RIBO IBAO Exam Study Guide & Practice Questions - 2026-2027 | Ontario Insurance Broker Prep
What does RIBO stand for? Registered Insurance Brokers of Ontario
When was RIBO established? 1981
What does RIBO regulate? Licensing, professional competence, ethical conduct, and insurance-related
financial obligations of independent general insurance brokers in Ontario
Insurance The undertaking by one person to indemnify another person against loss or liability
in respect of a certain risk or peril.
What is the purpose of insurance? To pay a sum of money or other thing of value upon the happening of a certain
event.
General Insurance Any insurance product other than travel, life, or health
Risk Retention A conscious decision on the part of an organization to self-insure all, or a portion, of
losses rather than purchasing insurance
Risk The chance of financial loss occurring on an object or activity that is insured or
about to be insured
Speculative Risk This is a possibility of either a financial loss or gain. Not insurable
Pure Risk This is the chance of financial loss with no chance of financial gain. It is insurable
Hazard Any condition that increases the risk or chance of a loss occurring or increases the
amount of damage that may happen if there were a loss
Physical Hazard Observable conditions relating to the object of insurance. For example, a garage is
insured, but the chemicals and oils inside are not
Moral Hazard Characteristics of an insured, or an applicant for insurance, that increases the
likelihood of a loss to occur. For example, the garage employees who regularly
smoke near the chemicals and oils
Methods to Deal with Risk Eliminate risk, control risk, retain risk, and transfer of risk
Eliminate Risk To prevent a loss from happening, you can avoid or eliminate the the risk all
together. For example, selling your car. Not a practical solution
, RIBO IBAO Exam Study Guide & Practice Questions - 2026-2027 | Ontario Insurance Broker Prep
Control Risk Taking steps that will help decrease the chance of a loss or to reduce the severity of
any losses. For example, taking driver training courses
Retain Risk Sometimes we can accept a loss, and afford it. Not always common
Transfer of Risk When people or businesses decide they're unable to withstand the financial impact
of a loss, they can choose to transfer all, or a portion, or their risk
Deductible The amount of money a policyholder pays out of pocket to cover the first portion of
a loss before the insurance begins to cover it
Idemnify the action of compensating an insured following a loss under the insurance policy
Idemnity The contractural obligation by one party (the insurer) to make good the losses
suffered by another (the insured) by putting the insured back in the same financial
position that they were in at the time the loss occurred
Principle of Idemnity A basic rule of reinsurance stating that policyholders receive the actual amount of
their losses
Reinsurance A form of insurance that can be purchased by an insurance company to limit the
amount of loss it may experience at any time
Five Functions of Insurance Spread of risk, basis of credit system, eliminates worry and encourages
entrepreneurship, loss prevention and loss reduction, and source of employment
and investment capital
Spread of Risk The ability to contribute to a fund, to share the losses of the few among the many, is
a primary function of insurance
Basis of Credit System Having insurance available, protects the investments of lenders, which helps to
facilitate the granting of credit. To borrow money for major purchases, clients need
to provide proof of insurance
Eliminates Worry and Encourages Entrepreneurship The availability of property and casualty insurance allows people to buy property
and engage in business ventures without having to set money aside to meet the
financial requirements that may arise from future losses
Source of Employment and Investment Capital Canadian insurers control nearly $200 billion in total assets. More that $100 billion
of these assets are invested. These insurers employ or contract services from more
than 130,000 people, including independent brokers, underwriters, computer
technologies, claims adjusters, actuaries, and more
Direct Writers The insurance companies themselves, such as TD Insurance, Desjardins, etc. They
sell their insurance directly to the consumer
Intermediaries Businesses of two main types; Independent Agencies and Brokerages
, RIBO IBAO Exam Study Guide & Practice Questions - 2026-2027 | Ontario Insurance Broker Prep
Agencies Private businesses contracted with one insurance company to sell their product to
consumers
Brokerages Contract with multiple insurers to offer a choice to consumers
Intermediary A person or organization who acts as a mediator or link between two parties
Insurance Brokers A person who primarily represents the interest of the policy holder in an insurance
transaction and who can sell their clients the policies of more than one insurance
company. They put the interests of their clients, or policyholders, at the center of
their transactions
Insurance Agents An individual authorized to sell products fro one insurance company and, in doing
so, primarily represents the interests if the company. They put the insurer at the
center of the insurance transaction
Stock Insurance Companies A business entity owned by its shareholders with a goal of making profit for them.
Some of these companies include Intact, Travellers, and Economical
Mutual Interest Companies An insurance company owned by its policyholders with a goal of covering costs. Any
profit is re-invested in the company or distributed back to policyholders
The Canadian Association of Mutual Insurance Companies The recognized leader in helping Canadian mutual insurance companies become
(CAMIC) the insurers of choice of the Canadian public
The Ontario Mutual Insurance Association (OMIA) A trade association with a rich history dating back more the 135 years
Business Development Responsibilities Appoint brokerage offices to sell its products; develop and manage brokerage
contracts; promote the company products to the broker distribution force; provide
broker training
Business Development Roles Vice President, manager, business development representatives (BDR's)
Business Development Broker Interaction A BDR assigned to do business with the brokerage
Underwriting Responsibilities Choose which type of risks it wishes to write; establishes underwriting criteria and
broker binding authority; work with actuaries to determine pricing; analyze
application forms submitted by brokers to ensure applicants' risks meet established
criteria; issues insurance policies and policy renewals; processes cancellations
Underwriting Roles Vice president,;managers/ team leaders for commercial, personal lines, and form
divisions; underwriters; underwriting assistants
Underwriting Broker Interaction With the underwriters assigned to underwrite risks for the broker
What does RIBO stand for? Registered Insurance Brokers of Ontario
When was RIBO established? 1981
What does RIBO regulate? Licensing, professional competence, ethical conduct, and insurance-related
financial obligations of independent general insurance brokers in Ontario
Insurance The undertaking by one person to indemnify another person against loss or liability
in respect of a certain risk or peril.
