AINS 101 2024/2025 FINAL EXAM QUESTIONS AND VERIFIED
ANSWERS
The two main sectors of the insurance industry are
Property-casualty insurance and life-health insurance.
Because insurance contracts impose an obligation for ethical practices and behaviors
on the parties while dealing with one another, an insurance contract is called a
Contract of utmost good faith.
Earned premiums are shown on an insurer's income statement because they are
Revenues
Destructive competition in the insurance industry could result in
Insurance Shortages
3 multiple choice options
Sean was driving and caused an injury to a pedestrian named Wilbur. In the context of
the resulting claim made to Sean's insurance company and assigned to Andrea in the
claims department, Sean and Wilbur and Andrea are, respectively
Insured and claimant and claims representative
Which one of these is most directly associated with a satisfied customer?
Leads and referrals that can be used to generate new business
3 multiple choice options
When conducting an advance audit, which of these tasks are performed to assist
underwriting?
Classify the various exposures
3 multiple choice options
Because the insurance company usually determines policy wording and the insured has
little choice but to "take it or leave it," an insurance contract is a
Contract of adhesion
Smart products used to perform repetitive tasks
Robots
3 multiple choice options
What is the correct order for these steps in the claims process? Calculating a loss
reserve, preparing a loss statement, identifying the policy, determining the cause of loss
Identifying the policy, calculating a loss reserve, determining the cause of loss,
preparing a loss statement
What is another name for a field underwriter?
Line Underwriter
Someone has the following duties: evaluate applicants that producers submit, present
policy quotations, process policy endorsements, help explain coverages, make
coverage recommendations. What is their role?
Field/Line Underwriter
In personal property-casualty insurance, which is more common: manuscript forms or
pre-printed policies?
Pre-printed policies
Which statement is true?
, A policy begins with a coverage overview, then goes into more coverage details
3 multiple choice options
Which of these is an example of general damages?
Compensation for disfigurement
3 multiple choice options
What are the four quadrants of risk?
Hazard, Operational, Financial, Strategic
What is a Hazard Risk?
A risk that arises from property, liability, or personnel loss exposures.
What is an operational risk?
A risk that arises from people or a failure in processes, systems, or controls, including
those involving information technology
What is a financial risk?
A risk that arises from the effect of market forces on financial assets or liabilities,
including market risk, credit risk, liquidity risk, and price risk.
What is strategic risk?
A risk that arises from trends in the economy and society, including changes in the
economic, political, and competitive environments
What is Pure Risk?
A category of risk that cannot be controlled, and only has 2 outcomes: complete loss or
no loss
What type of risk has no change for gain or profit?
Pure Risk
Michael is a commercial lines underwriter. He received a risk control report on a new
business that he had recently written with Laura, one of his producers. After reviewing
the report, Michael contacted Laura to let her know that they needed to process a policy
change request adding a new classification and some exposures to the general liability
policy. These activities are occurring during which one of the following steps of the
underwriting process?
Monitor the underwriting decision
3 multiple choice options
What is the difference between an independent agency and an exclusive agency?
An exclusive agency is contracted to sell insurance for one insurer or group of insurers.
The processing of almost every claim involves which one of the following activities?
Determining the amount of damages or extent of loss
3 multiple choice options
Windsor Insurance has sold more personal auto policies in the recent quarter than ever
before in its history, thanks to new commission incentives for ambitious staff members.
Even though Windsor is collecting more money upfront, it is actually making less per
policy after remitting the higher commissions. Some claim payments are also now being
delayed, resulting in many complaints against the company. Which one of the following
objectives of insurance regulation is not being realized through this scenario?
Maintaining insurer solvency
3 multiple choice options
What type of personal property-casualty insurance policy protects someone with high
potential for large liability losses?
ANSWERS
The two main sectors of the insurance industry are
Property-casualty insurance and life-health insurance.
Because insurance contracts impose an obligation for ethical practices and behaviors
on the parties while dealing with one another, an insurance contract is called a
Contract of utmost good faith.
Earned premiums are shown on an insurer's income statement because they are
Revenues
Destructive competition in the insurance industry could result in
Insurance Shortages
3 multiple choice options
Sean was driving and caused an injury to a pedestrian named Wilbur. In the context of
the resulting claim made to Sean's insurance company and assigned to Andrea in the
claims department, Sean and Wilbur and Andrea are, respectively
Insured and claimant and claims representative
Which one of these is most directly associated with a satisfied customer?
Leads and referrals that can be used to generate new business
3 multiple choice options
When conducting an advance audit, which of these tasks are performed to assist
underwriting?
Classify the various exposures
3 multiple choice options
Because the insurance company usually determines policy wording and the insured has
little choice but to "take it or leave it," an insurance contract is a
Contract of adhesion
Smart products used to perform repetitive tasks
Robots
3 multiple choice options
What is the correct order for these steps in the claims process? Calculating a loss
reserve, preparing a loss statement, identifying the policy, determining the cause of loss
Identifying the policy, calculating a loss reserve, determining the cause of loss,
preparing a loss statement
What is another name for a field underwriter?
Line Underwriter
Someone has the following duties: evaluate applicants that producers submit, present
policy quotations, process policy endorsements, help explain coverages, make
coverage recommendations. What is their role?
Field/Line Underwriter
In personal property-casualty insurance, which is more common: manuscript forms or
pre-printed policies?
Pre-printed policies
Which statement is true?
, A policy begins with a coverage overview, then goes into more coverage details
3 multiple choice options
Which of these is an example of general damages?
Compensation for disfigurement
3 multiple choice options
What are the four quadrants of risk?
Hazard, Operational, Financial, Strategic
What is a Hazard Risk?
A risk that arises from property, liability, or personnel loss exposures.
What is an operational risk?
A risk that arises from people or a failure in processes, systems, or controls, including
those involving information technology
What is a financial risk?
A risk that arises from the effect of market forces on financial assets or liabilities,
including market risk, credit risk, liquidity risk, and price risk.
What is strategic risk?
A risk that arises from trends in the economy and society, including changes in the
economic, political, and competitive environments
What is Pure Risk?
A category of risk that cannot be controlled, and only has 2 outcomes: complete loss or
no loss
What type of risk has no change for gain or profit?
Pure Risk
Michael is a commercial lines underwriter. He received a risk control report on a new
business that he had recently written with Laura, one of his producers. After reviewing
the report, Michael contacted Laura to let her know that they needed to process a policy
change request adding a new classification and some exposures to the general liability
policy. These activities are occurring during which one of the following steps of the
underwriting process?
Monitor the underwriting decision
3 multiple choice options
What is the difference between an independent agency and an exclusive agency?
An exclusive agency is contracted to sell insurance for one insurer or group of insurers.
The processing of almost every claim involves which one of the following activities?
Determining the amount of damages or extent of loss
3 multiple choice options
Windsor Insurance has sold more personal auto policies in the recent quarter than ever
before in its history, thanks to new commission incentives for ambitious staff members.
Even though Windsor is collecting more money upfront, it is actually making less per
policy after remitting the higher commissions. Some claim payments are also now being
delayed, resulting in many complaints against the company. Which one of the following
objectives of insurance regulation is not being realized through this scenario?
Maintaining insurer solvency
3 multiple choice options
What type of personal property-casualty insurance policy protects someone with high
potential for large liability losses?
