AINS 101 INCREASING YOUR INSURANCE
IQ EXAM PREP VERIFIED QUESTIONS AND
ANSWERS COMPREHENSIVE REVIEW
SHEET
●● When state insurance regulators fail to prevent destructive
competition and allow insurers to charge extremely low premiums,
which of the following is LEAST likely to occur?
Answer: Insurance companies may increase their investment in customer
service improvements.
●● Which statement best describes how insurance regulation prevents
destructive competition?
Answer: By preventing insurers from pricing policies too low to drive
competitors out of business.
●● Westfork Mutual is evaluating its financial position and needs to
understand the difference between admitted and nonadmitted assets.
Which one of the following best describes a key characteristic of
admitted assets?
Answer: Admitted assets are typically easy to convert into cash.
, ●● Millstone Insurance Company is preparing its annual financial
statements and needs to properly calculate its earned premiums for the
year. What represents the correct definition of earned premiums?
Answer: The portion of written premiums that applies to the part of the
policy period that has already occurred.
●● Maria is reviewing the financial statements of Westfork Mutual to
assess its profitability. Which one of the following best describes the
purpose of Westfork Mutual's balance sheet?
Answer: It provides a snapshot of the insurer's assets, liabilities, and
surplus at a specific point in time.
●● When analyzing an insurance company's income statement to assess
its financial performance, which one of the following represents the
portion of premiums that applies to coverage already provided during
the reporting period?
Answer: Earned premiums
●● Which one of the following appears on a property and liability
insurer's income statement?
Answer: Net underwriting gain
●● Which financial statement item best indicates whether Millstone
Insurance has sufficient resources to handle unexpected catastrophic
losses?
IQ EXAM PREP VERIFIED QUESTIONS AND
ANSWERS COMPREHENSIVE REVIEW
SHEET
●● When state insurance regulators fail to prevent destructive
competition and allow insurers to charge extremely low premiums,
which of the following is LEAST likely to occur?
Answer: Insurance companies may increase their investment in customer
service improvements.
●● Which statement best describes how insurance regulation prevents
destructive competition?
Answer: By preventing insurers from pricing policies too low to drive
competitors out of business.
●● Westfork Mutual is evaluating its financial position and needs to
understand the difference between admitted and nonadmitted assets.
Which one of the following best describes a key characteristic of
admitted assets?
Answer: Admitted assets are typically easy to convert into cash.
, ●● Millstone Insurance Company is preparing its annual financial
statements and needs to properly calculate its earned premiums for the
year. What represents the correct definition of earned premiums?
Answer: The portion of written premiums that applies to the part of the
policy period that has already occurred.
●● Maria is reviewing the financial statements of Westfork Mutual to
assess its profitability. Which one of the following best describes the
purpose of Westfork Mutual's balance sheet?
Answer: It provides a snapshot of the insurer's assets, liabilities, and
surplus at a specific point in time.
●● When analyzing an insurance company's income statement to assess
its financial performance, which one of the following represents the
portion of premiums that applies to coverage already provided during
the reporting period?
Answer: Earned premiums
●● Which one of the following appears on a property and liability
insurer's income statement?
Answer: Net underwriting gain
●● Which financial statement item best indicates whether Millstone
Insurance has sufficient resources to handle unexpected catastrophic
losses?
