AINS 101 EXAM WITH CORRECT
ANSWERS 2025
The primary role of insurance ( correct answers ) Indemnify
is to organizations for covered individuals and
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? ( correct answers ) When
her car's windshield breaks, Ciara has to pay only
$100 of the $600 cost of replacing it.
A homeowners policy is a ( correct answers ) Personal
type of insurance policy. property-casualty
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
answers ) Commercial crime insurance.
Which one of the following describes the characteristics of a mutual
insurance company? ( correct answers ) A corporation owned
by policyholders that provides insurance to its policyholders.
An insurer that was formed for the purpose of earning a profit for its
stockholders is a ( correct answers )
Stock insurer
Autonomous Vehicle Applications (AVA) is a start-up company that develops
safety technologies that can be sold to companies that are producing
autonomous vehicles. One technology AVA is developing allows an
autonomous vehicle to detect, extract, and analyze images; and then to
respond to the images. For example, the technology would detect a presence
in a crosswalk, extract the image, and a computer would analyze the image.
When the image was determined to be a human being, the vehicle would
slow down or stop until the crosswalk was clear. This technology, which is
designed to capture and analyze images, and to act on the recognition of
the image; is called
( correct answers )
Computer vision
In an effort to reduce expenses, increase profitability, and reduce human
errors; ABC Insurance Company decided to automate most of its personal
lines underwriting function. The company now uses standardized
application forms that are submitted electronically to one of the
company's regional offices. At each regional office, a
, computer with a scanner reads the applications. The computer has been
programmed with acceptable answers to the questions. If the answers on the
application are all acceptable, the policy is automatically issued. Rejected
applications are automatically forwarded to a human underwriter who
reviews them. The use of this technology has reduced the company's
expense ratio by two and a half percent, and reduced the time it takes to
issue a policy. ABC Insurance Company's use of computers to evaluate
applications electronically is an application of ( correct answers ) Artificial
intelligence
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 answers ) Insurance
regulation protects customers by guaranteeing insurance is available and
accessible to everyone who needs it
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 answers )
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.
What term refers to the ability of an insurer to meet its obligations as they
become due? ( correct answers ) Solvency
An insurer's financial statement shows a loss reserve and an unearned
premium reserve. These reserves are part of the insurer's ( correct
answers ) Total liabilities.
Admitted assets are types of property that regulators allow insurers to
show as assets on their financial statements because they are ( correct
answers ) Easily converted to cash
Which one of the following is a nonadmitted asset? ( correct
answers ) Office equipment
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? ( correct
answers ) 40%
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
ANSWERS 2025
The primary role of insurance ( correct answers ) Indemnify
is to organizations for covered individuals and
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? ( correct answers ) When
her car's windshield breaks, Ciara has to pay only
$100 of the $600 cost of replacing it.
A homeowners policy is a ( correct answers ) Personal
type of insurance policy. property-casualty
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
answers ) Commercial crime insurance.
Which one of the following describes the characteristics of a mutual
insurance company? ( correct answers ) A corporation owned
by policyholders that provides insurance to its policyholders.
An insurer that was formed for the purpose of earning a profit for its
stockholders is a ( correct answers )
Stock insurer
Autonomous Vehicle Applications (AVA) is a start-up company that develops
safety technologies that can be sold to companies that are producing
autonomous vehicles. One technology AVA is developing allows an
autonomous vehicle to detect, extract, and analyze images; and then to
respond to the images. For example, the technology would detect a presence
in a crosswalk, extract the image, and a computer would analyze the image.
When the image was determined to be a human being, the vehicle would
slow down or stop until the crosswalk was clear. This technology, which is
designed to capture and analyze images, and to act on the recognition of
the image; is called
( correct answers )
Computer vision
In an effort to reduce expenses, increase profitability, and reduce human
errors; ABC Insurance Company decided to automate most of its personal
lines underwriting function. The company now uses standardized
application forms that are submitted electronically to one of the
company's regional offices. At each regional office, a
, computer with a scanner reads the applications. The computer has been
programmed with acceptable answers to the questions. If the answers on the
application are all acceptable, the policy is automatically issued. Rejected
applications are automatically forwarded to a human underwriter who
reviews them. The use of this technology has reduced the company's
expense ratio by two and a half percent, and reduced the time it takes to
issue a policy. ABC Insurance Company's use of computers to evaluate
applications electronically is an application of ( correct answers ) Artificial
intelligence
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 answers ) Insurance
regulation protects customers by guaranteeing insurance is available and
accessible to everyone who needs it
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 answers )
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.
What term refers to the ability of an insurer to meet its obligations as they
become due? ( correct answers ) Solvency
An insurer's financial statement shows a loss reserve and an unearned
premium reserve. These reserves are part of the insurer's ( correct
answers ) Total liabilities.
Admitted assets are types of property that regulators allow insurers to
show as assets on their financial statements because they are ( correct
answers ) Easily converted to cash
Which one of the following is a nonadmitted asset? ( correct
answers ) Office equipment
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? ( correct
answers ) 40%
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
