BrokerExamPractice
General and industry practice
25 of the exam's 100 graded questions come from this section. 37 free questions here, 166 more in the paid bank.
All 37 free general and industry questions
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Under the Registered Insurance Brokers Act, what must a person hold before acting as an insurance broker in Ontario?
Section 2 of the Registered Insurance Brokers Act bars any person from acting as an insurance broker unless that person is personally registered under the Act, so working at a registered firm or belonging to an industry association does not stand in for the individual's own registration.
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Who may use the designation R.I.B. (Ont.)?
Subsection 3(2) of the Registered Insurance Brokers Act requires the user of the title registered insurance broker or the designations R.I.B. (Ont.) and C.A.I. (Ont.) to be the holder of a certificate under the Act, because the restriction attaches to the certificate, completing a course or holding another licence carries no right to use them.
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A brokerage wants a larger operating line of credit. Its bank agrees, on condition that the brokerage pledge its premium receivables, the money owed by clients for policies placed with insurers, as security for the loan. The principal broker asks whether the brokerage can sign. What is the answer under the Registered Insurance Brokers Act?
Section 32 of the Registered Insurance Brokers Act deems funds a member receives or has receivable on behalf of insurers or the public to be trust funds and prohibits a member from assigning, pledging, hypothecating, mortgaging or otherwise charging them, so the security the bank wants cannot be given.
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While checking a renewal a broker notices that the insurer has applied a rating credit the client does not qualify for, which has lowered the premium. Which principle of the code of conduct in Regulation 991 speaks most directly to how the broker treats the insurer here?
The first principle of the code of conduct in section 14 of Regulation 991 requires integrity toward insurers as well as toward clients, members of the public and fellow members, so the broker cannot quietly accept a credit the client has not earned.
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Which minimum amounts must a brokerage maintain under section 20 of Regulation 991? Select all that apply.
Section 20 of Regulation 991 sets two separate minimums, because subsection (1) calls for at least $3,000,000 per occurrence of errors and omissions cover or another approved financial guarantee, and subsection (2) calls for at least $100,000 per occurrence of fidelity insurance.
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A brokerage hires an unlicensed trainee. The principal broker will be away for two weeks and asks a Level 1 licensee in the office to act as supervising broker for the trainee's work while she is gone. What does By-Law No. 3 say about that plan?
Section 3.3 of By-Law No. 3 has a Level 1 licensee act under the supervision of a principal broker and while employed or sponsored by an active firm, and it bars that licensee from the principal broker, deputy principal broker and supervising broker roles, so the plan cannot go ahead.
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Under the Insurance Act, where is the list of unfair or deceptive acts and practices actually set out?
Section 438 defines an unfair or deceptive act or practice as any activity or failure to act that the Authority rules prescribe, so the Act supplies the definition and the rule made by the Financial Services Regulatory Authority of Ontario (FSRA) supplies the list of conduct itself.
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The prohibition on unfair or deceptive acts and practices in the Insurance Act applies only to licensed insurers, so a brokerage or an automobile repair shop falls outside it. Is that statement true or false?
Section 439 states that no person shall engage in any unfair or deceptive act or practice, and the Part's definition of person is wide, so a brokerage, an adjuster and a repair shop are all inside the prohibition alongside insurers.
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For the purposes of the unfair or deceptive acts and practices Part of the Insurance Act, which of the following are included in the definition of a person? Select all that apply.
Section 438 defines person to take in individuals, corporations, associations, partnerships, organizations, reciprocals, Lloyd's members, fraternal and mutual benefit societies and syndicates, which is why the prohibition reaches business structures and not only individuals.
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Under FSRA Rule 2020-001, misleading advice given to a client only in conversation, with nothing put in writing, falls outside the misrepresentation provision. Is that statement true or false?
Section 8(1) applies to information, promotional materials or advice in any form, and it lists audio, visual, electronic, written and oral means, so spoken advice is inside the provision on the same terms as a printed brochure.
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A broker is renewing a client's automobile policy with an insurer that belongs to a group of three affiliated companies. The renewal offer from the incumbent company is $2,240. A sister company in the same group would write the same risk at $1,890 through the same brokerage. What does FSRA Rule 2020-001 require the broker to do?
Section 10(1) makes it an unfair or deceptive act or practice for a broker providing a quote or renewal from an insurer not to offer the lowest rate available among that insurer and its affiliated insurers, and the subsection names renewals as well as quotes.
