Ethics and Regulatory Compliance Flashcards

What is the 'duty of care' standard that applies to LLQP-licensed insurance agents in Canada?

Answer: Agents must exercise the same care as a reasonably competent insurance professional

The duty of care requires agents to exercise the same level of skill and diligence as a reasonably competent insurance professional would in similar circumstances.

Under Canadian insurance regulation, what are the consequences for an agent found guilty of fraudulent misrepresentation to a client?

Answer: License revocation, fines, and potential criminal charges

Fraudulent misrepresentation can result in license revocation, substantial fines, and criminal charges, as it is one of the most serious violations in insurance regulation.

What is the 'replacement declaration' requirement in Canadian insurance regulation?

Answer: A written disclosure required when a new policy is intended to replace an existing one

A replacement declaration is a written disclosure required when a new insurance policy is being purchased to replace an existing one, ensuring the client understands the implications.

In the context of insurance ethics, what does 'fiduciary duty' mean for an insurance agent?

Answer: The duty to act in the best interest of the client with utmost good faith

Fiduciary duty requires the agent to act in the client's best interest with utmost good faith, placing the client's interests above their own.

What is the purpose of errors and omissions (E&O) insurance for licensed insurance agents?

Answer: To protect against claims arising from professional negligence or mistakes

Errors and omissions insurance protects agents against claims of professional negligence, errors, or omissions that cause financial harm to clients.

How should an insurance agent handle a situation where they suspect their client is involved in insurance fraud?

Answer: Report the suspected fraud to the insurer and cooperate with any investigation

The agent must report suspected fraud to the insurer and cooperate fully with any investigation, as facilitating fraud is itself a criminal offense.