Registered Insurance Brokers of Ontario (RIBO) Exam 2026 – 400 Free Practice Questions to Pass the Exam

The correct answer is that the agreement between an insurance broker and an insurer typically allows the broker to bind the insurer on acceptable risks. This means that, within the terms set by the insurer, the broker has the authority to finalize coverage for clients by accepting risks that meet the insurer's underwriting criteria. This is a significant responsibility as it directly affects the insurer's risk exposure and liability.

While brokers play a role in negotiating premiums, that is often more of a conversation with the client rather than a direct authority granted by the insurer. The actual underwriting of policies, which involves assessing risk and determining policy terms, is generally the responsibility of the insurer or underwriters employed by them. Additionally, brokers do not assume liability for policyholders; instead, they work to ensure that clients have appropriate coverage while maintaining a clear distinction between the insurer and the policyholder’s responsibilities.