AINS 101 SIMULATED EXAM WITH ANSWERS

AINS 101 SIMULATED EXAM WITH ANSWERS Exclusive agency is contracted to sell insurance for one insurer or group of insurers - CORRECT ANSWER-The difference between an independent agency and an exclusive agency is that an Insurance shortages - CORRECT ANSWER-Destructive competition in the insurance industry could result in Veronica directly contacts Maria for guidance on how to report a stolen car, Maria provides that, and claims rep Sean takes over after an introduction from Maria - CORRECT ANSWERMaria is a new producer who wears many hats when forming relationships and then serving her established customers. In this capacity, which one of the following scenarios most accurately describes her ongoing work wearing the hat of "claims handler"? $350 Replacement cost - Depreciation - CORRECT ANSWERJohn's two-year-old bicycle was stolen. The bicycle's purchase price was $700, its current replacement cost is $800, and depreciation was estimated at $450. What was the bicycle's actual cash value? Underwriting authority reports - CORRECT ANSWER-All of the following are sources of underwriting information to evaluate an insurance submission, EXCEPT: Implemented risk management techniques may prove to be ineffective or become obsolete - CORRECT ANSWER-Which one of the following best explains why producers should be alert to changes in clients' loss exposures? Field Underwriter - CORRECT ANSWER-James works very closely with producers on a daily basis. In addition to evaluating the applicants that the producers submit, James is involved in presenting policy quotations, processing policy endorsements, helping to explain coverages, and making coverage recommendations. James works as a Balance sheet - CORRECT ANSWER-Rachel is considering investing in the stock of an insurance company. Which one of the following is likely to provide the best indication of the insurer's financial position at this point in time? Support producers and insureds - CORRECT ANSWER-At Greenfield Insurance Company, Bernadette and Rachel are corporate underwriters, and Tomas and Jose are field underwriters. All of the following are underwriting activities typically performed by corporate (or staff) underwriters like Bernadette and Rachel, EXCEPT: Large number of similar exposure units - CORRECT ANSWEROscar's custom-built vehicle looks like a sausage sandwich on wheels. He plans to drive it to special events at schools around the country where it will serve as a mobile billboard to promote his product. Oscar is surprised to learn that insurers are reluctant to insure his vehicle because it fails to meet one of the ideal characteristics of an insurable risk. Which characteristic is Oscar's vehicle least likely to meet? Capacity - CORRECT ANSWER-Which one of the following is the amount of business an insurer can write based on regulatory guidelines, usually a comparsion of the insurer's written premiums to the policyholders' surplus? Mutual insurer - CORRECT ANSWER-Joe is the owner of JG Auto Repair. He is always frustrated with the amount of commercial insurance premium he pays every year, even though he has not had a single claim in over 10 years. Joe is looking to partner with an insurance company that will share its profits and maybe return a portion of his premium if the results are good. Which one of the following types of insurer is the right fit for Joe? Transfer - CORRECT ANSWER-When the Smiths purchased their first home, they were required to purchase a homeowners insurance policy in order to get a mortgage. Because they did not have a lot of extra money in their budget, they wanted to buy as little insurance coverage as possible. The Smiths' insurance agent advised them that if they purchase an insurance policy that adequately covers damage to their home and personal property, they only have to budget for the insurance premium, rather than the full cost of rebuilding the house and replacing its contents. Which one of the following key components of insurance is the insurance agent explaining to the Smiths? Providing laboratory analyses - CORRECT ANSWER-Risk control can assist the claims department by Loss ratio + expense ratio - CORRECT ANSWER-Which one of the following is the correct formula for calculating an insurer's combined ratio? Property-casualty insurance and life-health insurance - CORRECT ANSWER-The two main sectors of the insurance industry are