AINS 101 - Increasing Your Insurance IQ
What best explains why regulators do not permit insurers to include nonadmitted
assets on their balance sheets? - Answer- They cannot be readily converted to cash.
What is the best measure of the amount of insurance provided for a given period? -
Answer- Earned premium.
What is shown on the balance sheet of an insurer? - Answer- Cash and short-term
investments
Jill works in the field for Goshen Mutual as a line underwriter. What is the primary
responsibility of line underwriters? - Answer- To select insureds.
Anna was reviewing an all-lines submission for SP Markets. SP Markets own and
operates 5 small grocery stores. They are all well maintained and clean. The overall
loss experience on the account is good relative to the premium, the loss runs show a
frequency of small general liability claims from customer slips and falls. Rather than
reject the application for SP Markets, Anna would like to suggest a coverage
modification to the producer that could make the application acceptable and possible
add value for the insured. Which of the following modification should Anna suggest?
A. Propose the general liability coverage at a lower premium level, but apply a small
deductible.
B. Offer a proposal with all lines of coverage except the general liability coverage.
C. Propose the general liability coverage, excluding the 2 locations that have most of
the small claims.
D. Offer a proposal for all lines of coverage but price the - Answer- A. Propose the
general liability coverage at a lower premium level, but apply a small deductible.
Actual Cash Value (ACV) is - Answer- Replacement cost minus depreciation.
Alicia works for the Drewman Agency, Sandi at insurer Greenway Insurance, and
Rosa at Grossman Brokers, all as customer service representatives. Which of the
following is true regarding their work?
A. Sandi is the only one who can replicate the activities of a producer.
B. Sandi, Alicia, and Rosa are not involved in the generation of new business.
C. Alicia can process policy endorsements and explain coverage to her customers.
D. Rosa can provide superior service but is not generally involved in attracting new
customers. - Answer- C. Alicia can process policy endorsements and explain
coverage to her customers.
Which of the following most accurately describes one of the policy provisions in an
insurance policy.
A. The declarations state the insurer's promise to the insured.
B. The definitions contain a list of forms included in the policy.
, C. The conditions state what the insurer specifically will not cover.
D. The exclusions are in place to reduce duplicate coverage. - Answer- D. The
exclusions are in place to reduce duplicate coverage.
The insurance agent suggested that Sally's Snack Shop buy a policy that combines
property, crime, and liability coverages into one policy. This is an... - Answer-
Commercial package policy (CPP)
Shelton Industries experienced a fire in its manufacturing plant. Several employees
suffered burns and smoke inhalation injuries as they tried to escape the building.
Which one of Shelton Industries' commercial property-casualty policies would pay for
the employees' injuries and illnesses? - Answer- Workers Compensation insurance
Autonomous Vehicle Applications (AVA) is a start-up that develops safety
technologies that can be sold to companies that are producing autonomous vehicles.
One technology allows an autonomous vehicle to detect, extract, and analyze
images; and then respond. Ex: technology would detect a presence in a crosswalk,
extract the image, a computer would analyze the image. If the computer determines
it is a human, it would slow down or stop the vehicle. What technology (designed to
capture and analyze images and act) is called...
A. Computer vision
B. Accelerometer technology
C. Visual acuity
D. Transducer technology. - Answer- A. computer vision
Admitted assets - Answer- easily converted to cash, regulators allow insurers to
show these as assets on financial statements.
Aimee recently accepted a job in the Underwriting department. Her responsibilities
will include developing coverage forms, arranging reinsurance agreements, and
conducting underwriting audits. Which is Aimee's job?
A. Field Underwriter
B. Underwriting Technician
C. Corporate Underwriter
D. Line Underwriter - Answer- C. corporate underwriter
Tony works at the corporate level. He is a staff underwriter. What is his primary
responsibility?
A. Recommend coverage
B. Support producers
C. Revise underwriting guidelines
D. Manage a book of business. - Answer- C. Revise underwriting guidelines.
Subrogation - Answer- insurer's right to recover its claim payment from the
responsible party.
