LLQP Ethics & Professional Practice · Component 1.1 · 60% of the exam
A client asks which law applies if their insurer is federally incorporated and the client lives in Ontario. The agent should explain:
- AOnly federal law applies, since the insurer was incorporated under the Insurance Companies Act
- BNeither applies, since a federally incorporated insurer dealing with a provincial resident falls into a gap
- COnly OSFI rules apply, since OSFI supervises every aspect of a federally regulated insurer's business
- The Ontario Insurance Act governs the contract and conduct, while OSFI supervises the insurer's solvency
Correct answer: D) The Ontario Insurance Act governs the contract and conduct, while OSFI supervises the insurer's solvency
The two levels operate together: provincial law for the contract, federal supervision of the company.
Why the other options are wrong
- AProvincial law governs the contract.
- BBoth apply in their spheres.
- COSFI does not govern contracts.
Exam tip
Contract law = province of the insured; solvency = OSFI for federal insurers.
Common mistake
Telling a client the provincial regulator has no jurisdiction over a federal insurer's conduct.
What this tests
CISRO competency component 1.1 — Integrate into practice the legal aspects of insurance and annuity contracts — which is weighted at 60% of the Ethics & Professional Practice module. Written against the published curriculum.
More from component 1
- An 'assignee' of a life insurance policy is:
- A corporation as policyowner and beneficiary of a policy on a key employee:
- A 'trustee' named to receive proceeds on behalf of a beneficiary:
- The 'automatic premium loan' (APL) provision:
- A life insurance contract 'matures' when:
- The 'assignment' provision typically states that:
Practice the whole Ethics & Professional Practice module
Timed sets weighted like the exam, and review of every question you miss. Free to start.