Chapter 1 Insurancy Industry

Question 1

Four types of insurers

Answer 1

Joint stock company
Mutual company
Lloyd’s of London
Fraternal societies

Question 2

Define reinsurance

Answer 2

Insurance bought by insurers to transfer risk

Question 3

What are the two types of reinsurance?

Answer 3

Proportional - reinsurer shares percentage of Premium

Non-proportional - coverage starts after loss dollar amount

Question 4

Define Retrocession

Answer 4

When reinsurers purchase reinsurance

Question 5

Five elements of a legally binding contract

Answer 5

Competent parties
Offer and acceptance
Legality of object
Informed parties
Consideration

Question 6

The three additional elements of insurance contracts

Answer 6

Insurable interest
At most good-faith
Indemnity

Question 7

What is the difference between void contract and voidable contract

Answer 7

Void equals never existed

Voidable equals contract is in place until the victim chooses otherwise

Question 8

What losses can be insured?

Answer 8

Future and accidental
Caused by an insurable peril
Direct loss
Indirect loss resulting from a direct loss

Question 9

Define exclusive agents

Answer 9

Intermediaries who represent one insurer

Question 10

Define direct Writer

Answer 10

Employed agent of the insured. Only works with one insurer

Question 11

Define managing Agent/ General agent aka MGA

Answer 11

Represent ensures in one area or program. Can have underwriting, claims handling or accounting powers. Can offer special coverage. Can appoint agents

Question 12

Define wholesale broker

Answer 12

Specializes in hard-to-place specialty. Can underwrite, issue policy and paying claims

Question 13

Who is the OSFI? What do they do?

Answer 13

Office of the superintendent of financial institutions. Monitors national insurers for solvency and stability

Question 14

Who is the PACICC? What do they do?

Answer 14

Property and Casualty Insurance compensation Corporation. Protects consumers if insurer bankrupt.

Question 15

What are the limits paid out from the PACICC?

Answer 15

Auto and Commercial claims Max 250000
Home claims Max 300,000
70% refund for unearned premiums Max $700 per policy

Question 16

AIRB

Answer 16

Alberta automobile insurance rate board. Regulates rates for private passenger vehicles

Question 17

CIAA

Answer 17

Canadian independent adjusters Association. Advocacy education Professional Standards for independent Adjusters

Question 18

CICMA

Answer 18

Canadian insurance claims Managers Association. Manages the Canadian insurance company arbitration agreement so companies don’t need to sue each other

Question 19

CSIO

Answer 19

Center for study of insurance operations. Between Brokers, insurers and software vendors. Develops technology.

Question 20

FA

Answer 20

Facility Association. Residual Market

Question 21

GAA

Answer 21

Groupement des assureurs automobile. All Quebec Auto insurers are part of this group

Question 22

IBAA

Answer 22

Insurance Brokers Association of Alberta

Question 23

IBAC

Answer 23

Insurance Brokers Association of Canada

Question 24

ICB

Answer 24

Insurance Bureau of Canada. Represents 90% of insurers. Lobbies government on behalf of insurer. Educates customers

Question 25

ICLR

Answer 25

Institute for catastrophic loss reduction. Disaster prevention research

Question 26

SAC

Answer 26

SURETY Association of Canada.

Question 27

ULC

Answer 27

Underwriters Laboratories of Canada. Product safety, inspection and certification organization. Safety standards