RIBO Chapter 1 Questions with
complete solution
What are the 5 functions of insurance? - correct answer ✔1) Basis of Credit
System
2) Loss Prevention/Loss Reduction
3) Eliminates Worry/Encourages Entrepreneurship
4) Spread of Risk
5) Source of Employment/Investment Capital
What are the 5 Major Sections of an Agency/Broker Contract? - correct
answer ✔1) Broker's Authority
2) Ownership of Expirations
3) Commissions
4) Expenses
5) Termination
What is Treaty Reinsurance? - correct answer ✔The insurer and reinsurer
execute an insurance contract covering ALL policies within the scope of that
contract; may oblige reinsurer to accept reinsurance of all contracts within the
scope
What is Facultative Reinsurance? - correct answer ✔The insurer cedes and
the reinsurer assumes all or part of the risk assumed by a specified policy;
negotiated separately for each contract that is reinsured
What is the definition of insurance? - correct answer ✔The undertaking by
one person to indemnify another person against loss or liability for loss in
complete solution
What are the 5 functions of insurance? - correct answer ✔1) Basis of Credit
System
2) Loss Prevention/Loss Reduction
3) Eliminates Worry/Encourages Entrepreneurship
4) Spread of Risk
5) Source of Employment/Investment Capital
What are the 5 Major Sections of an Agency/Broker Contract? - correct
answer ✔1) Broker's Authority
2) Ownership of Expirations
3) Commissions
4) Expenses
5) Termination
What is Treaty Reinsurance? - correct answer ✔The insurer and reinsurer
execute an insurance contract covering ALL policies within the scope of that
contract; may oblige reinsurer to accept reinsurance of all contracts within the
scope
What is Facultative Reinsurance? - correct answer ✔The insurer cedes and
the reinsurer assumes all or part of the risk assumed by a specified policy;
negotiated separately for each contract that is reinsured
What is the definition of insurance? - correct answer ✔The undertaking by
one person to indemnify another person against loss or liability for loss in
