RIBO LEVEL 1 EXAM
Indemnify - Answer-The action of compensating an insured following a loss under
the insurance policy.
Risk - Answer-The chance of loss;
or an object or activity that is insured (about to be insured)
Peril - Answer-An event that may cause a loss to occur
Object of Insurance - Answer-The item that is insured or covered in an insurance
policy
Indemnity - Answer-to put you back in the same financial position (just prior to loss)
NO BETTER NO WORSE
Insured / Policy holder - Answer-The person who purchases an insurance policy
Noted as First Party
Insurer - Answer-Insurance company who issued the insurance policy and who
compensates/indemnifies a policy holder in the event of a loss
Noted as second party
Premium - Answer-The sum of money paid by a person to an insurance company in
exchange for an insurance policy
RIBO - Registered Insurance Brokers of Ontario - Answer-A 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 - Answer-- Also referred to as Property and Casualty (P&C)
- Anything other than Life or Health Insurance
Property risk - Answer-Financial loss occurs when owned property is lost or
damaged
Liability risk - Answer-When a person's negligent actions result in injury to others or
damage to another's property
Negligence - Answer-is what a reasonable and prudence person would do or not do
in a similar situation
Speculative risk - Answer-This is the possibility of either financial loss / gain
, --> this is NOT insurable
Pure risk - Answer-The chance of financial loss with no chance of financial gain.
--> this type of risk IS insurable
Hazards - Answer-is 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 - Answer-OBSERVABLE condition relating to the object of
insurance
Moral hazard - Answer-Subjective characteristics of an insured/applicant that
increases the likelihood of loss.
Proximate Cause - Answer-the immediate and effective cause of the loss
Dealing with Risk - Answer-1) 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 - Answer-Insurance for insurance company
Capacity - Answer-the amount of coverage that an insurer ca reasonably assume
Premium Capacity - Answer-is the aggregate premium volume an insurer can safely
write in a given accounting period
Five Function of Insurance - Answer-- Spread of Risk
- Basis of Credit System
- Eliminating Worry, Encouraging Entrepreneurship
- Loss prevention and Reduction
- Source of Investment Capital and Employment
Deductible - Answer-The amount of money a policy holder pays out of pocket to
cover the first portion of a loss before insurance begins to cover the balance
Writing Insurance - Answer-The act of selling or issuing an insurance policy
Type of Insurance Company - Answer-1) Government Insurers
2) Private Insurers - Stock insurance company
Indemnify - Answer-The action of compensating an insured following a loss under
the insurance policy.
Risk - Answer-The chance of loss;
or an object or activity that is insured (about to be insured)
Peril - Answer-An event that may cause a loss to occur
Object of Insurance - Answer-The item that is insured or covered in an insurance
policy
Indemnity - Answer-to put you back in the same financial position (just prior to loss)
NO BETTER NO WORSE
Insured / Policy holder - Answer-The person who purchases an insurance policy
Noted as First Party
Insurer - Answer-Insurance company who issued the insurance policy and who
compensates/indemnifies a policy holder in the event of a loss
Noted as second party
Premium - Answer-The sum of money paid by a person to an insurance company in
exchange for an insurance policy
RIBO - Registered Insurance Brokers of Ontario - Answer-A 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 - Answer-- Also referred to as Property and Casualty (P&C)
- Anything other than Life or Health Insurance
Property risk - Answer-Financial loss occurs when owned property is lost or
damaged
Liability risk - Answer-When a person's negligent actions result in injury to others or
damage to another's property
Negligence - Answer-is what a reasonable and prudence person would do or not do
in a similar situation
Speculative risk - Answer-This is the possibility of either financial loss / gain
, --> this is NOT insurable
Pure risk - Answer-The chance of financial loss with no chance of financial gain.
--> this type of risk IS insurable
Hazards - Answer-is 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 - Answer-OBSERVABLE condition relating to the object of
insurance
Moral hazard - Answer-Subjective characteristics of an insured/applicant that
increases the likelihood of loss.
Proximate Cause - Answer-the immediate and effective cause of the loss
Dealing with Risk - Answer-1) 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 - Answer-Insurance for insurance company
Capacity - Answer-the amount of coverage that an insurer ca reasonably assume
Premium Capacity - Answer-is the aggregate premium volume an insurer can safely
write in a given accounting period
Five Function of Insurance - Answer-- Spread of Risk
- Basis of Credit System
- Eliminating Worry, Encouraging Entrepreneurship
- Loss prevention and Reduction
- Source of Investment Capital and Employment
Deductible - Answer-The amount of money a policy holder pays out of pocket to
cover the first portion of a loss before insurance begins to cover the balance
Writing Insurance - Answer-The act of selling or issuing an insurance policy
Type of Insurance Company - Answer-1) Government Insurers
2) Private Insurers - Stock insurance company
