AINS 101 Exam | Associate in
Insurance Exam Study Guide |
2024/2025 Guide
Which one of the following represents uncertainty about outcomes that can be negative or positive?
- Correct Answer - Risk
Which one of the following best describes the concept of pooling? - Correct Answer - Insureds share
the cost of each other's losses.
A homeowners policy is a type of
Select one: - Correct Answer - Personal property-casualty insurance policy.
Coverage for money and other business property from various causes of loss such as burglary,
robbery, theft, and employee dishonesty typically is provided by - Correct Answer - Commercial
crime insurance.
A type of insurer that is owned by policyholders and may pay dividends to policyholders as a return
of a portion of premiums paid is a - Correct Answer - Mutual Insurer
Which one of the following correctly describes a reason for government involvement in property-
casualty insurance? - Correct Answer - Government programs can meet legitimate public demands
unmet by private insurers.
If a fund manager violates the investment guidelines, the computer immediately notifies MFC's
internal control director, and corrective action is taken. MFC's use of the computer algorithm to
monitor investment compliance and to provide notification when corrective action is necessary
illustrates use of - Correct Answer - Artificial Intel
Jimmy decided to buy a house in his neighborhood that had been foreclosed on by the bank that
held the mortgage. He is hoping to do some renovation and repair work on the house, and then sell
it for a quick profit. Which one of the following types of risk is this for Jimmy? - Correct Answer -
Speculative risk
,One of the reasons for insurance regulation is to prevent destructive competition. In which one of
the following scenarios would destructive competition be exhibited? - Correct Answer - East
Insurance comes up with a new rate structure allowing "preferred customers" discounted policies
when they continually renew year after year; East eventually loses needed revenue but is rewarded
by its competitors leaving the market.
Carlos is new to the insurance business and is learning about insurance regulation and what he, now
working with Grady Insurance, will need to be aware of regarding the subject of compliance. Which
one of the following will Carlos find is accurate as he better understands why insurance is regulated?
- Correct Answer - Insurance regulation protects customers by guaranteeing insurance is available
and accessible to everyone who needs it.
What term refers to the ability of an insurer to meet its obligations as they become due? - Correct
Answer - Solvency
An insurer's financial statement shows a loss reserve and an unearned premium reserve. These
reserves are part of the insurer's - Correct Answer - Total Liabilities
Which one of the following is part of written premiums? - Correct Answer - Unearned Premiums
Which one of the following types of financial statements shows the financial position of an insurance
company at any particular point in time? - Correct Answer - Balance Sheet
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
Incurred underwriting expense $2,000,000 - Correct Answer - ometown Insurer's expense ratio is its
incurred underwriting expenses ($2,000,000) divided by its written premiums ($5,000,000), or 40
percent.
Hometown's combined ratio equals its loss ratio ($3,000,000/$4,000,000) or 75 percent, plus its
expense ratio ($2,000,000/$5,000,000) or 40 percent, for a total of 115 percent. - Correct Answer -
The financial report for Hometown Insurer contains the following information:
Earned premiums$4,000,000Written premiums$5,000,000Net investment
income$1,000,000Incurred losses$3,000,000Incurred underwriting expenses$2,000,000
, What was the Hometown Insurer's combined ratio?
The key to the direct writer marketing system is that - Correct Answer - The insurer is using its own
employees as producers.
Spencer Insurance Associates is an independent agency selling primarily homeowners policies. This
agency - Correct Answer - Is free to work with as many different insurers as it wants.
As it continues to grow, Anchoy Insurance is examining other distribution channels to more
effectively market its products. Through this experience, which of one the following will Anchoy most
likely learn? - Correct Answer - Anchoy can use group marketing to target large numbers of recent
local college graduates.
Which one of the following statements is correct regarding the interaction between risk control and
other insurer functions? - Correct Answer - A risk control evaluation can make the difference
between the applicant's being rejected or accepted by the underwriter.
Which one of the following statements is correct regarding the interaction between risk control and
other insurer functions? - Correct Answer - Risk control personnel can assist underwriters in
modifying a new applicant's loss exposures to meet eligibility requirements.
Clare is a commercial lines underwriter. She always tries to follow underwriting guidelines, effectively
evaluate loss exposures, and charge adequate premiums. By doing these things, Clare's goal is to
ensure - Correct Answer - Adequate policyholders' surplus.
Aimee recently accepted a job in the Underwriting department at Noble Insurance Company. Her
responsibilities will include developing coverage forms, arranging reinsurance agreements, and
conducting underwriting audits. Which one of the following is the title of Aimee's new job? - Correct
Answer - Corporate Underwriter
Tony now works at the corporate level for Newtown Insurance. He is considered a staff underwriter.
Which one of the following is primarily a responsibility of staff underwriters? - Correct Answer -
Revise underwriting guidelines
Which one of the following is the first step in the underwriting process? - Correct Answer - Evaluate
the submission
Insurance Exam Study Guide |
2024/2025 Guide
Which one of the following represents uncertainty about outcomes that can be negative or positive?
