LLQP Ethics & Professional Practice · Component 1.1 · 60% of the exam
The tort of 'negligence' applies to an agent who:
- AMakes any error at all in a file, since the standard of care for licensed professionals is perfection
- Fails to meet the standard of a reasonably competent agent, causing foreseeable loss
- CFollows the client's clear written instructions, since doing so removes the agent's independent judgment
- DIs honest with the client, since honesty is the only standard the tort of negligence measures
Correct answer: B) Fails to meet the standard of a reasonably competent agent, causing foreseeable loss
Negligence liability is the civil consequence of careless advice. Documentation and E&O insurance are the practical defences.
Why the other options are wrong
- AOnly errors falling below the standard of care that cause loss.
- CFollowing clear instructions is usually a defence.
- DHonesty does not preclude negligence.
Exam tip
Negligence = breach of the competent-agent standard causing loss.
Common mistake
Failing to document advice a client declined.
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.