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Under the Registered Insurance Brokers Act, what must a person hold before acting as an insurance broker in Ontario?
- A A licence issued by the Financial Services Regulatory Authority of Ontario (FSRA). The Act requires registration with the Registered Insurance Brokers of Ontario, not a Financial Services Regulatory Authority of Ontario licence: 'No person shall act as an insurance broker unless the person is a registered insurance broker under this Act.'
- B Registration as an insurance broker under the Registered Insurance Brokers Act. Correct
- C Employment with a registered brokerage, working under the principal broker's registration. Registration is personal. Section 2(2)(f) exempts only an employee of a registered person who is engaged solely in clerical or administrative duties, not one acting as a broker.
- D Written authority from an insurer allowing the person to bind coverage. Authority from an insurer to bind coverage goes to what a broker may do once registered; section 2 still requires the person to be a registered insurance broker.
Section 2 of the Registered Insurance Brokers Act bars any person from acting as an insurance broker unless that person is personally registered under the Act, so working at a registered firm or belonging to an industry association does not stand in for the individual's own registration.
RIB Act, s. 2(1)
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Marc charges companies a fee to advise them on their coverage and cannot bind any insurer. Under the Registered Insurance Brokers Act, what is he?
- A Exempt from registration without binding authority. The definition expressly covers a person acting 'whether or not the person has agreements with insurers allowing the person to bind coverage and countersign insurance documents on behalf of insurers'.
- B A fee-paid consultant, exempt from registration. The definition opens with 'any person who for any compensation, commission or other thing of value', so a fee paid by the client is compensation and keeps him inside it.
- C A broker only once he places a contract. Placing a contract is only one of the listed activities; clause (c) captures consulting and advisory services on their own.
- D An insurance broker. Correct
The definition of insurance broker in section 1 of the Registered Insurance Brokers Act covers a person who deals directly with the public for compensation and provides consulting or advisory services about insurance, so binding authority is not what brings Marc inside the definition.
RIB Act, s. 1
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A registered broker wants to sell real estate on weekends. When is that allowed?
- A Never; no other business is allowed at all. A flat prohibition overstates the rule, because subclause (iii) opens the door to 'such other business as the Qualification and Registration Committee considers appropriate'.
- B Only with the Qualification and Registration Committee's approval, on its terms. Correct
- C Whenever the second business involves no insurance selling. Clause 5(1)(b) restricts the individual's 'only business or employment', so a non-insurance business is not automatically acceptable.
- D Once the principal broker approves it in writing and files it. The approval power sits with the Qualification and Registration Committee, not with the brokerage's principal broker.
Section 5 of Regulation 991 limits a registered individual's business or employment to that of an insurance broker, or an insurance broker and life insurance agent, or such other business as the Qualification and Registration Committee considers appropriate, so the outside business needs that Committee's approval and terms rather than an office level sign off.
O. Reg. 991, s. 5(1)(b)
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What must a broker have, besides explaining the risks, before placing cover with an unlicensed insurer?
- A Proof that the unlicensed insurer's premium is lower. Clause (c) turns on being unable to obtain sufficient insurance 'at reasonable rates or on the form of contract required' from licensed insurers, so a cheaper unlicensed price is not the test.
- B The client's written consent to the placement. Correct
- C Nothing more than a verbal go-ahead. Clause (b) requires 'the written consent of the member of the public', which a verbal instruction does not supply.
- D Approval from the Financial Services Regulatory Authority of Ontario (FSRA). Subsection 10(1) asks for no regulator approval; one of the disclosed risks is in fact that 'The Chief Executive Officer has no authority under the *Insurance Act* in respect of the insurer.'
Subsection 10(1) of Regulation 991 requires three things together before a placement with an unlicensed insurer, namely disclosure of the four listed risks, written consent from the client, and the inability to obtain sufficient insurance at reasonable rates or on the required form from licensed insurers, so a verbal go ahead leaves the second condition unmet.
O. Reg. 991, s. 10(1)
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Which principle of the Registered Insurance Brokers of Ontario (RIBO) Code of Conduct applies when a broker spots a rating credit that the client does not qualify for?
- A Keep all information about the client's affairs in strict confidence. Paragraph 5 governs confidentiality of client information, which is not what the mispriced credit raises.
- B Be competent to perform the services taken on for the client. Paragraph 2 is about competence in performing services for the client and says nothing about the broker's dealings with the insurer.
