Chapter 3 - Insurance Contracts and The Role of Government

4 levels of insurance regulation

Solvency - Federal and Provincial

Fair practices - Provincial

Insurer licensing - Provincial

Broker licensing - Provincial

Org that supervises all insurers under the insurance companies act

Office of the Superintendent of Financial Institutions (OSFI)

This is a federal org

Who response to P&C claims when insurer fails

Property and Casualty Insurance Compensation Corporation (PACICC)

Who regulates insurers operating in Ontario and enforces Insurance Act and Compulsory Automobile Insurance Act

Financial Services Regulatory Authority (FRSA)

This is a provincial org

They are responsible for: Licensing insurers, monitoring insurer solvency, ensuring fair markets, approving auto insurance coverage and rates

To be enforceable, all contracts must have these 5 things

Agreement - oral agreement is still binding

Consideration - something of value must be exchanged

Legality of object - object of insurance must have legal basis

Legal capacity - parties must have legal capacity

Genuine interest - cannot be tricked, coerced, etc.

3 additional elements of insurance contracts

Insurable interest - insured must suffer financially from a loss of the object

Utmost good faith - honesty on both sides when paying premiums, history of claims, etc.

Indemnity - claim payment must indemnify insured

Binders

Written or oral agreement giving temporary protection until insurer issues policy

Typically valid for 30 days

This document ensures the general insurance buying public is treated fairly

Fact Sheet: About your Broker

Created by RIBO