AINS 101 EXAM WITH CORRECT
ANSWERS 2025
Risk ( correct answers ) Uncertainty about an outcome, positive or
negative
Pooling ( correct answers ) All insureds share costs of each others
losses. All put money into a fund that is used to pay losses as they occur.
Helps keep the premium
affordable Helps cover large
losses
Benefits of Insurance( correct
answers ) - Pay for
losses
- Manage cash flow uncertainty
- Comply with legal
requirements
- Promote risk control activity
- Efficient use of insured's
resources
- Support for insured's credit
- Source of investment funds
- Reduce social burden
Transfer ( correct answers ) Transfer financial consequences of
unanticipated events to an insurer
Types of personal insurance ( correct
answers ) Personal Auto Personal
Umbrella
Homeowners
P&C-Property and Casualty aka Property and Liability
Commercial insurance( correct answers ) Businesses get packages,
packages have crime, property, umbrella, auto etc...
Used to have to buy them all separately
Proprietary Insurers ( correct answers ) Earn a profit for owners, insurers
Cooperative Insurers ( correct answers ) Provide insurance at a
minimum cost to their owners who are the policy holders
, Stock Insurers ( correct answers ) Objective is to earn profit
attract stockholders with expectation of returns
Mutual Insurers ( correct answers ) Large national/regional insurers
mutual insurers pay dividends to policy holders as a return of portion of
premiums paid
Surplus Lines ( correct answers ) Provides coverages unavailable in
standard insurers market.
Can go beyond state set values
Reciprocal Insurance ( correct answers ) Each member
Exchanges insured and an is both an
insuree
Lloyds ( correct answers ) Insurance-Reinsurance Exchange
Captive Insurer/Reinsurer ( correct answers ) Covers
losses of specific organizations Government Insurance ( correct answers
) Fill unmet insurance
Facilitate required insurance
purchases Provide efficiency and
convenience Achieve social goals
Pure Risk ( correct answers ) No
chance of gain
Speculative Risk ( correct answers
) Can be positive
or negative
3 reasons for regulation ( correct answers ) Protect consumers-verify policy
benefits, make sure insurers are honest and accessible
Maintain insurer solvency- have to have enough cash on hand to fulfil
obligations. insurers who cant pay for the losses they've insured are
insolvent
Prevent destructive competition- maintain financial health and prevent
policies from being set too low.
Not charging enough premium could leave insurer without enough cash to
pay covered claims
Charging low rates can be an attempt to put competitors out of business
ANSWERS 2025
Risk ( correct answers ) Uncertainty about an outcome, positive or
negative
Pooling ( correct answers ) All insureds share costs of each others
losses. All put money into a fund that is used to pay losses as they occur.
Helps keep the premium
affordable Helps cover large
losses
Benefits of Insurance( correct
answers ) - Pay for
losses
- Manage cash flow uncertainty
- Comply with legal
requirements
- Promote risk control activity
- Efficient use of insured's
resources
- Support for insured's credit
- Source of investment funds
- Reduce social burden
Transfer ( correct answers ) Transfer financial consequences of
unanticipated events to an insurer
Types of personal insurance ( correct
answers ) Personal Auto Personal
Umbrella
Homeowners
P&C-Property and Casualty aka Property and Liability
Commercial insurance( correct answers ) Businesses get packages,
packages have crime, property, umbrella, auto etc...
Used to have to buy them all separately
Proprietary Insurers ( correct answers ) Earn a profit for owners, insurers
Cooperative Insurers ( correct answers ) Provide insurance at a
minimum cost to their owners who are the policy holders
, Stock Insurers ( correct answers ) Objective is to earn profit
attract stockholders with expectation of returns
Mutual Insurers ( correct answers ) Large national/regional insurers
mutual insurers pay dividends to policy holders as a return of portion of
premiums paid
Surplus Lines ( correct answers ) Provides coverages unavailable in
standard insurers market.
Can go beyond state set values
Reciprocal Insurance ( correct answers ) Each member
Exchanges insured and an is both an
insuree
Lloyds ( correct answers ) Insurance-Reinsurance Exchange
Captive Insurer/Reinsurer ( correct answers ) Covers
losses of specific organizations Government Insurance ( correct answers
) Fill unmet insurance
Facilitate required insurance
purchases Provide efficiency and
convenience Achieve social goals
Pure Risk ( correct answers ) No
chance of gain
Speculative Risk ( correct answers
) Can be positive
or negative
3 reasons for regulation ( correct answers ) Protect consumers-verify policy
benefits, make sure insurers are honest and accessible
Maintain insurer solvency- have to have enough cash on hand to fulfil
obligations. insurers who cant pay for the losses they've insured are
insolvent
Prevent destructive competition- maintain financial health and prevent
policies from being set too low.
Not charging enough premium could leave insurer without enough cash to
pay covered claims
Charging low rates can be an attempt to put competitors out of business
