AINS 101 EXAM PREP EXAM WITH
CORRECT ANSWERS 2025
Loss exposure ( correct answers ) any condition or situation that
presents a possibility of loss, whether or not an actual loss occurs
Premium ( correct answers ) the price of the insurance coverage
provided for a specified period
Indemnify ( correct answers ) to restore a party who has sustained a
loss to the same financial position that party held before the loss
occurred
Insured ( correct answers ) any person or organization who is insured
under an insurance policy
Property-casualty insurance ( correct answers ) 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 answers ) one of the two main sectors of the
insurance industry encompassing numerous types of insurance that cover
the financial
Stock insurer ( correct answers ) 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 answers ) 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 answers ) 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 answers ) 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 answers ) a chance of loss or no loss, but no
chance of gain Speculative risk ( correct answers ) a chance of
loss, no loss, or gain
, Solvency ( correct answers ) 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 answers ) 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 answers ) the portion of the written
premiums that apply to the part of the policy period that has already
occurred
Underwriting income ( correct answers ) income an
insurer earns from premiums paid by policyholders minus incurred losses
and underwriting expenses
Balance sheet ( correct answers ) the financial statement that reports
the assets, liabilities, and owner's equity of an organization as of a
specific date
Policyholder's surplus( correct answers ) an insurer's assets minus its
liabilities, which represents its net worth
Loss adjustment expenses ( correct answers ) the expense that an
insurer incurs to investigate, defend, and settle claims according to the
terms specified in the insurance policy
Assets ( correct answers ) types of property, both tangible and
intangible, owned by an entity
Liabilities ( correct answers ) financial obligations, or debts, owned by a
company to another entity usually the policyholder in the case of an insurer
Investment income( correct answers ) interest, dividends, and net
capital gains received by an insurer from the insurer's financial assets,
minus its investment expenses
Loss reserve ( correct answers ) an estimate of the amount of money
the insurer expects to pay in the future for losses that have occurred
Unearned premium reserve ( correct answers ) an
insurer liability representing the amount of premiums received from
policyholders that are not yet earned
Loss ratio ( correct answers ) 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 answers ) an insurer's incurred underwriting
expenses for a given period divided by its written premiums for the same
period
CORRECT ANSWERS 2025
Loss exposure ( correct answers ) any condition or situation that
presents a possibility of loss, whether or not an actual loss occurs
Premium ( correct answers ) the price of the insurance coverage
provided for a specified period
Indemnify ( correct answers ) to restore a party who has sustained a
loss to the same financial position that party held before the loss
occurred
Insured ( correct answers ) any person or organization who is insured
under an insurance policy
Property-casualty insurance ( correct answers ) 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 answers ) one of the two main sectors of the
insurance industry encompassing numerous types of insurance that cover
the financial
Stock insurer ( correct answers ) 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 answers ) 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 answers ) 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 answers ) 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 answers ) a chance of loss or no loss, but no
chance of gain Speculative risk ( correct answers ) a chance of
loss, no loss, or gain
, Solvency ( correct answers ) 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 answers ) 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 answers ) the portion of the written
premiums that apply to the part of the policy period that has already
occurred
Underwriting income ( correct answers ) income an
insurer earns from premiums paid by policyholders minus incurred losses
and underwriting expenses
Balance sheet ( correct answers ) the financial statement that reports
the assets, liabilities, and owner's equity of an organization as of a
specific date
Policyholder's surplus( correct answers ) an insurer's assets minus its
liabilities, which represents its net worth
Loss adjustment expenses ( correct answers ) the expense that an
insurer incurs to investigate, defend, and settle claims according to the
terms specified in the insurance policy
Assets ( correct answers ) types of property, both tangible and
intangible, owned by an entity
Liabilities ( correct answers ) financial obligations, or debts, owned by a
company to another entity usually the policyholder in the case of an insurer
Investment income( correct answers ) interest, dividends, and net
capital gains received by an insurer from the insurer's financial assets,
minus its investment expenses
Loss reserve ( correct answers ) an estimate of the amount of money
the insurer expects to pay in the future for losses that have occurred
Unearned premium reserve ( correct answers ) an
insurer liability representing the amount of premiums received from
policyholders that are not yet earned
Loss ratio ( correct answers ) 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 answers ) an insurer's incurred underwriting
expenses for a given period divided by its written premiums for the same
period
