Chapter 4

Question 1

By RIBO legislation, Insurances brokerages in Ontario must purchase this coverage

Answer 1

Errors and Omission Liability Insurance

Question 2

Most common cause of errors and omissions (E&O) claims accounting for more than 50% of all claims

Answer 2

Inadequate coverage

Question 3

This is the best defense against an E&O claim

Answer 3

well document file (client conversations, both written and oral)

Question 4

Is a written agreement between an insurance company and a brokerage office.

It states the scope of services to be provided by the brokerage and the compensation the brokerage will receive for providing such services.

Answer 4

Broker Conract

Question 5

two parties for brokerage contract

Answer 5

Brokerage firm and the insurance company

Question 6

Provides Eligibility rules and guidelines related to the types of risk a brokerage is authorized to write and bind coverage for, and provides the coverage limits for each policy type.

Answer 6

Authority

Question 7

States that the brokerage office retains ownership of clients’ files and controls the placement of insurance for those clients. Also makes clear which party owns the expirations and who will continue to provide coverage for these policyholders if the broker contract is terminated by either party.

Answer 7

Ownership of policyholder’s business (expirations)

Question 8

List of commission schedule for each class of insurance sold and the terms of any contingent profit commission profit commission as a reward for any brokerage whose portfolio of business is profitable for the insurer

Answer 8

Commissions

Question 9

Major Components of a typical Agreement between an insurance company and a brokerage

Answer 9

Authority
Ownership of policyholder’s business(expirations)
Commissions
Billing Procedures
Claims Handling
Termination

Question 10

States how premium are to be remitted to the insurer, depending on the premium payment method offered

Answer 10

Billing procedures

Question 11

Indicates whether the brokerage is authorized to adjust and settle claims or not. If so, it states the types of claims and dollar amount the brokerage can handle.

Answer 11

Claims handling

Question 12

Spells out the terms for cancellation of the broker agreement by either party along with the length of the notice period(ranging from 90 to 180 days)

Answer 12

Termination

Question 13

A process whereby the broker asks sufficient questions to understand the nature of the object of insurance or risk, and the client’s objectives in buying insurance.

Answer 13

Needs Assesment

Question 14

step after analyzing the coverage option and price points of several insurers

Answer 14

Present Coverage Options

Question 15

if the client wishes to proceed with an insurance purchase, they must complete and sign in an application.

Answer 15

Complete with Application Form

Question 16

No binder may be issued for a period greater than 30 days

Answer 16

This means that temporary insurance coverage, known as a binder, cannot be provided for more than 30 days. A binder is a temporary insurance contract that provides coverage until a formal insurance policy is issued.

Question 17

Insurance policies are typically in force for how many months?

Answer 17

12-month term

Question 18

Policy that has reached its expiry date and has not been renewed or extended

Answer 18

lapsed policy

Question 19

a certificate that attest to the fact that an insurance policy, or contract of insurance, has been extended for another term

Answer 19

Renewal

Question 20

also known as 80/20 rule

states that for many events, roughly 80% of effects come from 20% of causes.

Answer 20

The Pareto Principle

Question 21

an insured person reviews and settles claims on behalf of the insurance company. they could be an employee of the insurance company or an independent contractor hired by the company

Answer 21

Adjuster

Question 22

The process of reviewing and settling losses under an insurance policy

Answer 22

Adjusting

Question 23

An insured person who makes an insurance claim. is usually the policyholder, but i can be anyone who is defined as an insured person under the policy

Answer 23

Claimant

Question 24

A process where the brokerage, as an authorizes representative of the insurance company, has the authority to confirm immediately that coverage is in force

Answer 24

Binding Coverage

Question 25

The portion of the insurance policy containing the summary of mandatory information, such as the name and address of the the insured, the policy period, a description and location of the property insured, the amount of insurance coverage, the insurable interest of others(if any), the the policy premium

Answer 25

Declaration