AINS 101 Exam | Updated Questions and
Answers | Most Recent 2026 Edition
• Premium . CORRECT ANSWER: the price of the insurance coverage provided for a
specified period
• Indemnify . CORRECT ANSWER: to restore a party who has sustained a loss to the
same financial position that party held before the loss occurred
• Insured . CORRECT ANSWER: any person or organization who is insured under an
insurance policy
• Property-casualty insurance . CORRECT ANSWER: one of the two main sectors of
the insurance industry encompassing numerous types of insurance, most of which
cover the financial consequences of damage to one's own property or legal liability to
others
• Life-health insurance . CORRECT ANSWER: one of the two main sectors of the
insurance industry encompassing numerous types of insurance that cover the financial
• Stock insurer . CORRECT ANSWER: an insurer that is owned by its stockholders and
formed as a corporation for the purpose of earning a profit for the stockholders
• Mutual insurer . CORRECT ANSWER: an insurer that is owned by its policyholders
and formed as a corporation for the purpose of providing insurance to them
• Surplus-lines insurer . CORRECT ANSWER: a non-admitted insurer that is eligible to
insure risks that have been exported by a surplus lines licensee in accordance with a
surplus lines law
• Reinsurance . CORRECT ANSWER: the transfer of insurance risk from one insurer to
another through a contractual agreement under which one insurer (the reinsurer)
agrees, in return for a reinsurance premium, to indemnify another insurer (the primary
insurer) for some or all of the financial consequences of certain loss exposures covered
by the primary's insurance policies
• Pure risk . CORRECT ANSWER: a chance of loss or no loss, but no chance of gain
• Speculative risk . CORRECT ANSWER: a chance of loss, no loss, or gain
• Solvency . CORRECT ANSWER: the ability of an insurer to meet its financial
obligations as they become due, even those resulting from insured losses that may be
claimed several years in the future
, • Income statement . CORRECT ANSWER: the financial statement that reports an
organization's profit or loss for a specific period by comparing the revenues generated
with the expenses incurred to produce those revenues
• Earned premiums . CORRECT ANSWER: the portion of the written premiums that
apply to the part of the policy period that has already occurred
• Underwriting income . CORRECT ANSWER: income an insurer earns from premiums
paid by policyholders minus incurred losses and underwriting expenses
• Balance sheet . CORRECT ANSWER: the financial statement that reports the assets,
liabilities, and owner's equity of an organization as of a specific date
• Policyholder's surplus . CORRECT ANSWER: an insurer's assets minus its liabilities,
which represents its net worth
• Loss adjustment expenses . CORRECT ANSWER: the expense that an insurer incurs
to investigate, defend, and settle claims according to the terms specified in the
insurance policy
• Assets . CORRECT ANSWER: types of property, both tangible and intangible, owned
by an entity
• Liabilities . CORRECT ANSWER: financial obligations, or debts, owned by a company
to another entity usually the policyholder in the case of an insurer
• Investment income . CORRECT ANSWER: interest, dividends, and net capital gains
received by an insurer from the insurer's financial assets, minus its investment
expenses
• Loss reserve . CORRECT ANSWER: an estimate of the amount of money the insurer
expects to pay in the future for losses that have occurred
• Unearned premium reserve . CORRECT ANSWER: an insurer liability representing
the amount of premiums received from policyholders that are not yet earned
• Loss ratio . CORRECT ANSWER: a ratio that measures losses and loss adjustment
expenses against earned premiums and that reflects the percentage of premiums being
consumed by losses
• Expense ratio . CORRECT ANSWER: an insurer's incurred underwriting expenses for
a given period divided by its written premiums for the same period
• Combined ratio . CORRECT ANSWER: a profitability ratio that indicates whether an
insurer has made an underwriting loss or gain
Answers | Most Recent 2026 Edition
• Premium . CORRECT ANSWER: the price of the insurance coverage provided for a
specified period
• Indemnify . CORRECT ANSWER: to restore a party who has sustained a loss to the
same financial position that party held before the loss occurred
• Insured . CORRECT ANSWER: any person or organization who is insured under an
insurance policy
• Property-casualty insurance . CORRECT ANSWER: one of the two main sectors of
the insurance industry encompassing numerous types of insurance, most of which
cover the financial consequences of damage to one's own property or legal liability to
others
• Life-health insurance . CORRECT ANSWER: one of the two main sectors of the
insurance industry encompassing numerous types of insurance that cover the financial
• Stock insurer . CORRECT ANSWER: an insurer that is owned by its stockholders and
formed as a corporation for the purpose of earning a profit for the stockholders
• Mutual insurer . CORRECT ANSWER: an insurer that is owned by its policyholders
and formed as a corporation for the purpose of providing insurance to them
• Surplus-lines insurer . CORRECT ANSWER: a non-admitted insurer that is eligible to
insure risks that have been exported by a surplus lines licensee in accordance with a
surplus lines law
• Reinsurance . CORRECT ANSWER: the transfer of insurance risk from one insurer to
another through a contractual agreement under which one insurer (the reinsurer)
agrees, in return for a reinsurance premium, to indemnify another insurer (the primary
insurer) for some or all of the financial consequences of certain loss exposures covered
by the primary's insurance policies
• Pure risk . CORRECT ANSWER: a chance of loss or no loss, but no chance of gain
• Speculative risk . CORRECT ANSWER: a chance of loss, no loss, or gain
• Solvency . CORRECT ANSWER: the ability of an insurer to meet its financial
obligations as they become due, even those resulting from insured losses that may be
claimed several years in the future
, • Income statement . CORRECT ANSWER: the financial statement that reports an
organization's profit or loss for a specific period by comparing the revenues generated
with the expenses incurred to produce those revenues
• Earned premiums . CORRECT ANSWER: the portion of the written premiums that
apply to the part of the policy period that has already occurred
• Underwriting income . CORRECT ANSWER: income an insurer earns from premiums
paid by policyholders minus incurred losses and underwriting expenses
• Balance sheet . CORRECT ANSWER: the financial statement that reports the assets,
liabilities, and owner's equity of an organization as of a specific date
• Policyholder's surplus . CORRECT ANSWER: an insurer's assets minus its liabilities,
which represents its net worth
• Loss adjustment expenses . CORRECT ANSWER: the expense that an insurer incurs
to investigate, defend, and settle claims according to the terms specified in the
insurance policy
• Assets . CORRECT ANSWER: types of property, both tangible and intangible, owned
by an entity
• Liabilities . CORRECT ANSWER: financial obligations, or debts, owned by a company
to another entity usually the policyholder in the case of an insurer
• Investment income . CORRECT ANSWER: interest, dividends, and net capital gains
received by an insurer from the insurer's financial assets, minus its investment
expenses
• Loss reserve . CORRECT ANSWER: an estimate of the amount of money the insurer
expects to pay in the future for losses that have occurred
• Unearned premium reserve . CORRECT ANSWER: an insurer liability representing
the amount of premiums received from policyholders that are not yet earned
• Loss ratio . CORRECT ANSWER: a ratio that measures losses and loss adjustment
expenses against earned premiums and that reflects the percentage of premiums being
consumed by losses
• Expense ratio . CORRECT ANSWER: an insurer's incurred underwriting expenses for
a given period divided by its written premiums for the same period
• Combined ratio . CORRECT ANSWER: a profitability ratio that indicates whether an
insurer has made an underwriting loss or gain
