AINS 101
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.
Ling has noticed that her neighbor has recovered money for two homeowners property claims
and an auto damage claim he has filed in recent years. Ling has been paying insurance
premiums for many years and has never suffered a loss or made a claim. She feels that her
insurance contracts over the years have been worthless to her. What Ling does not understand
is that she has been paying premiums in exchange for - correct answer Of unequal amount.
Private insurers are reluctant to provide windstorm insurance on coastal properties. This is
because the loss exposures fail to meet the criterion that ideally insurable exposures must be -
correct answer Independent and not catastrophic.
Because many properties can be damaged in the same hurricane or tropical storm, coastal
properties are not independent, and potential losses are catastrophic.
Which of the following is the fundamental measure of loss exposure used in insurance rating? -
correct answer Exposure Unit
Which one of the following best explains why producers should be alert to changes in clients'
loss exposures? - correct answer Implemented risk management techniques may prove to be
ineffective or become obsolete
Adhering to the characteristics of an ideally insurable loss exposure in selling insurance help
assure that - correct answer The insurer is able to charge a premium that the insured can afford
to pay.
,AINS 101
An insurer has decided to take an extremely narrow interpretation of a property insurance
policy provision to limit the number of loss payments it will need to make. It realizes that its
interpretation is probably wrong, but it knows that individual insured's loss amounts will be
small, such that most insureds will not take the trouble to file lawsuits against it. The insurer
may be violating the principle that an insurance policy is - correct answer A contract of the
utmost good faith
When preprinted forms do not provide the terms of coverage needed by a particular insured or
small group of insureds, the insurer may - correct answer draft a manuscript form to meet the
customers needs.
The big differences between property and liability policies are found in their - correct answer
Insuring agreements
which of the following most accurately describes one of the policy provisions in an insurance
policy? - correct answer The exclusions are in place to reduce duplicate coverage.
Which one of these is most directly associated with a satisfied customer? - correct answer Leads
and referrals that can be used to generate new business
Because insurance contracts impose an obligation for ethical practices and behaviors on the
parties while dealing with one another, an insurance contract is called a - correct answer
Contract of utmost good faith
Margaret was severely injured and scarred due to a recent accident. Which one of the following
is an example of general damages Margaret received? - correct answer Compensation for
disfigurement
Jennie recently purchased a personal auto policy from Westcox Insurers. Three weeks later,
Jennie reported her car was stolen from her driveway during the middle of the day. Upon
further investigation, claims representative Harry finds out the home address he has on file for
, AINS 101
Jennie does not match the location where the theft occurred. In light of this scenario, which one
of the following would be particularly helpful for Harry to pursue concerning Jenny's claim? -
correct answer Harry can verify Jennie's address and other possible helpful information by
reviewing her policy which has her original application information attached.
Joel is the underwriter for Stanton Industries. He received a notice from the premium auditor
on the account. After a recent visit to the insured's location, the auditor wanted to make Joel
aware of a decline in the business and some questionable business practices. Which one of the
following types of hazards is the auditor identifying? - correct answer Moral Hazards
Earned premiums are the portion of written premiums that - correct answer Apply to the part of
the policy period that has already occurred.
Jessie is a new customer service representative (CSR) at the Winfield Agency. Jessie usually
engages in all the following activities, EXCEPT - correct answer Determining coverage quotes
Which one of the following is the correct formula for calculating an insurer's combined ratio? -
correct answer Loss ratio + expense ratio
Alicia works for the Drewman Agency, Sandi at insurer Greenway Insurance, and Rosa at
Grossman Brokers, all as customer service representatives. Which one of the following is true
regarding their work? - correct answer Alicia can process policy endorsements and explain
coverage to her customers
Rachel is a new employee of Westley Insurance, and has been asked to review some existing
policies to become familiar with the types of policies she will be working with. Which one of the
following will Rachel find is true as she conducts her review? - correct answer Rachel finds the
policy begins with a coverage overview and then goes into more coverage details.
Which two of the four quadrants of risk are classified as pure risks? - correct answer Hazard
risks and operational risks
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.
