Exam (elaborations)
RIBO Level 1 Exam Questions and Answers with Solutions 2024/2025
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RIBO Level 1 Exam Questions and Answers with Solutions 2024/2025
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RIBO Level 1 ExamIndemnify - ANSThe action of compensating an insured following a loss under the insurance
policy.
Risk - ANSThe chance of loss;
or an object or activity that is insured (about to be insured)
Peril - ANSAn event that may cause a loss to occur
Object of Insurance - ANSThe item that is insured or covered in an insurance policy
Indemnity - ANSto put you back in the same financial position (just prior to loss) NO BETTER
NO WORSE
Insured / Policy holder - ANSThe person who purchases an insurance policy
Noted as First Party
Insurer - ANSInsurance company who issued the insurance policy and who
compensates/indemnifies a policy holder in the event of a loss
Noted as second party
Premium - ANSThe sum of money paid by a person to an insurance company in exchange for
an insurance policy
RIBO - Registered Insurance Brokers of Ontario - ANSA Self-governing, self-funded
organization of general insurance brokers in Ontario
RIBO regulates the
- Licensing;
- Professional competence;
- Ethical conduct
- Insurance-related financial obligations
of all independent general insurance brokers in ON through the RIB Act
General Insurance - ANS- Also referred to as Property and Casualty (P&C)
- Anything other than Life or Health Insurance
Property risk - ANSFinancial loss occurs when owned property is lost or damaged
Liability risk - ANSWhen a person's negligent actions result in injury to others or damage to
another's property
, Negligence - ANSis what a reasonable and prudence person would do or not do in a similar
situation
Speculative risk - ANSThis is the possibility of either financial loss / gain
--> this is NOT insurable
Pure risk - ANSThe chance of financial loss with no chance of financial gain.
--> this type of risk IS insurable
Hazards - ANSis a condition that may cause a peril to occur or make the loss more severe.
There are 2 types of hazard: Physical hazard
Moral hazard
Physical hazard - ANSOBSERVABLE condition relating to the object of insurance
Moral hazard - ANSSubjective characteristics of an insured/applicant that increases the
likelihood of loss.
Proximate Cause - ANSthe immediate and effective cause of the loss
Dealing with Risk - ANS1) Eliminating Risk: get rid of risk completely
(not practical)
2) Controlling Risk: taking measures to decrease the
chance of loss (more practical but not enough)
3) Retaining Risk: Self-insurance and Deductible
e.g. Canadian National Railways self insure
4) Transferring Risk: transferring a portion or all of your
risk to an insurer for a cost ($ premium)
Reinsurance - ANSInsurance for insurance company
Capacity - ANSthe amount of coverage that an insurer ca reasonably assume
Premium Capacity - ANSis the aggregate premium volume an insurer can safely write in a given
accounting period
Five Function of Insurance - ANS- Spread of Risk
- Basis of Credit System
- Eliminating Worry, Encouraging Entrepreneurship
- Loss prevention and Reduction
- Source of Investment Capital and Employment
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