AINS 101 Qs&As 2023

Actual cash value (ACV) - ANS-The cost to replace property with new property of like kind and quality less depreciation. Adverse selection - ANS-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. Binder - ANS-A temporary written or oral agreement to provide insurance coverage until a formal written policy is issued. Book of business - ANS-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. Broker - ANS-An independent producer who represents insurance customers. Brokerage - ANS-Compensation in the form of a flat fee or a commission that is paid by the reinsurer to the reinsurance intermediary for services provided. Capacity - ANS-The amount of business an insurer is able to write, usually based on a comparison of the insurer's written premiums to its policyholders' surplus Catastrophe model - ANS-A type of computer program that estimates losses from future potential catastrophic events. Certificate of insurance - ANS-A brief description of insurance coverage prepared by an insurer or its agent and commonly used by policyholders to provide evidence of insurance. Claim - ANS-A demand by a person or business seeking to recover from an insurer for a loss that may be covered by an insurance policy. Claimant - ANS-A party that makes a claim and that can be either a first-party claimant or a third-party claimant.