AINS 101: Practice Questions & Answers Latest Update.
AINS 101: Practice Questions & Answers
Latest Update.
Which one of the following best describes the concept of pooling? - ✔✔✔-The concept
of pooling is that insureds share the cost of each other's losses
As a single mother on a very tight budget, Ciara is tempted to skimp on her insurance.
However, her friend Mehmet tells her not to skimp on insurance, because it will help
manage her cash flows. Which one of the following examples best illustrates Mehmet's
point? - ✔✔✔-When her car's windshield breaks, Ciara has to pay only $100 of the $600
cost of replacing it
Shelton Industries experienced a fire in its manufacturing plant. Several employees
suffered burns and smoke inhalation injuries as they tried to escape the building. Which
one of Shelton Industries' commercial property-casualty policies would pay for the
employees' injuries and illnesses? - ✔✔✔-Workers compensation insurance
Coverage for money and other business property from various causes of loss such as
burglary, robbery, theft, and employee dishonesty typically is provided by - ✔✔✔-
Commercial crime insurance
All of the following are types of private insurers, EXCEPT: - ✔✔✔-State workers
compensation funds
The state of Maryland operates a residual auto plan (the Maryland Auto Insurance
Fund—MAIF) that provides coverage for drivers who are unable to obtain coverage from
private insurers. Which one of the following is the best rationale for the MAIF program?
- ✔✔✔-Auto insurance is compulsory, and the program makes it possible for all drivers
to have reasonably priced insurance
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,AINS 101: Practice Questions & Answers Latest Update.
ABC Company experienced a dramatic ideological shift in corporate policies after a
national election. This is an example of which one of the following quadrants of risk? -
✔✔✔-Strategic risk
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? - ✔✔✔-Speculative risk
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? - ✔✔✔-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?
- ✔✔✔-Solvency
One of the reasons for insurance regulation is to prevent destructive competition. In
which one of the following scenarios would destructive competition be exhibited? -
✔✔✔-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
All of the following are categories of liabilities found on an insurer's balance sheet,
EXCEPT: - ✔✔✔-Policyholders' surplus
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, AINS 101: Practice Questions & Answers Latest Update.
Which one of the following is part of written premiums? - ✔✔✔-Unearned premiums
An insurer's balance sheet can best be described as a - ✔✔✔-Snapshot of its financial
position.
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
What is Hometown Insurer's expense ratio? - ✔✔✔-40%
The financial report for LMN Insurance contains the following information:
Earned premiums $8,000,000Written premiums $10,000,000Incurred losses
$6,000,000Incurred underwriting expenses $4,000,000
What is LMN Insurance's expense ratio? - ✔✔✔-40%
Expense Ratio = Incurred underwriting expenses ÷ Written premiums: $4 million ÷ $10
million = .40 (40%)
Spencer Insurance Associates is an independent agency selling primarily homeowners
policies. This agency - ✔✔✔-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
®™
AINS 101: Practice Questions & Answers
Latest Update.
Which one of the following best describes the concept of pooling? - ✔✔✔-The concept
of pooling is that insureds share the cost of each other's losses
As a single mother on a very tight budget, Ciara is tempted to skimp on her insurance.
However, her friend Mehmet tells her not to skimp on insurance, because it will help
manage her cash flows. Which one of the following examples best illustrates Mehmet's
point? - ✔✔✔-When her car's windshield breaks, Ciara has to pay only $100 of the $600
cost of replacing it
Shelton Industries experienced a fire in its manufacturing plant. Several employees
suffered burns and smoke inhalation injuries as they tried to escape the building. Which
one of Shelton Industries' commercial property-casualty policies would pay for the
employees' injuries and illnesses? - ✔✔✔-Workers compensation insurance
Coverage for money and other business property from various causes of loss such as
burglary, robbery, theft, and employee dishonesty typically is provided by - ✔✔✔-
Commercial crime insurance
All of the following are types of private insurers, EXCEPT: - ✔✔✔-State workers
compensation funds
The state of Maryland operates a residual auto plan (the Maryland Auto Insurance
Fund—MAIF) that provides coverage for drivers who are unable to obtain coverage from
private insurers. Which one of the following is the best rationale for the MAIF program?
- ✔✔✔-Auto insurance is compulsory, and the program makes it possible for all drivers
to have reasonably priced insurance
®™
,AINS 101: Practice Questions & Answers Latest Update.
ABC Company experienced a dramatic ideological shift in corporate policies after a
national election. This is an example of which one of the following quadrants of risk? -
✔✔✔-Strategic risk
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? - ✔✔✔-Speculative risk
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? - ✔✔✔-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?
- ✔✔✔-Solvency
One of the reasons for insurance regulation is to prevent destructive competition. In
which one of the following scenarios would destructive competition be exhibited? -
✔✔✔-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
All of the following are categories of liabilities found on an insurer's balance sheet,
EXCEPT: - ✔✔✔-Policyholders' surplus
®™
, AINS 101: Practice Questions & Answers Latest Update.
Which one of the following is part of written premiums? - ✔✔✔-Unearned premiums
An insurer's balance sheet can best be described as a - ✔✔✔-Snapshot of its financial
position.
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
What is Hometown Insurer's expense ratio? - ✔✔✔-40%
The financial report for LMN Insurance contains the following information:
Earned premiums $8,000,000Written premiums $10,000,000Incurred losses
$6,000,000Incurred underwriting expenses $4,000,000
What is LMN Insurance's expense ratio? - ✔✔✔-40%
Expense Ratio = Incurred underwriting expenses ÷ Written premiums: $4 million ÷ $10
million = .40 (40%)
Spencer Insurance Associates is an independent agency selling primarily homeowners
policies. This agency - ✔✔✔-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
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