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Under the code of conduct in Regulation 991, how is a broker's duty of competence framed?
Paragraph 2 of the code owes competence to the client and measures it against the services the broker undertakes, so accepting work the broker is not competent to perform breaches the code at the moment of acceptance rather than when something goes wrong.
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In February a broker realises that the client's business interruption limit was set on a figure two years out of date and is now well short of what a full shutdown would cost. She decides to raise it at the August renewal. In March the client asks her whether the policy still fits the business and she says it does, without mentioning the limit. What does the code of conduct say about waiting?
Paragraph 4 of the code requires a member to be both candid and honest when advising a client, so an assurance that the policy still fits, given while the broker knows the limit is short, withholds the one fact the client needed even though nothing false was said.
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A broker who declines to answer questions in an investigation by the Registered Insurance Brokers of Ontario (RIBO) commits a separate breach of the code of conduct, quite apart from whatever is being investigated. Is that statement true or false?
Paragraph 14 of the code requires a member to cooperate in an investigation conducted by the Corporation, so refusing to answer or sitting on documents is misconduct in its own right, and section 25(4) of the Registered Insurance Brokers Act separately prohibits obstructing an investigator or concealing records.
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A broker gives the Registered Insurance Brokers of Ontario (RIBO) an inaccurate answer during a routine file review about a matter that turns out to be trivial. Under Regulation 991, what follows?
Paragraph 14 of section 15(1) makes providing false or misleading information to the Corporation misconduct on its own, so the answer is judged separately from whatever it was about and a minor underlying matter does not excuse it.
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Under Regulation 991, what must a sole proprietorship, partnership or corporation do in order to hold a certificate of registration as an insurance broker?
Section 7.2(1) requires a firm that holds or wishes to hold a certificate of registration to designate an individual who is an insurance broker as its principal broker, so a firm cannot be registered without one in place.
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Under By-Law No. 3, what form must a principal broker's supervision arrangements take?
Section 6.1(d)(viii) makes it part of the principal broker's direction and supervision duties that procedures and a written Plan of Supervision are established and followed to ensure compliance, so a well-run but unwritten practice does not satisfy the by-law.
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A principal broker appoints a deputy principal broker and prescribes to her in writing the whole of the firm's trust account oversight. A year later the trust reconciliations are found to be a shambles. The principal broker says the duty was handed over in writing and is no longer his. What does By-Law No. 3 provide?
Section 6.1(i) states that despite any appointment and delegation of duties, a principal broker continues to be subject to and remains responsible for compliance with the responsibilities in the applicable laws, so delegation adds a person rather than moving the accountability.
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By-Law No. 3 sets the classes of firm registration. What are they?
Section 4.1 provides that there shall be three classes of firm registration, namely active firm licensee, non-active firm licensee and consultant firm licensee, so the levels used for individuals are a separate scheme.
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Under Regulation 991, what must appear on every cheque drawn on a brokerage trust account?
Section 16(9) requires all cheques drawn on a trust account to have the words trust account and the name of the member in whose name the account is kept imprinted on them, so the marking is printed on the stock rather than added by hand.
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Under Regulation 991, what mailing address must a broker who carries on business, or who is employed by a member carrying on business, register for the purposes of the Registered Insurance Brokers Act?
Section 24(1) requires the mailing address maintained for the purposes of section 28 of the Act to be the address where the business is carried on and not a post office box number, which is what makes service by registered mail effective under sections 28 and 29 of the Act.
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Under the Registered Insurance Brokers Act, how does an individual member resign, and what is the effect?
Section 5(2) lets an individual member resign by filing a resignation in writing with the Manager, and the word thereupon means the registration is cancelled as soon as that filing is made rather than at any later date.
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The Registered Insurance Brokers Act requires Council to establish certain committees. Which of the following does the Act require? Select all that apply.
Section 12(1) requires Council to establish a Qualification and Registration Committee, one or more Complaints Committees and a Discipline Committee, and allows but does not require Council to establish other committees it considers necessary.
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An Ontario resident who owns a car asks a broker for automobile insurance. The broker expects every insurer she deals with to decline the risk. Under the Compulsory Automobile Insurance Act, what must the broker do?
Section 5 obliges an agent, when requested by an Ontario resident owner or lessee, to provide an application for automobile insurance and to submit a completed application to an insurer, so a broker may not screen a driver out by refusing to hand over the form.
