AINS 21 Chapter Two Practice Exam Questions with Correct Answers
Question 1:
A reciprocal insurance exchange
Answer:
Is an unincorporated association providing insurance coverage to its subscribers
Small U.S. unincorporated insurance associations, domiciled mainly in Texas, are known as
American Lloyds
Question 2:
True or False: Lloyd's primarily insures unusual exposures
Answer:
False.
Question 3:
A company interested in improving cash flow should consider meeting its insurance needs
through which one of the following types of insurance organizations?
Answer:
Captive Insurers
Question 4:
Successful underwriting ensures selected applicants
Answer:
Receive coverage that adequately reflect their loss exposure.
Question 5:
Which one of the following best describes what is determined by the insurer's staff review of
applications from prospective insureds?
Answer:
Whether the characteristics of the customer match the insurer's eligibility and selection
guidelines
Question 6:
Prompt and professional loss adjustment services are a responsibility of what part of an
insurer's organization?
Answer:
The Claims Function
, Question 7:
Following the terrorist attacks on the United States, insurers became reluctant to provide
property insurance on target properties until the federal Terrorism Risk Insurance Program
(TRIP) was introduced. Which one of the following social purposes did this government
insurance program serve?
Answer:
Prevent economic disruption
Prevent economic disruption
Prevent economic disruption
Prevent economic disruption
Question 8:
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?
Answer:
Auto insurance is compulsory, and the program makes it possible for all drivers to have
reasonably priced insurance.
Question 9:
Which one of the following statements is correct regarding government involvement in
insurance?
Answer:
Federal and state government are involved in insurance to facilitate compulsory insurance
purchases.
Question 10:
Which one of the following correctly describes a reason for government involvement in
property-casualty insurance?
Answer:
Government programs can meet legitimate public demands unmet by private insurers.
Question 11:
What is solvency?
Answer:
The ability of an insurer to meet its obligations as they become due
Question 1:
A reciprocal insurance exchange
Answer:
Is an unincorporated association providing insurance coverage to its subscribers
Small U.S. unincorporated insurance associations, domiciled mainly in Texas, are known as
American Lloyds
Question 2:
True or False: Lloyd's primarily insures unusual exposures
Answer:
False.
Question 3:
A company interested in improving cash flow should consider meeting its insurance needs
through which one of the following types of insurance organizations?
Answer:
Captive Insurers
Question 4:
Successful underwriting ensures selected applicants
Answer:
Receive coverage that adequately reflect their loss exposure.
Question 5:
Which one of the following best describes what is determined by the insurer's staff review of
applications from prospective insureds?
Answer:
Whether the characteristics of the customer match the insurer's eligibility and selection
guidelines
Question 6:
Prompt and professional loss adjustment services are a responsibility of what part of an
insurer's organization?
Answer:
The Claims Function
, Question 7:
Following the terrorist attacks on the United States, insurers became reluctant to provide
property insurance on target properties until the federal Terrorism Risk Insurance Program
(TRIP) was introduced. Which one of the following social purposes did this government
insurance program serve?
Answer:
Prevent economic disruption
Prevent economic disruption
Prevent economic disruption
Prevent economic disruption
Question 8:
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?
Answer:
Auto insurance is compulsory, and the program makes it possible for all drivers to have
reasonably priced insurance.
Question 9:
Which one of the following statements is correct regarding government involvement in
insurance?
Answer:
Federal and state government are involved in insurance to facilitate compulsory insurance
purchases.
Question 10:
Which one of the following correctly describes a reason for government involvement in
property-casualty insurance?
Answer:
Government programs can meet legitimate public demands unmet by private insurers.
Question 11:
What is solvency?
Answer:
The ability of an insurer to meet its obligations as they become due
