AINS 101 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 provided for a
specific 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 consequences of death, injury or sickness.
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 nonadmitted 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 agility 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 owners' equity of an organization as of a specific
date.
Policyholders 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, owed 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.
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 provided for a
specific 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 consequences of death, injury or sickness.
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 nonadmitted 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 agility 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 owners' equity of an organization as of a specific
date.
Policyholders 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, owed 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.
