrepresentation
Violation for any life insurance agent to make, issue, circulate any illustrations/sales material, or make any false statement
Missappropriating client funds/ commingling of funds
Taking money or other property received from client for specific purpose and fradulently misapplying to other purpose
Cannot seposit client dund in to ur account
MIing a false document (forgery)
Agent making false document knowingly
Hilding out improperly
Pg 128
Misusing comoany privided illustrations
Pg 129
Defamation
Unethical for life ins agent to be maliciously critical/ derogatory about any colleague
Making proper disclosure (4)
Product disclosure
Disclosure anput replacement
Commission sharing
Referral/ referral fees
Product disclosure
Agent should provide complete info about the producy and how if meets clients needs + biz relationship w insurer
See pg 131 for key items
Disclosure about replacement
- how policies differ
- why recommendation appropriate
- risks of replacement
- existing ins w possible cash values
- negative tax consequences
LIRD- life ins replacement declaration
Commission sharing
Payment or exchange of something of value based on % of commission
Agent must disclose to cliwnr
Referral and referral fee
Fee paid for each lead/prospect whether a sale or jot
Cannot be contigent on sale
Cannot be % of commission UNLESS if being paid to another licenced Gent
Must disclose to clients
Acting un compliamcd with eegulations and codes of conduct (3 - MDD)
- maintaining req liability ins (E&O)
- documemt file
- deliver contract
Majntaining S&O INS
Req by FSCO to have E&O coverage
Provides indemnity against negligence, error, ommision + protection for any financial losses may have incured
Doesnt protect against intentional acts, missapp., fraud, crime
Documenting file
To protect against complaints/ lawsuits, keep detailed notes + correspondence of of orihinal txs, recommendations, cliemt acceptance
Contract delivery
Do not deliver policy to client w/o verifying if any change in health or insuraniliyy
When policy delivered (win 30 days) must check insured still in good health
If any significant changes– do not give the policy
Definition of complaint
Expression of dissatisfaction anout servixe peovided hy agent, may incl claim
For financial loss
Complaint proceduce to follow
Maintain complaint log to track complaints
See pg 137-138 for more
Core ethical values
- acting in goos fair (core, competence, integrity
- managing conflicts of interest properly
- no unfair/deceptive practices
- proper disclosure
- complying w regilarion and codes of conducts
Handling complaimts in fair and timely manner
Fullt licemced agents can sell:
- individual and group life ins
- indibixual and group a&s
- individual and group annuities
Reviking licence
Superintendant maybeevike livemce if
- violated any provision if licence
- made material misstatmwnt or ommission
- guilty of fraud
- showed incompetence or untrustworthiness