- Correct Answer - Risk
Which one of the following best describes the concept of pooling? - Correct Answer - Insureds share
the cost of each other's losses.
A homeowners policy is a type of
Select one: - Correct Answer - Personal property-casualty insurance policy.
Coverage for money and other business property from various causes of loss such as burglary,
robbery, theft, and employee dishonesty typically is provided by - Correct Answer - Commercial
crime insurance.
A type of insurer that is owned by policyholders and may pay dividends to policyholders as a return
of a portion of premiums paid is a - Correct Answer - Mutual Insurer
Which one of the following correctly describes a reason for government involvement in property-
casualty insurance? - Correct Answer - Government programs can meet legitimate public demands
unmet by private insurers.
If a fund manager violates the investment guidelines, the computer immediately notifies MFC's
internal control director, and corrective action is taken. MFC's use of the computer algorithm to
monitor investment compliance and to provide notification when corrective action is necessary
illustrates use of - Correct Answer - Artificial Intel
Jimmy decided to buy a house in his neighborhood that had been foreclosed on by the bank that
held the mortgage. He is hoping to do some renovation and repair work on the house, and then sell
it for a quick profit. Which one of the following types of risk is this for Jimmy? - Correct Answer -
Speculative risk
,One of the reasons for insurance regulation is to prevent destructive competition. In which one of
the following scenarios would destructive competition be exhibited? - Correct Answer - East
Insurance comes up with a new rate structure allowing "preferred customers" discounted policies
when they continually renew year after year; East eventually loses needed revenue but is rewarded
by its competitors leaving the market.
Carlos is new to the insurance business and is learning about insurance regulation and what he, now
working with Grady Insurance, will need to be aware of regarding the subject of compliance. Which
one of the following will Carlos find is accurate as he better understands why insurance is regulated?
- Correct Answer - Insurance regulation protects customers by guaranteeing insurance is available
and accessible to everyone who needs it.
What term refers to the ability of an insurer to meet its obligations as they become due? - Correct
Answer - Solvency
An insurer's financial statement shows a loss reserve and an unearned premium reserve. These
reserves are part of the insurer's - Correct Answer - Total Liabilities
Which one of the following is part of written premiums? - Correct Answer - Unearned Premiums
Which one of the following types of financial statements shows the financial position of an insurance
company at any particular point in time? - Correct Answer - Balance Sheet
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
Incurred underwriting expense $2,000,000 - Correct Answer - ometown Insurer's expense ratio is its
incurred underwriting expenses ($2,000,000) divided by its written premiums ($5,000,000), or 40
percent.
Hometown's combined ratio equals its loss ratio ($3,000,000/$4,000,000) or 75 percent, plus its
expense ratio ($2,000,000/$5,000,000) or 40 percent, for a total of 115 percent. - Correct Answer -
The financial report for Hometown Insurer contains the following information:
Earned premiums$4,000,000Written premiums$5,000,000Net investment
income$1,000,000Incurred losses$3,000,000Incurred underwriting expenses$2,000,000
, What was the Hometown Insurer's combined ratio?
The key to the direct writer marketing system is that - Correct Answer - The insurer is using its own
employees as producers.
Spencer Insurance Associates is an independent agency selling primarily homeowners policies. This
agency - Correct Answer - Is free to work with as many different insurers as it wants.
As it continues to grow, Anchoy Insurance is examining other distribution channels to more
effectively market its products. Through this experience, which of one the following will Anchoy most
likely learn? - Correct Answer - Anchoy can use group marketing to target large numbers of recent
local college graduates.
Which one of the following statements is correct regarding the interaction between risk control and
other insurer functions? - Correct Answer - A risk control evaluation can make the difference
between the applicant's being rejected or accepted by the underwriter.
Which one of the following statements is correct regarding the interaction between risk control and
other insurer functions? - Correct Answer - Risk control personnel can assist underwriters in
modifying a new applicant's loss exposures to meet eligibility requirements.
Clare is a commercial lines underwriter. She always tries to follow underwriting guidelines, effectively
evaluate loss exposures, and charge adequate premiums. By doing these things, Clare's goal is to
ensure - Correct Answer - Adequate policyholders' surplus.
Aimee recently accepted a job in the Underwriting department at Noble Insurance Company. Her
responsibilities will include developing coverage forms, arranging reinsurance agreements, and
conducting underwriting audits. Which one of the following is the title of Aimee's new job? - Correct
Answer - Corporate Underwriter
Tony now works at the corporate level for Newtown Insurance. He is considered a staff underwriter.
Which one of the following is primarily a responsibility of staff underwriters? - Correct Answer -
Revise underwriting guidelines
Which one of the following is the first step in the underwriting process? - Correct Answer - Evaluate
the submission
