AINS 21 PRACTICE FINAL EXAM Questions with Correct Answers
Question 1:
Summary of available coverage options Relevant statutory terms and provisions Completed
application
Insurer's bylaws
Answer:
A. Summary of available coverage options
All of the answer choices are documents that can become part of a policy, except for summary
of available coverage options, which generally does not become part of the policy.
A company turnover rate well above company and industry averages could be a sign of
Employee slacking.
Financial problems that need to be addressed. Claims-consciousness.
Question 2:
Personnel problems that need to be addressed.
Answer:
D. Personnel problems that need to be addressed.
A company turnover rate well above company and industry averages could be a sign of
personnel problems that need to be addressed.
Traditionally, the risk management professional's role has been associated with loss exposures
related to Business risk.
Operational risk. Pure risk.
Question 3:
Speculative risk.
Answer:
C. Pure risk.
Traditionally, the risk management professional's role has been associated with loss exposures
related to pure risk.
The financial report for Hometown Insurer contains the following information: Earned
premiums
$4,000,000
Written premiums $5,000,000
Net investment income $1,000,000 Incurred losses $3,000,000
,Question 4:
Incurred underwriting expenses $2,000,000 What is Hometown Insurer's loss ratio? 20%
30%
Answer:
D. 75%
Question 5:
Incurred underwriting expenses $2,000,000 What is Hometown Insurer's loss ratio? 20%
30%
Answer:
D. 75%
50%75%
Hometown Insurer's loss ratio is its incurred losses ($3,000,000) divided by its earned premiums
($4,000,000), or 75 percent.A stock insurer is distinguished from a mutual insurer by the fact
that Owners are not necessarily insureds.It seeks to generate a profit.It is governed by a board
of directors.50%75%
Hometown Insurer's loss ratio is its incurred losses ($3,000,000) divided by its earned premiums
($4,000,000), or 75 percent.A stock insurer is distinguished from a mutual insurer by the fact
that Owners are not necessarily insureds.It seeks to generate a profit.It is governed by a board
of directors.
50%
75%
Hometown Insurer's loss ratio is its incurred losses ($3,000,000) divided by its earned premiums
($4,000,000), or 75 percent.
A stock insurer is distinguished from a mutual insurer by the fact that Owners are not
necessarily insureds.
It seeks to generate a profit.
It is governed by a board of directors.
50%
75%
Hometown Insurer's loss ratio is its incurred losses ($3,000,000) divided by its earned premiums
($4,000,000), or 75 percent.
A stock insurer is distinguished from a mutual insurer by the fact that Owners are not
necessarily insureds.
It seeks to generate a profit.
It is governed by a board of directors.
Question 6:
Owners have voting rights.
Answer:
A. Owners are not necessarily insureds.
A stock insurer is distinguished from a mutual insurer by the fact that owners are not
necessarily insureds.
, Question 7:
A decrease in incurred losses will generally cause a decrease in all of the following, EXCEPT:
Combined ratio
Expense ratio Overall ratio Loss ratio
Answer:
B. Expense ratio
A decrease in incurred losses would decrease the loss ratio, which is included in the combined
ratio and the overall operating ratio. The expense ratio would not decrease.
A loss exposure is
The same thing as a peril.
Any condition that presents the possibility of a loss. The same thing as a hazard.
Question 8:
Any condition that precludes the chance of loss.
Answer:
B. Any condition that presents the possibility of a loss.
A loss exposure is any condition or situation that presents the possibility of a loss.
A group of policies with a common characteristic, such as a territory or type of coverage, or all
policies written by a particular insurer, producer, or agency is referred to as
A. A book of business.
B. A coverage pool.
C. A line of business.
Question 9:
D. A policy group.
Answer:
A. A book of business.
A group of policies with a common characteristic, such as a territory or type of coverage, or all
policies written by a particular insurer, producer, or agency is referred to as a book of business.
Question 1:
Summary of available coverage options Relevant statutory terms and provisions Completed
application
Insurer's bylaws
Answer:
A. Summary of available coverage options
All of the answer choices are documents that can become part of a policy, except for summary
of available coverage options, which generally does not become part of the policy.
A company turnover rate well above company and industry averages could be a sign of
Employee slacking.
Financial problems that need to be addressed. Claims-consciousness.
Question 2:
Personnel problems that need to be addressed.
Answer:
D. Personnel problems that need to be addressed.
A company turnover rate well above company and industry averages could be a sign of
personnel problems that need to be addressed.
Traditionally, the risk management professional's role has been associated with loss exposures
related to Business risk.
Operational risk. Pure risk.
Question 3:
Speculative risk.
Answer:
C. Pure risk.
Traditionally, the risk management professional's role has been associated with loss exposures
related to pure risk.
The financial report for Hometown Insurer contains the following information: Earned
premiums
$4,000,000
Written premiums $5,000,000
Net investment income $1,000,000 Incurred losses $3,000,000
,Question 4:
Incurred underwriting expenses $2,000,000 What is Hometown Insurer's loss ratio? 20%
30%
Answer:
D. 75%
Question 5:
Incurred underwriting expenses $2,000,000 What is Hometown Insurer's loss ratio? 20%
30%
Answer:
D. 75%
50%75%
Hometown Insurer's loss ratio is its incurred losses ($3,000,000) divided by its earned premiums
($4,000,000), or 75 percent.A stock insurer is distinguished from a mutual insurer by the fact
that Owners are not necessarily insureds.It seeks to generate a profit.It is governed by a board
of directors.50%75%
Hometown Insurer's loss ratio is its incurred losses ($3,000,000) divided by its earned premiums
($4,000,000), or 75 percent.A stock insurer is distinguished from a mutual insurer by the fact
that Owners are not necessarily insureds.It seeks to generate a profit.It is governed by a board
of directors.
50%
75%
Hometown Insurer's loss ratio is its incurred losses ($3,000,000) divided by its earned premiums
($4,000,000), or 75 percent.
A stock insurer is distinguished from a mutual insurer by the fact that Owners are not
necessarily insureds.
It seeks to generate a profit.
It is governed by a board of directors.
50%
75%
Hometown Insurer's loss ratio is its incurred losses ($3,000,000) divided by its earned premiums
($4,000,000), or 75 percent.
A stock insurer is distinguished from a mutual insurer by the fact that Owners are not
necessarily insureds.
It seeks to generate a profit.
It is governed by a board of directors.
Question 6:
Owners have voting rights.
Answer:
A. Owners are not necessarily insureds.
A stock insurer is distinguished from a mutual insurer by the fact that owners are not
necessarily insureds.
, Question 7:
A decrease in incurred losses will generally cause a decrease in all of the following, EXCEPT:
Combined ratio
Expense ratio Overall ratio Loss ratio
Answer:
B. Expense ratio
A decrease in incurred losses would decrease the loss ratio, which is included in the combined
ratio and the overall operating ratio. The expense ratio would not decrease.
A loss exposure is
The same thing as a peril.
Any condition that presents the possibility of a loss. The same thing as a hazard.
Question 8:
Any condition that precludes the chance of loss.
Answer:
B. Any condition that presents the possibility of a loss.
A loss exposure is any condition or situation that presents the possibility of a loss.
A group of policies with a common characteristic, such as a territory or type of coverage, or all
policies written by a particular insurer, producer, or agency is referred to as
A. A book of business.
B. A coverage pool.
C. A line of business.
Question 9:
D. A policy group.
Answer:
A. A book of business.
A group of policies with a common characteristic, such as a territory or type of coverage, or all
policies written by a particular insurer, producer, or agency is referred to as a book of business.
