LLQP Ethics & Professional Practice · Component 2.1 · 40% of the exam
A client's federally incorporated insurer has merged with another company and he asks who watches its financial strength. The answer is:
- Athe ombudservice, which reviews the financial position of every merged insurer in Canada
- the federal superintendent of financial institutions, which supervises its financial soundness
- Cthe provincial regulator, which now assumes responsibility for the merged insurer's solvency
- Dnobody, because supervision ends when two insurers combine into one larger company
Correct answer: B) the federal superintendent of financial institutions, which supervises its financial soundness
The federal superintendent supervises federally incorporated insurers for solvency and would intervene if capital fell short. Provincial regulators continue to handle market conduct, contract law and the licensing of agents.
Why the other options are wrong
- AThe ombudservice reviews complaints, not the financial position of insurers.
- CProvincial regulators deal with conduct and licensing, not federal solvency.
- DSupervision continues without interruption through a merger.
Exam tip
Solvency supervision is federal; conduct and licensing are provincial.
Common mistake
Assuming a merger changes who supervises an insurer's financial strength.
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.