LLQP Ethics & Professional Practice · Component 2.1 · 40% of the exam
A managing general agency (MGA) has responsibilities toward clients through:
- ASetting the premiums on the policies its agents sell, since the MGA negotiates rates with each insurer on their behalf
- BPaying claims on policies placed through the agency, since the MGA holds the client relationship
- Its obligations to insurers to screen, supervise and monitor sponsored agents and maintain compliance programs
- DNothing beyond processing, since an MGA is a middleman that passes business between agents and insurers
Correct answer: C) Its obligations to insurers to screen, supervise and monitor sponsored agents and maintain compliance programs
MGAs sit between insurers and agents; regulators have focused on their oversight role.
Why the other options are wrong
- AInsurers, not MGAs, set premiums.
- BInsurers, not MGAs, pay claims.
- DMGAs have supervisory duties.
Exam tip
MGA: screening and supervision duties under insurer contracts and regulator expectations.
Common mistake
Assuming the MGA's screening replaces the agent's own compliance.
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.