RIBO INSURANCE LATEST 2026 EXAM QUESTIONS AND
SOLUTIONS SCORED A+
✔✔What is the ratemaking calculation? - ✔✔Number of times the event happens
divided by number of times the event may happen
✔✔What is cession? - ✔✔something that is given up
✔✔What is retrocede? - ✔✔to cede a part of a risk to another insurer or reinsurer
✔✔What is retrocessionaire? - ✔✔The reinsurance company that accepts a
retrocession from another company
✔✔What is an underwriting loss? - ✔✔The amount of money that an insurance
company loses as a result of its insurance operations. It excludes investment
transactions and income taxes.
✔✔What are the two types of Reinsurance? - ✔✔1) Treaty - an agreement between an
insurance company and reinsurer. The reinsurer automatically accepts a portion of the
ceding company's liability for a specified class or classes of business.
2) Facultative - reinsurance of risks on an individual case by case basis subject to
acceptance or rejection by the insurer
✔✔What are the methods of reinsuring? - ✔✔1) Proportional (Pro Rata Reinsurance) -
type of reinsurance where the company shares loss payments in the same proportion
that it shares premium and policy amounts
2) Non Proportional (Loss Reinsurance) - insurer pays all the loss up to an agreed
amount called the priority; the reinsurer then pays all or part of the loss that exceeds the
priority up to a limit previously agreed upon
✔✔What is an independent agency system? - ✔✔A system of marketing insurance
through independent contractors (agents) who sell insurance on a commission or fee
basis with one or more insurers
✔✔What is an independent brokerage system? - ✔✔A system in which independent
insurance professionals, licensed as insurance brokers, are contracted to sell insurance
on behalf of an insurer or multiple insurers.
✔✔What is an exclusive agency system? - ✔✔A system of marketing insurance through
agents who represent only one company or a group of companies under similar
management.
✔✔What is a direct writer? - ✔✔Insurance company selling directly to the public and not
through independent agents or brokers
, ✔✔What is a general agent? - ✔✔One who is appointed by a company in a specific
territory. He or she is usually given an exclusive territory and may appoint sub agents in
that territory
✔✔What is the law of agency? - ✔✔Applies when an agent is authorized to do
something on behalf of a principal. The principal is the person or entity for whom the
agent or broker acts.
✔✔What is an express contract? - ✔✔One in which the terms of the arrangement have
been specifically stated and agreed to by both parties either orally or in writing
✔✔What is implied contract? - ✔✔One in which the parties have acted in such a way
that it is understood that a principal-agent relationship exists, even though no expressed
statement may have been made by either
✔✔What is binding authority? - ✔✔The capacity to confirm to people who have
submitted insurance applications that they have insurance coverage. It gives agents
and brokers the power to make decisions that enter insurers into contracts of insurance.
✔✔What is interim receipt? - ✔✔A temporary measure to insure in an agreed manner
while waiting for the completed policy to be issued. Also known as a "binder"
✔✔What is a binder? - ✔✔A written or oral agreement given by an insurer to insure a
risk, pending the issuance of a formal policy. A binder is deemed to be the policy and
must be cancelled in the same manner.
✔✔What is a cover note? - ✔✔A document with insurance, or the insurance protection
provided.
✔✔What is a broker of record? - ✔✔The broker currently receiving a commission to
handle a policy.
✔✔What is representation? - ✔✔A statement or conduct made to influence an insurer to
decide on a risk. The decision includes declining or accepting the risk and deciding the
rate and premium to be charged. In insurance, these statements are said to be "material
to the risk" and are enough to void a policy.
✔✔What is a named insured? - ✔✔The person or party designated in the policy as the
insured, as opposed to someone who may be covered by the policy but is not
specifically named
✔✔What is a loss payee? - ✔✔A person or an entity other than the named insured to
whom the proceeds of insurance will be paid
SOLUTIONS SCORED A+
✔✔What is the ratemaking calculation? - ✔✔Number of times the event happens
divided by number of times the event may happen
✔✔What is cession? - ✔✔something that is given up
✔✔What is retrocede? - ✔✔to cede a part of a risk to another insurer or reinsurer
✔✔What is retrocessionaire? - ✔✔The reinsurance company that accepts a
retrocession from another company
✔✔What is an underwriting loss? - ✔✔The amount of money that an insurance
company loses as a result of its insurance operations. It excludes investment
transactions and income taxes.
✔✔What are the two types of Reinsurance? - ✔✔1) Treaty - an agreement between an
insurance company and reinsurer. The reinsurer automatically accepts a portion of the
ceding company's liability for a specified class or classes of business.
2) Facultative - reinsurance of risks on an individual case by case basis subject to
acceptance or rejection by the insurer
✔✔What are the methods of reinsuring? - ✔✔1) Proportional (Pro Rata Reinsurance) -
type of reinsurance where the company shares loss payments in the same proportion
that it shares premium and policy amounts
2) Non Proportional (Loss Reinsurance) - insurer pays all the loss up to an agreed
amount called the priority; the reinsurer then pays all or part of the loss that exceeds the
priority up to a limit previously agreed upon
✔✔What is an independent agency system? - ✔✔A system of marketing insurance
through independent contractors (agents) who sell insurance on a commission or fee
basis with one or more insurers
✔✔What is an independent brokerage system? - ✔✔A system in which independent
insurance professionals, licensed as insurance brokers, are contracted to sell insurance
on behalf of an insurer or multiple insurers.
✔✔What is an exclusive agency system? - ✔✔A system of marketing insurance through
agents who represent only one company or a group of companies under similar
management.
✔✔What is a direct writer? - ✔✔Insurance company selling directly to the public and not
through independent agents or brokers
, ✔✔What is a general agent? - ✔✔One who is appointed by a company in a specific
territory. He or she is usually given an exclusive territory and may appoint sub agents in
that territory
✔✔What is the law of agency? - ✔✔Applies when an agent is authorized to do
something on behalf of a principal. The principal is the person or entity for whom the
agent or broker acts.
✔✔What is an express contract? - ✔✔One in which the terms of the arrangement have
been specifically stated and agreed to by both parties either orally or in writing
✔✔What is implied contract? - ✔✔One in which the parties have acted in such a way
that it is understood that a principal-agent relationship exists, even though no expressed
statement may have been made by either
✔✔What is binding authority? - ✔✔The capacity to confirm to people who have
submitted insurance applications that they have insurance coverage. It gives agents
and brokers the power to make decisions that enter insurers into contracts of insurance.
✔✔What is interim receipt? - ✔✔A temporary measure to insure in an agreed manner
while waiting for the completed policy to be issued. Also known as a "binder"
✔✔What is a binder? - ✔✔A written or oral agreement given by an insurer to insure a
risk, pending the issuance of a formal policy. A binder is deemed to be the policy and
must be cancelled in the same manner.
✔✔What is a cover note? - ✔✔A document with insurance, or the insurance protection
provided.
✔✔What is a broker of record? - ✔✔The broker currently receiving a commission to
handle a policy.
✔✔What is representation? - ✔✔A statement or conduct made to influence an insurer to
decide on a risk. The decision includes declining or accepting the risk and deciding the
rate and premium to be charged. In insurance, these statements are said to be "material
to the risk" and are enough to void a policy.
✔✔What is a named insured? - ✔✔The person or party designated in the policy as the
insured, as opposed to someone who may be covered by the policy but is not
specifically named
✔✔What is a loss payee? - ✔✔A person or an entity other than the named insured to
whom the proceeds of insurance will be paid
