LLQP Ethics & Professional Practice · Component 2.1 · 40% of the exam
The interplay between regulators and insurers when an agent is terminated 'for cause' is that:
- ANothing is reported to anyone, since the termination is a private contractual matter between the insurer and the agent alone
- BThe agent is automatically banned from the industry, since a termination for cause is treated as a revocation
- COnly the MGA is informed, so the agent can be placed with another insurer without the regulator's involvement
- The insurer must notify the regulator with reasons, which may investigate, and other insurers learn through screening
Correct answer: D) The insurer must notify the regulator with reasons, which may investigate, and other insurers learn through screening
Termination for cause triggers reporting and screening consequences that follow the agent.
Why the other options are wrong
- AReporting is required.
- BThe regulator decides on the licence; there is no automatic ban.
- CWider reporting occurs beyond the MGA.
Exam tip
Termination for cause → regulator notice → screening record.
Common mistake
Believing a quiet termination has no consequences.
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.