What best explains why regulators do not permit insurers to include nonadmitted
assets on their balance sheets? - Answer- They cannot be readily converted to cash.
What is the best measure of the amount of insurance provided for a given period? -
Answer- Earned premium.
What is shown on the balance sheet of an insurer? - Answer- Cash and short-term
investments
Jill works in the field for Goshen Mutual as a line underwriter. What is the primary
responsibility of line underwriters? - Answer- To select insureds.
Anna was reviewing an all-lines submission for SP Markets. SP Markets own and
operates 5 small grocery stores. They are all well maintained and clean. The overall
loss experience on the account is good relative to the premium, the loss runs show a
frequency of small general liability claims from customer slips and falls. Rather than
reject the application for SP Markets, Anna would like to suggest a coverage
modification to the producer that could make the application acceptable and possible
add value for the insured. Which of the following modification should Anna suggest?
A. Propose the general liability coverage at a lower premium level, but apply a small
deductible.
B. Offer a proposal with all lines of coverage except the general liability coverage.
C. Propose the general liability coverage, excluding the 2 locations that have most of
the small claims.
D. Offer a proposal for all lines of coverage but price the - Answer- A. Propose the
general liability coverage at a lower premium level, but apply a small deductible.
Actual Cash Value (ACV) is - Answer- Replacement cost minus depreciation.
Alicia works for the Drewman Agency, Sandi at insurer Greenway Insurance, and
Rosa at Grossman Brokers, all as customer service representatives. Which of the
following is true regarding their work?
A. Sandi is the only one who can replicate the activities of a producer.
B. Sandi, Alicia, and Rosa are not involved in the generation of new business.
C. Alicia can process policy endorsements and explain coverage to her customers.
D. Rosa can provide superior service but is not generally involved in attracting new
customers. - Answer- C. Alicia can process policy endorsements and explain
coverage to her customers.
Which of the following most accurately describes one of the policy provisions in an
insurance policy.
A. The declarations state the insurer's promise to the insured.
B. The definitions contain a list of forms included in the policy.
, C. The conditions state what the insurer specifically will not cover.
D. The exclusions are in place to reduce duplicate coverage. - Answer- D. The
exclusions are in place to reduce duplicate coverage.
The insurance agent suggested that Sally's Snack Shop buy a policy that combines
property, crime, and liability coverages into one policy. This is an... - Answer-
Commercial package policy (CPP)
Shelton Industries experienced a fire in its manufacturing plant. Several employees
suffered burns and smoke inhalation injuries as they tried to escape the building.
Which one of Shelton Industries' commercial property-casualty policies would pay for
the employees' injuries and illnesses? - Answer- Workers Compensation insurance
Autonomous Vehicle Applications (AVA) is a start-up that develops safety
technologies that can be sold to companies that are producing autonomous vehicles.
One technology allows an autonomous vehicle to detect, extract, and analyze
images; and then respond. Ex: technology would detect a presence in a crosswalk,
extract the image, a computer would analyze the image. If the computer determines
it is a human, it would slow down or stop the vehicle. What technology (designed to
capture and analyze images and act) is called...
A. Computer vision
B. Accelerometer technology
C. Visual acuity
D. Transducer technology. - Answer- A. computer vision
Admitted assets - Answer- easily converted to cash, regulators allow insurers to
show these as assets on financial statements.
Aimee recently accepted a job in the Underwriting department. Her responsibilities
will include developing coverage forms, arranging reinsurance agreements, and
conducting underwriting audits. Which is Aimee's job?
A. Field Underwriter
B. Underwriting Technician
C. Corporate Underwriter
D. Line Underwriter - Answer- C. corporate underwriter
Tony works at the corporate level. He is a staff underwriter. What is his primary
responsibility?
A. Recommend coverage
B. Support producers
C. Revise underwriting guidelines
D. Manage a book of business. - Answer- C. Revise underwriting guidelines.
Subrogation - Answer- insurer's right to recover its claim payment from the
responsible party.
