LLQP Ethics & Professional Practice · Component 2.1 · 40% of the exam
A client is delighted that the ombudservice has recommended in his favour and asks when the insurer must pay. The agent should explain that:
- Athe recommendation takes effect only once the provincial regulator has approved it formally
- Bthe recommendation is binding on the client but not on the insurer that issued the policy
- Cpayment is due within thirty days because the recommendation binds the insurer by law
- the recommendation is not binding, though insurers usually follow it, and the courts remain open
Correct answer: D) the recommendation is not binding, though insurers usually follow it, and the courts remain open
The ombudservice makes non-binding recommendations after reviewing an unresolved complaint. Insurers generally accept them, and a client who is refused can still pursue the matter in court within the limitation period.
Why the other options are wrong
- ANo regulatory approval is required for the recommendation to be made.
- BA non-binding recommendation binds neither party.
- CThe recommendation does not carry the force of a court order.
Exam tip
Ombudservice recommendations are persuasive, not binding; courts remain available.
Common mistake
Telling a client an ombudservice recommendation must be paid.
What this tests
CISRO competency component 2.1 — Integrate into practice the rules governing the activities of life insurance agents — which is weighted at 40% of the Ethics & Professional Practice module. Written against the published curriculum.
More from component 2
- A prospective client wants to confirm that an agent is properly licensed before meeting him. She should:
- A dual-licensed agent's mutual fund business is reviewed following a client complaint. The review will be conducted by:
- Assuris coverage applies to:
- OLHI's services are available to:
- Complaints about an agent's conduct (as opposed to an insurer's claim decision) should be directed to:
- The best summary of an agent's ethical obligations is to:
Practice the whole Ethics & Professional Practice module
Timed sets weighted like the exam, and review of every question you miss. Free to start.