AINS 101 INSURANCE PREP EXAM
WITH CORRECT ANSWERS 2025
What three concepts are pertinent to understanding ( correct
insurance? Risk answers )
Transfe
r
Pooling
If Katherine has an insurance policy that covers property damage to her
bicycle shop, how does that affect her budget? ( correct answers )
She has to budget for the insurance premium, but not for the full cost of
rebuilding her shop.
Who benefits from insurance ( correct answers ) Those with losses it pays,
but also society as a whole
What type of insurance would an insured purchase to protect a new
sports car? ( correct answers )
personal auto insurance
A fire destroys Sarah's restaurant. What type of insurance would cover the
damages to the restaurant? ( correct answers ) property insurance
Someone broke into mikes house while he was away on vacation. This
robber stole his expensive guitar. What type of insurance would cover the
loss? ( correct
answers ) Homeowners insurance would provide protection against damage
to or theft of mikes home and or belongings.
Christopher works for a private insurer tht provides insurance coverages
unavailable in the standard market. What kind of insurer does Christopher
work for? ( correct
answers ) Surplus lines insurer
Under what circumstances would the government participate in insurance?
( correct
answers ) When private insurers are unable or unwilling to satisfy
legitimate insurance needs
What are some examples of federal government insurance plans?( correct
answers ) National Flood Insurance Program and the Terrorism Risk
Insurance Program.
Into what two categories can rick be classified?
( correct answers ) Pure and speculative risk
, What are the four quadrants of ( correct answers ) Hazard,
risk? Financial, Strategic Operational,
Which quadrant of risk arises from trends in th economy and ( corre
society? answers ) Strategic risk arises from trends in the ct
economy and society
Can you name the three reasons why insurance is ( correct answers )
regulated? protect consumers To
To maintain insurer solvency
To prevent destructive competition
A series of intense wildfires are devastating the west coast. Which objective
of insurance regulation is therefore in jeopardy? ( correct answers ) In
a natural disaster were affecting a particular geographic area, maintaining
insurer solvency would be in jeopardy one of the reasons regulators enact
and to maintain and enhance their financial that affect lots of policyholders
at onc doesnt deplete insurers resources, thereby preventing insurers from
aging claims
When reviewing the balance sheet, which item give the best indication of an
insurers overall economic health? ( correct answers ) Policyholders
surplus: which shows how much cash an insurer has o hand for
emergencies, unexpected losses & expansion of its business
What does an insurer's income statement show? ( correct
answers ) Shows revenue, expenses & net
income for a particular period of time
Mary would like to understand the profitability of the underwriting
department she works for. If the combined ratio is $0.97, what profit was
achieved for each premium dollar the insurer earned? ( correct answers ) A
combined ratio of less than 100 indicates a profit- in this case the UW dep.
gains a $0.03 profit for every premium dollar earned. For every $1.00 in
premium, the insurer pays$0.97 for losses and expenses
Identify the two ratios that make up the combined ratio. ( correct
answers ) The combined ratio is the sum of the loss ratio which measures
how much of each remount dollar the insurer uses to pay losses & loss
adjustments expenses and the expens ration, which indicates how much of
each premium dollar is used to pay the insurers expenses, such as
employee wages, marketing cost. And so forth.
Describe how insurance is marketed? ( correct answers ) Through
independent agents and brokers, exclusive agencies,direct writers, and
distribution channels
Regarding how they sell insurance, what do agents and brokers have in
common and what is different about them? ( correct answers ) Both
agents and brokers sell insurance products to individuals and businesses
and provide policy services. The broker represents the customer, while the
agent represents one or more insurers.
WITH CORRECT ANSWERS 2025
What three concepts are pertinent to understanding ( correct
insurance? Risk answers )
Transfe
r
Pooling
If Katherine has an insurance policy that covers property damage to her
bicycle shop, how does that affect her budget? ( correct answers )
She has to budget for the insurance premium, but not for the full cost of
rebuilding her shop.
Who benefits from insurance ( correct answers ) Those with losses it pays,
but also society as a whole
What type of insurance would an insured purchase to protect a new
sports car? ( correct answers )
personal auto insurance
A fire destroys Sarah's restaurant. What type of insurance would cover the
damages to the restaurant? ( correct answers ) property insurance
Someone broke into mikes house while he was away on vacation. This
robber stole his expensive guitar. What type of insurance would cover the
loss? ( correct
answers ) Homeowners insurance would provide protection against damage
to or theft of mikes home and or belongings.
Christopher works for a private insurer tht provides insurance coverages
unavailable in the standard market. What kind of insurer does Christopher
work for? ( correct
answers ) Surplus lines insurer
Under what circumstances would the government participate in insurance?
( correct
answers ) When private insurers are unable or unwilling to satisfy
legitimate insurance needs
What are some examples of federal government insurance plans?( correct
answers ) National Flood Insurance Program and the Terrorism Risk
Insurance Program.
Into what two categories can rick be classified?
( correct answers ) Pure and speculative risk
, What are the four quadrants of ( correct answers ) Hazard,
risk? Financial, Strategic Operational,
Which quadrant of risk arises from trends in th economy and ( corre
society? answers ) Strategic risk arises from trends in the ct
economy and society
Can you name the three reasons why insurance is ( correct answers )
regulated? protect consumers To
To maintain insurer solvency
To prevent destructive competition
A series of intense wildfires are devastating the west coast. Which objective
of insurance regulation is therefore in jeopardy? ( correct answers ) In
a natural disaster were affecting a particular geographic area, maintaining
insurer solvency would be in jeopardy one of the reasons regulators enact
and to maintain and enhance their financial that affect lots of policyholders
at onc doesnt deplete insurers resources, thereby preventing insurers from
aging claims
When reviewing the balance sheet, which item give the best indication of an
insurers overall economic health? ( correct answers ) Policyholders
surplus: which shows how much cash an insurer has o hand for
emergencies, unexpected losses & expansion of its business
What does an insurer's income statement show? ( correct
answers ) Shows revenue, expenses & net
income for a particular period of time
Mary would like to understand the profitability of the underwriting
department she works for. If the combined ratio is $0.97, what profit was
achieved for each premium dollar the insurer earned? ( correct answers ) A
combined ratio of less than 100 indicates a profit- in this case the UW dep.
gains a $0.03 profit for every premium dollar earned. For every $1.00 in
premium, the insurer pays$0.97 for losses and expenses
Identify the two ratios that make up the combined ratio. ( correct
answers ) The combined ratio is the sum of the loss ratio which measures
how much of each remount dollar the insurer uses to pay losses & loss
adjustments expenses and the expens ration, which indicates how much of
each premium dollar is used to pay the insurers expenses, such as
employee wages, marketing cost. And so forth.
Describe how insurance is marketed? ( correct answers ) Through
independent agents and brokers, exclusive agencies,direct writers, and
distribution channels
Regarding how they sell insurance, what do agents and brokers have in
common and what is different about them? ( correct answers ) Both
agents and brokers sell insurance products to individuals and businesses
and provide policy services. The broker represents the customer, while the
agent represents one or more insurers.
