Canadian Accredited Insurance Broker (CAIB) One Practice Exam

Who is referred to as a fiduciary in insurance?

1. A client seeking coverage

2. An insurer providing the policy

3. A person handling the affairs or funds of another

4. A regulatory authority in finance

The correct answer is: A person handling the affairs or funds of another

In the context of insurance, a fiduciary is someone who manages the affairs or funds of another person, which aligns with the role of an insurance broker or agent. This individual has a legal and ethical obligation to act in the best interest of their clients, ensuring that their needs are met and that they receive appropriate coverage. A fiduciary duty involves loyalty and good faith, requiring the fiduciary to prioritize the interests of the client over their own. While a client seeking coverage is certainly involved in the insurance process, they do not hold a fiduciary status; rather, they are the party seeking protection. Similarly, the insurer providing the policy is a seller of insurance products and has its own interests as a business entity, and while regulatory authorities play a crucial role in overseeing the insurance market to ensure fairness and transparency, they do not serve a fiduciary role in the individual client-insurer relationship. Thus, the definition of a fiduciary being someone who handles the affairs or funds of another clearly identifies why this option is the correct answer in the context of insurance.