Chapter 2 Flashcards
Role of Agent (23 cards)
Broker
independent business person representing multiple insurance companies they have an agreement with. Matches the best products with the customer’s needs. Paid on commission
Agent
Represents one insurance company that they are an employee of. Salary possibly plus commissions. Direct writers
Exclusive Agency
Exclusive agents that market their products that are not employees, they are paid a commission.
Level 1 Certificate of Authority
Can sell insurance and give advice to clients but must be supervised.
Level 2 Certificate of Authority
Can sell all lines of insurance without supervision
Level 3 Certificate of Authority
For a designated representative to own, manage or supervise an insurance brokerage.
probationary general certificate
agent 1 duties for up to 90 days under the supervision of a level 2 or 3
continuing education credits
Through the Alberta Insurance Council. min 15 hours in an annual certificate term. If extra hours are obtained max of 7.5 can be applied to the next term. (Keep record of courses for 3 years for records)
Law of Agency
A contract where one party authorizes (principal) an independent broker or agent (intermediary or agent) to act on their behalf.
Agency or Brokerage Agreement
The terms in which the agent will fulfill their obligations to the principal. Classes of business that may be written, binding authority, responsibility for premium collection and remittance, commissions, termination etc. Each contract with each insurance company will differ. Information given to the intermediary is deemed to be given to the insurer. (Limitations)
Binding Authority
The authority to bind an insurer to an insurance contract without first submitting an application to an underwriter for confirmation. Coverage confirmation can be provided with a binder or cover note (written confirmation that insurance coverage is in effect.) It includes the summary of coverages bound.
Express vs Implied contract
Express - terms have been specifically stated between both parties. Written or oral express agreements are legally binding but written is preferred.
Implied - the parties act as though a relationship exists. Terms are not clearly evident.
Fiduciary Duty
A duty to act in trust and in the best interest of another especially regarding financial matters. A fiduciary is the one that holds property or money in trust for another. Between agents and their principals. Brokers collect money on behalf of the insurance company and they belong to the insurer. These funds are held in trust and net premium is delivered to the insurer in the agreed amount of time of the contract. Net premium is the total amount of premium paid by the customer minus the commission (compensation) for the broker which the broker keeps. Any imposed brokers fees over and above the policy must be disclosed and agreed upon by both parties.
Material fact
A fact that is continuing and substantial. Material facts are to be shared with the insurer. It is important enough to change the terms of the contract or cause it to not be made.
Non-disclosure
Silence when there is an obligation to speak or share pertinent information.
Utmost Good Faith
High standard of honesty to disclose any information that is material to the risk. This applies to all parties involved in the contract.
abeyance
to be put on hold or suspended until details are sufficient to sign and proceed with contract
In the event of a claim
First notice of loss form - completed with the initial and basic information about the property claim.
Proof of Loss form - statutory declaration of the exact details as per the insured. This may be filed by the insured or anyone with financial interest to the property ex. mortagee
Personal Information Protection Act (PIPA)
Privacy legislation about the collection, use and distribution of personal details
Guidance Conduct of Insurance Business and Fair Treatment of Customers
Behaving ethically, acting in good faith, fair practices
Principles and Practices for the sale of products and services by Property and Casualty Insurance Brokers.
Code of Ethics endorsed by Insurance Brokers Assoc. of Alberta (IBAA) and the Insurance Broker Assoc. of Canada (IBAC)
Additional broker licencing courses supplied by
Insurance Brokers Assoc. of Canada
Insurance Institute of Canada
Global Risk Management Institute
Errors and Omissions Insurance
professional liability insurance mandatory to cover potential losses to the broker in the event of broker negligence.
The policy must be issued by the insurer and contains the terms, definitions and inclusions approved by the Minister of Treasury Board and Finance. It is issued in the name of the business and provides coverage for all employees who hold Certificates of Authority. Must have coverage of at least $500,000 per claim with a max policy payout for all claims of $2,000,000 in a policy year.