- C Act with integrity toward insurers as well as toward clients. Correct
- D Make the broker's services available to the public efficiently. Paragraph 10 addresses how a member makes services available to the public, not honesty toward an insurer.
The first principle of the code of conduct in section 14 of Regulation 991 requires integrity toward insurers as well as toward clients, members of the public and fellow members, so the broker cannot quietly accept a credit the client has not earned.
O. Reg. 991, s. 14, para. 1
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What should a broker do when a woman calling herself a client's wife asks for his policy limits and claims history?
- A Give her the details. Paragraph 5 keys the release to the client's authorization, not to a relationship or an interest the caller claims.
- B Give her the details once she states his date of birth and policy number. Identifying details are not one of the three exceptions listed in paragraph 5, so answering the questions correctly does not authorize disclosure.
- C Give her the limits but not the claims history. The paragraph covers 'all information acquired in the course of the professional relationship concerning the business and affairs of the member's client', which takes in coverage limits.
- D Decline to give her any of the details. Correct
Paragraph 5 of the code of conduct in section 14 of Regulation 991 holds all information about a client's business and affairs in strict confidence and lets a member divulge it only where the client authorizes it, the law requires it, or negotiating with underwriters or insurers for the client requires it, so this caller gets nothing because none of the three exceptions applies.
O. Reg. 991, s. 14, para. 5
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Which statement about a broker's duty to disclose an insurer's volume bonus to a client is TRUE?
- A A verbal disclosure with a note on the file is enough. The paragraph says the member 'shall disclose in writing', and a file note is a record for the brokerage rather than a disclosure to the client.
- B The disclosure must be in writing. Correct
- C The broker may not place business with that insurer. The rule is a disclosure obligation, not a prohibition on placing business with the insurer concerned.
- D A potential conflict needs no disclosure. Paragraph 7.1 reaches 'any conflict of interest or potential conflict of interest', so a potential conflict is squarely covered.
Paragraph 7.1 of the code of conduct in section 14 of Regulation 991 requires written disclosure to a client or prospective client of any conflict or potential conflict associated with a transaction or recommendation, so telling the client on the phone and noting the file falls short.
O. Reg. 991, s. 14, para. 7.1
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May a Level 1 licensee act as supervising broker for an unlicensed trainee while the principal broker is away for two weeks?
- A Yes, for up to 30 days while the principal broker is away. Section 3.3(b) sets a flat bar with no temporary or absence based exception.
- B Yes, for unlicensed staff, though not for another licensee. The bar is on holding the role at all, and it does not turn on who is being supervised.
- C No, a Level 1 licensee may not act as a supervising broker. Correct
- D Yes, once the Level 1 licensee has held registration for 24 months. The 24 month period belongs to section 3.5(a)(i) as a route to Level 3 registration, not as a way for a Level 1 licensee to take a supervisory appointment.
Section 3.3 of By-Law No. 3 has a Level 1 licensee act under the supervision of a principal broker and while employed or sponsored by an active firm, and it bars that licensee from the principal broker, deputy principal broker and supervising broker roles, so the plan cannot go ahead.
By-Law No. 3, s. 3.3(a), (b)
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What is the position of a broker who leaves her brokerage, joins no firm and is not a sole proprietor, when a former client asks her to arrange his renewal?
- A Her registration is cancelled and she must apply again from the start. Section 8.1(a) makes the registration inactive rather than cancelled, and sections 8.1(c) and (e) contemplate a return to active status.
- B She may place it if she tells the client her registration is inactive. The bar on carrying on business is absolute while the registration is inactive, so telling the client changes nothing.
- C She may keep serving existing clients for up to 12 months. The 12 months in section 8.1(c) is the window to return the registration to active status by confirming new employment or sponsorship, not a period in which business may continue.
- D Her registration is inactive and she must not act as a broker. Correct
Section 8.1(a) of By-Law No. 3 turns an individual licensee's registration inactive the moment the licensee stops acting as a sole proprietor or being employed or sponsored by an active firm, so she must not carry on business as an insurance broker until an active firm employs or sponsors her again.
By-Law No. 3, s. 8.1(a), (c)
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According to the Personal Information Protection and Electronic Documents Act (PIPEDA), when should a brokerage generally seek express rather than implied consent?