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Under the Compulsory Automobile Insurance Act, what obligation does membership in the Facility Association place on an insurer?
Section 7(3.1) requires every member of the Association to comply with the Plan and with the articles of association, by-laws, rules and resolutions of the Association, which is what makes the Plan workable across the whole market.
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Under the Insurance Act, on what basis may an automobile insurer decline to issue, terminate or refuse to renew a contract, or refuse to provide a coverage or endorsement?
Section 238(1) bars an insurer from declining to issue, terminating or refusing to renew a contract, or refusing to provide or continue a coverage or endorsement, except on a ground filed with the Chief Executive Officer, which is the statutory basis of the take all comers obligation.
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Where does part of the money in the Motor Vehicle Accident Claims Fund come from?
Section 2(2) requires a fee prescribed by the Lieutenant Governor in Council to be paid to the Fund by the person to whom a driver's licence or renewal is issued, and section 2(1.2) also records amounts assessed against insurers, so drivers help fund it directly.
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Two defendants are found at fault for the same loss, one at 80 per cent and one at 20 per cent. Under the Negligence Act, what may the injured person recover from the defendant found 20 per cent at fault?
Section 1 makes two or more persons found at fault jointly and severally liable to the person suffering the loss, and confines the split by degree of fault to contribution and indemnity between the wrongdoers themselves, which is why a liability policy can be asked for the whole judgment on a small share of fault.
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Under the Occupiers' Liability Act, who is an occupier of premises?
Section 1 defines occupier to include a person in physical possession and a person with responsibility for and control over the condition of the premises, the activities carried on there, or the persons allowed to enter, and says so despite there being more than one occupier of the same premises.
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What standard does the Occupiers' Liability Act set for an occupier's duty to people entering the premises?
Section 3(1) sets the duty as taking such care as in all the circumstances of the case is reasonable to see that persons entering, and the property they bring, are reasonably safe while on the premises, and section 2 replaces the old common law categories of visitor.
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Under the Occupiers' Liability Act, what notice must be given before an action may be brought for personal injury caused by snow or ice?
Section 6.1(1) bars the action unless, within 60 days after the injury, written notice of the claim including the date, time and location of the occurrence has been personally served on or sent by registered mail to at least one of the persons listed in section 6.1(2).
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Under the Dog Owners' Liability Act, what damages is a dog owner liable for?
Section 2(1) makes the owner of a dog liable for damages resulting from a bite or attack by the dog on another person or domestic animal, so harm to another animal is inside the section as much as injury to a person.
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A dog with two owners bites a neighbour. Under the Dog Owners' Liability Act, how does liability fall between them?
Section 2(2) provides that where there is more than one owner of a dog they are jointly and severally liable under the section, so the injured neighbour may look to either of them for the whole of the damages.
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Under the Highway Traffic Act, when is the owner of a motor vehicle not liable for loss caused by negligence in its operation on a highway?
Section 192(2) makes the owner liable for loss caused by negligence in the operation of the vehicle on a highway unless the vehicle was, without the owner's consent, in the possession of a person other than the owner or the owner's chauffeur, so consent to possession is the hinge and it is not the same as consent to how the vehicle was driven.
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A tractor trailer is owned by a leasing company and leased to a haulage firm, whose employee drives it. The trailer runs under the operating authority of a separate carrier, which dispatches the load. The load shifts because of poor securement and injures a motorist. Under the Highway Traffic Act, whose liability does the Act add on top of the owner's and the lessee's?
Section 192(5) provides that in addition to any liability of an owner or lessee, the operator of a commercial motor vehicle is liable for loss caused by negligence in its operation on a highway, and section 192(6) then makes driver, owner, lessee and operator jointly and severally liable.
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Under the Insurance Act, when is insurable interest tested for a contract insuring a life, and what happens if it is absent?
Section 178(1) provides that where at the time a contract would otherwise take effect the insured has no insurable interest, the contract is void, which is a stronger result than voidable because there is nothing for the insurer to elect.
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Where the person whose life is to be insured is under the age of sixteen, who may give the written consent the Insurance Act contemplates?
Section 178(3) lets consent to insurance on the life of a person under sixteen be given by one of that person's parents or by someone standing in the role of parent, so the signature the Act looks for is the parent's rather than the child's.