LLQP Ethics & Professional Practice · Component 1.1 · 60% of the exam
The role of the courts in the insurance legal framework is to:
- ASet premiums when an insurer's rates are challenged as unfair, since the courts protect consumers from overcharging
- Interpret the Act and policy wording, develop common-law principles such as contra proferentem, and award remedies
- CWrite policy wording for the industry, so that every insurer's contract uses language the courts have approved
- DLicense agents through the provincial superior court, which hears applications for new licences each term
Correct answer: B) Interpret the Act and policy wording, develop common-law principles such as contra proferentem, and award remedies
Case law is a living source of insurance law. Contra proferentem means ambiguity in an insurer-drafted policy is resolved for the insured.
Why the other options are wrong
- AInsurers set premiums; courts do not.
- CInsurers draft policies.
- DLicensing is done by provincial regulators, not the courts.
Exam tip
Courts interpret; ambiguities go against the drafter.
Common mistake
Assuming policy wording is always read literally in the insurer's favour.
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.