- A When the individual is a commercial client rather than a personal lines client. The clause draws no line between commercial and personal clients; clause 4.3.4 makes sensitivity depend on the information and its context.
- B When the information will be kept for longer than one year. Retention periods are dealt with under the limiting retention principle, and clause 4.3.6 ties the form of consent to sensitivity.
- C When the information is collected from a third party rather than the individual. Clause 4.3.6 turns on sensitivity, not on the source the information came from.
- D When the information is likely to be considered sensitive. Correct
Clause 4.3.6 of Schedule 1 to PIPEDA states that an organization should generally seek express consent when the information is likely to be considered sensitive, and that implied consent would generally be appropriate when the information is less sensitive.
PIPEDA, Schedule 1, cl. 4.3.6
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A broker who doubts parts of a client's proof of loss leaves it in a drawer for five weeks, telling no one, while the adjuster waits. What does the misconduct rule make of it?
- A It is proper caution. Doubt about the contents is a reason to raise the point with the client and the adjuster, not to withhold the document, which is the delay the paragraph names.
- B It is misconduct. Correct
- C It is a matter for the insured, not the broker. Where the duty to deliver the proof originates does not licence the broker to hold it; the paragraph catches conduct that delays fair adjustment.
- D It is misconduct only if the insurer denies the claim over the delay. The paragraph turns on conduct that results in unreasonable delay, not on the eventual outcome of the claim.
Paragraph 7 of section 15(1) makes the use of any practice or conduct that results in unreasonable delay or resistance to the fair adjustment of claims misconduct, and sitting on a client's proof of loss is exactly that whatever the broker's private doubts.
O. Reg. 991, s. 15(1), para. 7
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In what name may a registered brokerage advertise and carry on business?
- A The name in which the individual, corporation or partnership is registered. Correct
- B Any name the brokerage's insurers have approved for their documents. An insurer's approval is not the registered name, and the paragraph measures against registration with the Corporation.
- C Any trade name the brokerage has registered with a domain registrar. Registering a domain does not make a name the registered name, and the paragraph names advertisements, letterheads and signs among the ways the rule is broken.
- D Any name not already in use by another brokerage in Ontario. Availability is not the test. The paragraph permits only the name the person or firm is registered in.
Paragraph 6 of section 15(1) makes it misconduct to hold out, advertise or carry on business in any manner other than the name in which the individual, or the corporation or partnership of which the individual is the designated representative, is registered.
O. Reg. 991, s. 15(1), para. 6
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A brokerage ad for home insurance at $61 a month is accurate but assumes a $2,500 deductible, no mortgage and a monitored alarm, none of which the ad mentions. Where does the ad stand under the misconduct rule?
- A The accurate figure makes it acceptable. The paragraph expressly covers an illustration that misrepresents by omission, so accuracy of the stated figures is not a defence.
- B It is acceptable once the assumptions are given at the quote. The advertisement is the item the paragraph measures, and a later conversation does not undo the impression it created.
- C It needs the insurer's written consent. Nothing in the paragraph forbids advertising a premium or requires an insurer's consent; what it forbids is an illustration that misrepresents, including by omission.
- D It is misconduct. Correct
Paragraph 1 of section 15(1) names the use of an illustration, circular or memorandum that misrepresents, or by omission is so incomplete that it misrepresents, the terms, benefits or advantages of a policy, so accurate numbers with the conditions left out are caught.
O. Reg. 991, s. 15(1), para. 1
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A broker gives the Registered Insurance Brokers of Ontario (RIBO) an inaccurate answer in a routine file review, on a matter that turns out to be trivial. Which statement is TRUE?
- A It is not misconduct if the underlying matter was not. The paragraph is a standalone item in the definition of misconduct, so it does not depend on the underlying matter being misconduct.
- B It is not misconduct if corrected before the review closes. Correction may matter to penalty, but the paragraph makes the provision of false or misleading information the misconduct.
- C It is misconduct only if given under oath. The paragraph is not limited to sworn evidence; it covers information provided to the Corporation in any form.
- D The inaccurate answer is misconduct in itself. Correct
Paragraph 14 of section 15(1) makes providing false or misleading information to the Corporation misconduct on its own, so the answer is judged separately from whatever it was about and a minor underlying matter does not excuse it.
O. Reg. 991, s. 15(1), para. 14
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What must a brokerage do before it can hold a certificate of registration as an insurance broker?
