AINS Practice Exam Review
One distinguishing feature between independent agency systems and other marketing systems
is the... - correct answer agency expiration list
Foreign Insurer - correct answer An insurer licensed to operate in a state but incorporated in
another state
Domestic Insurer - correct answer An insurer doing business in the jurisdiction in which it was
incorporated
Alien Insurer - correct answer An insurer domiciled in a country other than the US
Direct Response Marketing System - correct answer Greatly reduces compensation costs but has
higher advertising costs
Agency Expiration List - correct answer An agency's most valuable asset (does not belong to
insurer)
Important consideration when selecting distribution channels - correct answer Does the channel
capitalize on its core capabilities?
Knowledge acquired by the agent is presumed to be.. - correct answer knowledge acquired by
the insurer
Premium collection method used for personal insurance and small commercial accounts -
correct answer Direct Bill
What specifies scope of authority of an agent? - correct answer Agency contract
, AINS Practice Exam Review
Agency Bill - correct answer Payment procedure in which a producer sends premium bills to the
insured, collects the premium, and sends the premium to the insurer, less any commission
Item Basis - correct answer Premium (less commission) is forwarded to the insurer when the
producer collects it or when it comes due. Least complex method
Statement Basis - correct answer Insurer sends statement to the producer showing the
premiums due. Producer is obligated to pay the premiums as due.
Account Current Basis - correct answer Producer periodically prepares a statement showing the
premiums due to the insurer, after deducting appropriate commissions, and transmits the
amount to the insurer. The agency contract will indicate how often the producer must submit
the account current statement (usually monthly). Producer must pay when premium is due,
even if policyholder hasn't paid.
Purposes of underwriting - correct answer Develop and maintain a book of business, guard
against adverse selection, ensure adequate policyholder's surplus and enforce underwriting
guidelines
Experience Rating - correct answer A rating plan that adjusts the premium for the current policy
period to recognize the loss experience of the insured organization during past policy periods
Schedule Rating - correct answer A rating plan that awards debits and credits based specific
categories, such as the care and condition of premises of the training and selection of
employees, to reflect a modified premium that the class rate does not include
Retrospective Rating - correct answer A ratemaking technique that adjusts the insured's
premium for the current policy period based on the insured's loss experience during the current
period; paid losses or incurred losses may be used to determine loss experience
One distinguishing feature between independent agency systems and other marketing systems
is the... - correct answer agency expiration list
Foreign Insurer - correct answer An insurer licensed to operate in a state but incorporated in
another state
Domestic Insurer - correct answer An insurer doing business in the jurisdiction in which it was
incorporated
Alien Insurer - correct answer An insurer domiciled in a country other than the US
Direct Response Marketing System - correct answer Greatly reduces compensation costs but has
higher advertising costs
Agency Expiration List - correct answer An agency's most valuable asset (does not belong to
insurer)
Important consideration when selecting distribution channels - correct answer Does the channel
capitalize on its core capabilities?
Knowledge acquired by the agent is presumed to be.. - correct answer knowledge acquired by
the insurer
Premium collection method used for personal insurance and small commercial accounts -
correct answer Direct Bill
What specifies scope of authority of an agent? - correct answer Agency contract
, AINS Practice Exam Review
Agency Bill - correct answer Payment procedure in which a producer sends premium bills to the
insured, collects the premium, and sends the premium to the insurer, less any commission
Item Basis - correct answer Premium (less commission) is forwarded to the insurer when the
producer collects it or when it comes due. Least complex method
Statement Basis - correct answer Insurer sends statement to the producer showing the
premiums due. Producer is obligated to pay the premiums as due.
Account Current Basis - correct answer Producer periodically prepares a statement showing the
premiums due to the insurer, after deducting appropriate commissions, and transmits the
amount to the insurer. The agency contract will indicate how often the producer must submit
the account current statement (usually monthly). Producer must pay when premium is due,
even if policyholder hasn't paid.
Purposes of underwriting - correct answer Develop and maintain a book of business, guard
against adverse selection, ensure adequate policyholder's surplus and enforce underwriting
guidelines
Experience Rating - correct answer A rating plan that adjusts the premium for the current policy
period to recognize the loss experience of the insured organization during past policy periods
Schedule Rating - correct answer A rating plan that awards debits and credits based specific
categories, such as the care and condition of premises of the training and selection of
employees, to reflect a modified premium that the class rate does not include
Retrospective Rating - correct answer A ratemaking technique that adjusts the insured's
premium for the current policy period based on the insured's loss experience during the current
period; paid losses or incurred losses may be used to determine loss experience
