Chapter 3

Question 1

What is the primary role of the Office of the Superintendent of Financial Institutions (OSFI)?

Answer 1

To supervise and enforce safeguards ensuring financial health of Canadian and foreign insurance companies.

Question 2

Which legislation governs the incorporation and regulation of insurance companies in Canada?

Answer 2

The Insurance Companies Act.

Question 3

What are the three areas of supervision under the Insurance Companies Act?

Answer 3

Establishment, prerequisites to operation, and supervision during operation.

Question 4

What legal document grants an insurance company its corporate status?

Answer 4

Letters patent.

Question 5

Why is federal incorporation preferred for insurance companies?

Answer 5

To facilitate business operations across Canada.

Question 6

What must an insurance company provide to obtain an order of commencement?

Answer 6

Incorporating documents, proof of capitalization, and other required information.

Question 7

Where must the company publish notice of the order of commencement?

Answer 7

In a local newspaper and the Canada Gazette.

Question 8

How often are insurance companies inspected by OSFI?

Answer 8

At least once a year, or every three years if deemed less frequent.

Question 9

What must a company’s annual return include?

Answer 9

Assets, liabilities, income, expenditures, and actuarial/auditor reports.

Question 10

What happens if a company fails to comply with OSFI directives?

Answer 10

OSFI may take control of assets and liquidate the company.

Question 11

What is required for a foreign insurance company to operate in Canada?

Answer 11

An order of the superintendent approving specified risks in Canada.

Question 12

Where must a foreign company vest its assets in Canada?

Answer 12

In trust with a Canadian financial institution.

Question 13

What is the role of provincial/territorial regulators?

Answer 13

to supervise insurance companies operating exclusively in their jurisdictions.

Question 14

Which insurance professionals are licensed by provinces/territories?

Answer 14

Agents, brokers, and adjusters.

Question 15

What do provincial insurance acts regulate?

Answer 15

Statutory conditions, policy contents, and grounds for voiding policies.

Question 16

Which policies are most affected by statutory conditions?

Answer 16

Accident and sickness, automobile, and fire insurance policies.

Question 17

What is the purpose of PACICC?

Answer 17

To protect policyholders if an insurer becomes insolvent.

Question 18

How is PACICC funded?

Answer 18

By the property and casualty (P&C) insurance industry.

Question 19

What does PIPEDA govern?

Answer 19

Collection, use, and confidentiality of personal information.

Question 20

Name three provinces with privacy legislation deemed “substantially similar” to PIPEDA.

Answer 20

Alberta, British Columbia, and Quebec.

Question 21

What governs insurance contracts in Quebec?

Answer 21

The Civil Code of Québec.

Question 22

How does the Civil Code differ from common law in other provinces?

Answer 22

It is not obliged to follow prior case law.

Question 23

What is regulated under highway traffic acts?

Answer 23

Driver and vehicle licensing, and insurance proof requirements.

Question 24

What penalties may result from operating an uninsured vehicle?

Answer 24

Fines and other legal penalties under traffic acts.

Question 25

What does the Insurance Companies Act ensure?

Answer 25

The financial integrity and solvency of insurers.

Question 26

Who enforces the Insurance Companies Act?

Answer 26

OSFI

Question 27

What happens if an insurer omits statutory conditions?

Answer 27

The statutory conditions still apply, and penalties may be incurred.

Question 28

Can statutory conditions be varied in accident and sickness policies?

Answer 28

Yes, but only if the changes are not less favorable to the insured.

Question 29

What investment principle must insurance companies follow?

Answer 29

A prudent portfolio approach to avoid undue risk and ensure reasonable returns.

Question 30

What reserves must companies maintain under the Insurance Companies Act?

Answer 30

Reserves for unearned premiums and claims.

Question 31

What are the key steps to responding to a privacy breach?

Answer 31

Identify the breach and its source (internal or external). Contain the breach and reduce harm. Evaluate the risks associated with the breach. Determine and notify affected parties. Prevent future breaches by addressing the cause.

Question 32

What is the first step in responding to a privacy breach?

Answer 32

Identify the breach and its source, determining whether it is internal or external.

Question 33

What does the containment step involve when responding to a privacy breach?

Answer 33

Containing the breach involves assessing ways to reduce harm to the affected parties and preventing further exposure.

Question 34

Why is evaluating the risks of a breach important?

Answer 34

helps assess the potential harm based on factors like the type of personal information, the cause of the breach, the number of people affected, and any risks to public health or safety.

Question 35

How should organizations handle notification during a privacy breach?

Answer 35

Determine who needs to be notified based on case-by-case review and send appropriate notice to affected parties and relevant authorities.

Question 36

What is the final step in responding to a privacy breach?

Answer 36

Prevent future breaches by determining how the breach occurred and taking steps to prevent recurrence.

Question 37

What type of insurance coverage can help organizations address privacy breaches?

Answer 37

can cover legal defence costs and damages for lawsuits arising from breaches of fiduciary duty related to client information.