- A Designate an individual broker as the firm's principal broker. Correct
- B Appoint a director who holds a risk management designation. The subsection requires an individual who is an insurance broker, and names no outside designation or diploma.
- C Name one employee to hold the certificate on the firm's behalf. The firm itself holds the certificate; the individual designated is the principal broker, not a substitute certificate holder.
- D Retain an outside consultant to review its client files each year. No external review is required by section 7.2; the requirement is the designation of a principal broker.
Section 7.2(1) requires a firm that holds or wishes to hold a certificate of registration to designate an individual who is an insurance broker as its principal broker, so a firm cannot be registered without one in place.
O. Reg. 991, s. 7.2(1)
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Who is exposed when an unregistered assistant at a brokerage quotes and binds auto risks, and the principal broker knows but does not stop it?
- A Only the assistant. The by-law puts an express duty on the principal broker about unregistered staff, so the exposure is not the assistant's alone.
- B Only the firm. The prohibition on acting as an insurance broker without registration attaches to the person who acts, so the firm is not the only party at risk.
- C Both the assistant and the principal broker. Correct
- D Neither, while the assistant is supervised. Supervision does not license unregistered broking; the by-law requires that unregistered staff not act as insurance brokers at all, whatever the Plan of Supervision says.
Section 6.1(d)(vii) makes it a principal broker's duty to ensure that no director, partner or employee of the active firm who is not registered acts as an insurance broker, and section 2(1) of the Registered Insurance Brokers Act separately bars an unregistered person from acting as one.
By-Law No. 3, s. 6.1(d)(vii)
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An employed broker puts a client's premium cheque into a personal account in his own name over a long weekend and pays the brokerage on Tuesday. What is that under the trust rules?
- A It is allowed, with the money at the brokerage on the next banking day. Section 16(4) governs when trust money must reach a trust account, but section 16(8) bars this member from controlling the funds at all, so getting the money in promptly does not cure the breach.
- B It is allowed, with no money lost. Absence of loss and the designation of the account are not defences; the prohibition is on control of trust funds and on holding the account in the member's own name.
- C It is a breach only if the trust account was overdrawn. The state of the firm's account is irrelevant to a prohibition addressed to the individual member, and section 16(6) measures the firm's trust position for a different purpose.
- D It is a breach. Correct
Section 16(8) provides that no member who is not a sole proprietor, partnership or corporation shall control trust funds or maintain a trust account in the member's own name, so the trust obligation sits with the firm and an employed broker cannot take it on personally however careful the intention.
O. Reg. 991, s. 16(8)
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What must you do when an Ontario resident who owns a car asks you for automobile insurance and you expect every insurer you deal with to decline?
- A Tell the client no market is available and take the enquiry no further. The section imposes the duty on request without any market availability condition, and the Facility Association Plan exists for exactly this applicant.
- B Give the client an application and submit the completed application to an insurer. Correct
- C Refer the client to the Financial Services Regulatory Authority of Ontario (FSRA). The obligation named in the section falls on the agent, who must provide the application and submit it to an insurer.
- D Take the application but hold it until an insurer agrees to consider it. Clause (b) requires the agent to submit the completed application to an insurer, not to wait for an insurer's indication first.
Section 5 obliges an agent, when requested by an Ontario resident owner or lessee, to provide an application for automobile insurance and to submit a completed application to an insurer, so a broker may not screen a driver out by refusing to hand over the form.
Compulsory Automobile Insurance Act, s. 5
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What date must an insurance card show when a client binds coverage on Wednesday and asks for it to be dated Monday, the day before a police stop?
- A Monday, the day he meant to buy the coverage. Intention to buy, and what the insurer would have done, are not the date the contract was made, and the subsection fixes the card to the latter.
- B Tuesday, the day of the police stop. Any date earlier than the date the contract was actually made is barred, so a compromise date is still a breach.
- C Monday, with the true binding date noted on the file. A file note does not cure a card that misstates the effective date, which is what the subsection prohibits.
- D Wednesday, the day the contract was made. Correct
Section 6(2) of the Compulsory Automobile Insurance Act prohibits an insurer or its agent from specifying on an insurance card an effective date earlier than the date the contract was actually made, or otherwise misrepresenting the particulars of the insurance.
Compulsory Automobile Insurance Act, s. 6(2)
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For how many insurers may an insurance agent licensed for all classes other than life act?