What is the purpose of insurance? To pay a sum of money or other thing of value upon the happening of a certain
event.
General Insurance Any insurance product other than travel, life, or health
Risk Retention A conscious decision on the part of an organization to self-insure all, or a portion, of
losses rather than purchasing insurance
Risk The chance of financial loss occurring on an object or activity that is insured or
about to be insured
Speculative Risk This is a possibility of either a financial loss or gain. Not insurable
Pure Risk This is the chance of financial loss with no chance of financial gain. It is insurable
Hazard Any condition that increases the risk or chance of a loss occurring or increases the
amount of damage that may happen if there were a loss
Physical Hazard Observable conditions relating to the object of insurance. For example, a garage is
insured, but the chemicals and oils inside are not
Moral Hazard Characteristics of an insured, or an applicant for insurance, that increases the
likelihood of a loss to occur. For example, the garage employees who regularly
smoke near the chemicals and oils
Methods to Deal with Risk Eliminate risk, control risk, retain risk, and transfer of risk
Eliminate Risk To prevent a loss from happening, you can avoid or eliminate the the risk all
together. For example, selling your car. Not a practical solution
, RIBO IBAO Exam Study Guide & Practice Questions - 2026-2027 | Ontario Insurance Broker Prep
Control Risk Taking steps that will help decrease the chance of a loss or to reduce the severity of
any losses. For example, taking driver training courses
Retain Risk Sometimes we can accept a loss, and afford it. Not always common
Transfer of Risk When people or businesses decide they're unable to withstand the financial impact
of a loss, they can choose to transfer all, or a portion, or their risk
Deductible The amount of money a policyholder pays out of pocket to cover the first portion of
a loss before the insurance begins to cover it
Idemnify the action of compensating an insured following a loss under the insurance policy
Idemnity The contractural obligation by one party (the insurer) to make good the losses
suffered by another (the insured) by putting the insured back in the same financial
position that they were in at the time the loss occurred
Principle of Idemnity A basic rule of reinsurance stating that policyholders receive the actual amount of
their losses
Reinsurance A form of insurance that can be purchased by an insurance company to limit the
amount of loss it may experience at any time
Five Functions of Insurance Spread of risk, basis of credit system, eliminates worry and encourages
entrepreneurship, loss prevention and loss reduction, and source of employment
and investment capital
Spread of Risk The ability to contribute to a fund, to share the losses of the few among the many, is
a primary function of insurance
Basis of Credit System Having insurance available, protects the investments of lenders, which helps to
facilitate the granting of credit. To borrow money for major purchases, clients need
to provide proof of insurance
Eliminates Worry and Encourages Entrepreneurship The availability of property and casualty insurance allows people to buy property
and engage in business ventures without having to set money aside to meet the
financial requirements that may arise from future losses
Source of Employment and Investment Capital Canadian insurers control nearly $200 billion in total assets. More that $100 billion
of these assets are invested. These insurers employ or contract services from more
than 130,000 people, including independent brokers, underwriters, computer
technologies, claims adjusters, actuaries, and more
Direct Writers The insurance companies themselves, such as TD Insurance, Desjardins, etc. They
sell their insurance directly to the consumer
Intermediaries Businesses of two main types; Independent Agencies and Brokerages
, RIBO IBAO Exam Study Guide & Practice Questions - 2026-2027 | Ontario Insurance Broker Prep
Agencies Private businesses contracted with one insurance company to sell their product to
consumers
Brokerages Contract with multiple insurers to offer a choice to consumers
Intermediary A person or organization who acts as a mediator or link between two parties
Insurance Brokers A person who primarily represents the interest of the policy holder in an insurance
transaction and who can sell their clients the policies of more than one insurance
company. They put the interests of their clients, or policyholders, at the center of
their transactions
Insurance Agents An individual authorized to sell products fro one insurance company and, in doing
so, primarily represents the interests if the company. They put the insurer at the
center of the insurance transaction
Stock Insurance Companies A business entity owned by its shareholders with a goal of making profit for them.
Some of these companies include Intact, Travellers, and Economical
Mutual Interest Companies An insurance company owned by its policyholders with a goal of covering costs. Any
profit is re-invested in the company or distributed back to policyholders
The Canadian Association of Mutual Insurance Companies The recognized leader in helping Canadian mutual insurance companies become
(CAMIC) the insurers of choice of the Canadian public
The Ontario Mutual Insurance Association (OMIA) A trade association with a rich history dating back more the 135 years
Business Development Responsibilities Appoint brokerage offices to sell its products; develop and manage brokerage
contracts; promote the company products to the broker distribution force; provide
broker training
Business Development Roles Vice President, manager, business development representatives (BDR's)
Business Development Broker Interaction A BDR assigned to do business with the brokerage
Underwriting Responsibilities Choose which type of risks it wishes to write; establishes underwriting criteria and
broker binding authority; work with actuaries to determine pricing; analyze
application forms submitted by brokers to ensure applicants' risks meet established
criteria; issues insurance policies and policy renewals; processes cancellations
Underwriting Roles Vice president,;managers/ team leaders for commercial, personal lines, and form
divisions; underwriters; underwriting assistants
Underwriting Broker Interaction With the underwriters assigned to underwrite risks for the broker
