AINS 101 UPDATED 2026 EXAMS SCRIPT QUESTIONS
AND ANSWERS RATED A+
✔✔Expense ratio - ✔✔an insurer's incurred underwriting expenses for a given period
divided by its written premiums for the same period
✔✔Combined ratio - ✔✔a profitability ratio that indicates whether an insurer has made
an underwriting loss or gain
✔✔Independent agency - ✔✔a business, operated for the benefit of its owner that sells
insurance, usually as a representative of several unrelated insurers
✔✔Exclusive agency marketing system - ✔✔an insurance marketing system under
which agents contract to sell insurance exclusively for one insurer
✔✔Direct writer marketing system - ✔✔an insurance marketing system that uses sales
agents who are direct employees of the insurer
✔✔Distribution channel - ✔✔the necessary people and physical facilities to support the
sale of insurance products and services
✔✔Agent - ✔✔in the agency relationship, the party that is authorized by the principal to
act on the principal's behalf
✔✔Agency - ✔✔a legal, consensual relationship that exists when one party, the agent,
acts on behalf of another party, the principal
✔✔Principal - ✔✔the party in an agency relationship that authorizes the agent to act on
that party's behalf
✔✔Agency expiration list - ✔✔the record of an insurance agency's present
policyholders and the dates their policies expire
, ✔✔Underwriting guidelines - ✔✔a written manual that communicates an insurer's
underwriting policy and that specifies the attributes of an account that an insurer is
willing to insure
✔✔Binder - ✔✔a temporary written or oral agreement to provide insurance coverage
until a formal written policy is issued
✔✔Book of business - ✔✔a group of policies with a common characteristic, such as
territory or type of coverage, or all policies written by a particular insurer or agency
✔✔Telematics - ✔✔the use of technological devices to transmit data via wireless
communication and GPS tracking
✔✔Rate manual - ✔✔a resource for classifying accounts and developing premiums for
given types of insurance; includes necessary rules, factors and guidelines to apply
those rates
✔✔Adverse selection - ✔✔insuring individuals with a high probability of loss at a cost
lower than the insurer would normally charge for that risk because it wasn't aware of the
actual risk involved
✔✔Underwriting - ✔✔the process of selecting insureds, pricing coverage, determining
insurance policy terms and conditions, and then monitoring the underwriting decisions
made
✔✔Predictive modeling - ✔✔a process in which historical data based on behaviors and
events is blended with multiple variables and used to constrict models of anticipated
future outcomes
✔✔Capacity - ✔✔the amount of business an insurer is able to write, usually based on a
comparison of the insurer's written premiums to its policyholder's surplus
✔✔Exposure unit - ✔✔the unit of measure used to determine an insurance policy
premium
✔✔Certificate of insurance - ✔✔a brief descriptions of insurance coverage prepared by
an insurer or its agent and commonly used by policy holders to provide evidence of
insurance
✔✔Catastrophe model - ✔✔a type of computer program that estimates losses from
future potential catastrophic events
✔✔Rate - ✔✔the price per exposure unit for insurance coverage
AND ANSWERS RATED A+
✔✔Expense ratio - ✔✔an insurer's incurred underwriting expenses for a given period
divided by its written premiums for the same period
✔✔Combined ratio - ✔✔a profitability ratio that indicates whether an insurer has made
an underwriting loss or gain
✔✔Independent agency - ✔✔a business, operated for the benefit of its owner that sells
insurance, usually as a representative of several unrelated insurers
✔✔Exclusive agency marketing system - ✔✔an insurance marketing system under
which agents contract to sell insurance exclusively for one insurer
✔✔Direct writer marketing system - ✔✔an insurance marketing system that uses sales
agents who are direct employees of the insurer
✔✔Distribution channel - ✔✔the necessary people and physical facilities to support the
sale of insurance products and services
✔✔Agent - ✔✔in the agency relationship, the party that is authorized by the principal to
act on the principal's behalf
✔✔Agency - ✔✔a legal, consensual relationship that exists when one party, the agent,
acts on behalf of another party, the principal
✔✔Principal - ✔✔the party in an agency relationship that authorizes the agent to act on
that party's behalf
✔✔Agency expiration list - ✔✔the record of an insurance agency's present
policyholders and the dates their policies expire
, ✔✔Underwriting guidelines - ✔✔a written manual that communicates an insurer's
underwriting policy and that specifies the attributes of an account that an insurer is
willing to insure
✔✔Binder - ✔✔a temporary written or oral agreement to provide insurance coverage
until a formal written policy is issued
✔✔Book of business - ✔✔a group of policies with a common characteristic, such as
territory or type of coverage, or all policies written by a particular insurer or agency
✔✔Telematics - ✔✔the use of technological devices to transmit data via wireless
communication and GPS tracking
✔✔Rate manual - ✔✔a resource for classifying accounts and developing premiums for
given types of insurance; includes necessary rules, factors and guidelines to apply
those rates
✔✔Adverse selection - ✔✔insuring individuals with a high probability of loss at a cost
lower than the insurer would normally charge for that risk because it wasn't aware of the
actual risk involved
✔✔Underwriting - ✔✔the process of selecting insureds, pricing coverage, determining
insurance policy terms and conditions, and then monitoring the underwriting decisions
made
✔✔Predictive modeling - ✔✔a process in which historical data based on behaviors and
events is blended with multiple variables and used to constrict models of anticipated
future outcomes
✔✔Capacity - ✔✔the amount of business an insurer is able to write, usually based on a
comparison of the insurer's written premiums to its policyholder's surplus
✔✔Exposure unit - ✔✔the unit of measure used to determine an insurance policy
premium
✔✔Certificate of insurance - ✔✔a brief descriptions of insurance coverage prepared by
an insurer or its agent and commonly used by policy holders to provide evidence of
insurance
✔✔Catastrophe model - ✔✔a type of computer program that estimates losses from
future potential catastrophic events
✔✔Rate - ✔✔the price per exposure unit for insurance coverage