Ling has noticed that her neighbor has recovered money for two homeowners property claims
and an auto damage claim he has filed in recent years. Ling has been paying insurance
premiums for many years and has never suffered a loss or made a claim. She feels that her
insurance contracts over the years have been worthless to her. What Ling does not understand
is that she has been paying premiums in exchange for - correct answer Of unequal amount.
Private insurers are reluctant to provide windstorm insurance on coastal properties. This is
because the loss exposures fail to meet the criterion that ideally insurable exposures must be -
correct answer Independent and not catastrophic.
Because many properties can be damaged in the same hurricane or tropical storm, coastal
properties are not independent, and potential losses are catastrophic.
Which of the following is the fundamental measure of loss exposure used in insurance rating? -
correct answer Exposure Unit
Which one of the following best explains why producers should be alert to changes in clients'
loss exposures? - correct answer Implemented risk management techniques may prove to be
ineffective or become obsolete
Adhering to the characteristics of an ideally insurable loss exposure in selling insurance help
assure that - correct answer The insurer is able to charge a premium that the insured can afford
to pay.
,AINS 101
An insurer has decided to take an extremely narrow interpretation of a property insurance
policy provision to limit the number of loss payments it will need to make. It realizes that its
interpretation is probably wrong, but it knows that individual insured's loss amounts will be
small, such that most insureds will not take the trouble to file lawsuits against it. The insurer
may be violating the principle that an insurance policy is - correct answer A contract of the
utmost good faith
When preprinted forms do not provide the terms of coverage needed by a particular insured or
small group of insureds, the insurer may - correct answer draft a manuscript form to meet the
customers needs.
The big differences between property and liability policies are found in their - correct answer
Insuring agreements
which of the following most accurately describes one of the policy provisions in an insurance
policy? - correct answer The exclusions are in place to reduce duplicate coverage.
Which one of these is most directly associated with a satisfied customer? - correct answer Leads
and referrals that can be used to generate new business
Because insurance contracts impose an obligation for ethical practices and behaviors on the
parties while dealing with one another, an insurance contract is called a - correct answer
Contract of utmost good faith
Margaret was severely injured and scarred due to a recent accident. Which one of the following
is an example of general damages Margaret received? - correct answer Compensation for
disfigurement
Jennie recently purchased a personal auto policy from Westcox Insurers. Three weeks later,
Jennie reported her car was stolen from her driveway during the middle of the day. Upon
further investigation, claims representative Harry finds out the home address he has on file for
, AINS 101
Jennie does not match the location where the theft occurred. In light of this scenario, which one
of the following would be particularly helpful for Harry to pursue concerning Jenny's claim? -
correct answer Harry can verify Jennie's address and other possible helpful information by
reviewing her policy which has her original application information attached.
Joel is the underwriter for Stanton Industries. He received a notice from the premium auditor
on the account. After a recent visit to the insured's location, the auditor wanted to make Joel
aware of a decline in the business and some questionable business practices. Which one of the
following types of hazards is the auditor identifying? - correct answer Moral Hazards
Earned premiums are the portion of written premiums that - correct answer Apply to the part of
the policy period that has already occurred.
Jessie is a new customer service representative (CSR) at the Winfield Agency. Jessie usually
engages in all the following activities, EXCEPT - correct answer Determining coverage quotes
Which one of the following is the correct formula for calculating an insurer's combined ratio? -
correct answer Loss ratio + expense ratio
Alicia works for the Drewman Agency, Sandi at insurer Greenway Insurance, and Rosa at
Grossman Brokers, all as customer service representatives. Which one of the following is true
regarding their work? - correct answer Alicia can process policy endorsements and explain
coverage to her customers
Rachel is a new employee of Westley Insurance, and has been asked to review some existing
policies to become familiar with the types of policies she will be working with. Which one of the
following will Rachel find is true as she conducts her review? - correct answer Rachel finds the
policy begins with a coverage overview and then goes into more coverage details.
Which two of the four quadrants of risk are classified as pure risks? - correct answer Hazard
risks and operational risks