- A Up to three, one each for auto, property and liability. No number of that kind appears in the subsection, which states one insurer only.
- B One insurer only, licensed for the class of insurance. Correct
- C Any number, provided each insurer is licensed in Ontario. The subsection restricts the agent to one insurer, and section 392.2(5) requires the licence to specify that insurer by name.
- D Any number, provided each appointment is disclosed to the client. Disclosure does not enlarge the licence; section 392.2(7) further bars the agent from representing that they act for any other insurer.
Section 392.2(4) provides that a licence in the accident and sickness class or the all classes other than life class authorises an agent to act for one insurer only, and that insurer must itself be licensed for the applicable class, which is what separates an agent from a broker placing business across several markets.
Insurance Act, s. 392.2(4)
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What must a client do when a storm tears part of the roof off her building, the adjuster cannot come for three days and rain is forecast tonight?
- A Wait for the adjuster before doing anything. Subcondition (1) of Statutory Condition 9 puts a positive duty on the insured to take all reasonable steps to prevent further damage, so waiting is the breach, and nothing in the conditions turns emergency salvage work into an alteration of the risk.
- B Get the insurer's written approval before spending on repairs. The condition requires reasonable steps without making prior written authorisation a precondition.
- C Tarp the roof at her own cost. Subcondition (2) requires the insurer to contribute proportionately to reasonable and proper expenses, so the cost is not left wholly with the insured.
- D Take reasonable steps to prevent further damage. Correct
Statutory Condition 9 requires the insured to take all reasonable steps to prevent further damage after a loss, and requires the insurer to contribute proportionately towards the reasonable and proper expenses of those steps according to the respective interests of the parties, so salvage runs in both directions.
Insurance Act, s. 148, Statutory Condition 9
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May a brokerage pay an accountant who is not an agent or broker a share of the commission on the clients he refers?
- A No, a broker may not pay an unlicensed person for placing insurance. Correct
- B Yes, the ban binds insurers and their agents, not brokers. The subsection names brokers expressly: 'No insurer, and no officer, employee or agent thereof, and no broker, shall directly or indirectly pay or allow'.
- C Yes, a payment out of the broker's own commission is a saving. The saving in s. 403(3) is a 'payment by way of dividend, bonus, profit or savings that is provided for by the policy', which a share of a brokerage's commission is not.
- D Yes, if the payment is disclosed to the client before placement. Section 403 states a prohibition rather than a disclosure duty, so telling the client does not make the payment lawful.
Section 403(1) bars an insurer, its officers, employees and agents, and a broker, from paying or agreeing to pay compensation or anything of value for placing or negotiating insurance in Ontario to a person who is not an agent or broker, and the exceptions in s. 403(3) reach only a policy dividend, bonus, profit or saving and an insurer's payment to its own salaried employee, so a commission split with an unlicensed referrer is caught.
Insurance Act, s. 403(1), (3)
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What should a broker do when a client asks for $200 out of the brokerage's commission to keep her renewal?
- A Refuse the request. Correct
- B Pay it out of the brokerage's own commission. Where the money comes from does not matter: handing back part of the premium, directly or indirectly, is a rebate whether the brokerage or anyone else pays it.
- C Pay it once the client puts the request in writing. A written request does not change what the payment is; paragraph 4 has no exception for a client who asks for the rebate.
- D Give her a $200 gift card instead. Paragraph 4 reaches anything of value given in place of a premium refund, so a gift card is the same rebate in another form.
Paragraph 4 of section 15(1) of Regulation 991 makes it misconduct to give a person insured a rebate of the whole or part of the premium, or any other thing of value meant as a rebate, so the broker refuses however the $200 would be paid.
R.R.O. 1990, Reg. 991, s. 15(1), para. 4
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By what date each year must an individual licensee complete the required continuing education?
- A August 31. August 31 is the date for filing the renewal application and paying the annual fee, not the continuing education deadline, which is September 30.
- B September 30. Correct
- C October 31. October 31 is a month after the deadline, which the by-law sets at September 30.
- D December 31. December 31 is not the deadline; the by-law sets September 30 and each 12-month period after that.
By-Law No. 3 requires an individual licensee who is not a principal, deputy principal or supervising broker to complete the continuing education on or before September 30 and within each 12-month period after that. A licensee who misses it, and is not exempted, has the registration suspended.
By-Law No. 3, s. 7.1(a)
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