AINS 101 Midterm Exam Questions
with 100% Verified Answers 2025 A+
The insurance agent suggested that Sally's Snack Shop buy
a policy that combines property, crime, and liability
coverages into one policy. This is referred to as a(n)
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?
Workers compensation insurance
All of the following are types of private insurers, EXCEPT:
State workers compensation funds
An insurer that was formed for the purpose of earning a
profit for its stockholders is a
Stock insurer
In an effort to reduce expenses, increase profitability, and
reduce human errors; ABC Insurance Company decided to
automate most of its personal lines underwriting function.
The company now uses standardized application forms that
are submitted electronically to one of the company's regional
offices. At each regional office, a computer with a scanner
reads the applications. The computer has been programmed
with acceptable answers to the questions. If the answers on
the application are all acceptable, the policy is automatically
issued. Rejected applications are automatically forwarded to
a human underwriter who reviews them. The use of this
technology has reduced the company's expense ratio by two
and a half percent, and reduced the time it takes to issue a
policy. ABC Insurance Company's use of computers to
evaluate applications electronically is an application of
,Artificial Intelligence
Mutual Fund Company (MFC) offers a wide array of mutual
fund options to investors. Each mutual fund has a different
fund objective and set of investment guidelines that apply to
the fund. While MFC gives considerable freedom to its fund
portfolio managers, they are required to abide by the fund's
investment guidelines. To monitor compliance, MFC
developed a computer algorithm. The computer algorithm
continuously monitors each fund's compliance with
investment guidelines. If a fund manager violates the
investment guidelines, the computer immediately notifies
MFC's internal control director, and corrective action is
taken. MFC's use of the computer algorithm to monitor
investment compliance and to provide notification when
corrective action is necessary illustrates use of
Artificial intelligence
Carlos is new to the insurance business and is learning
about insurance regulation and what he, now working with
Grady Insurance, will need to be aware of regarding the
subject of compliance. Which one of the following will Carlos
find is accurate as he better understands why insurance is
regulated?
Insurance regulation protects customers by guaranteeing
insurance is available and accessible to everyone who needs it.
One of the reasons for insurance regulation is to prevent
destructive competition. In which one of the following
scenarios would destructive competition be exhibited?
East insurance comes up with a new rate structure allowing
"preferred customers" discounted policies when they continually
renew year after year; East eventually loses needed revenue but
is rewarded by its competitors leaving the market.
Renegade Insurance prides itself on its upstanding
reputation through its commitment to small communities'
homeowners coverage needs over the past twenty years.
Which one of Renegade's actions over this time would best
, illustrate its continued commitment to maintaining its
solvency?
Renegade keeps enough cash assets on hand to cover claims on
policies long after it collected the premiums from customers.
An insurer's income statement shows amounts for all of the
following, EXCEPT:
Policyholders' surplus
Which one of the following is shown on the balance sheet of
an insurer?
Cash and short-term investments
An insurer's financial statement shows a loss reserve and an
unearned premium reserve. These reserves are part of the
insurer's
Total liabilities
The financial report for Hometown Insurer contains the
following information:
Earned premiums $4,000,000
Written premiums $5,000,000
Net investment income $1,000,000
Incurred losses $3,000,000
Incurred underwriting expenses $2,000,000
What was the Hometown Insurer's combined ratio?
115%
Insurance Company J has a loss ratio of 72 and an expense
ratio of 25. What is Company J's combined ratio?
The combined ratio is 97 which means the company has an
underwriting gain.
The key to the direct writer marketing system is that
The insurer is using its own employees as producers
Spencer Insurance Associates is an independent agency
selling primarily homeowners policies. This agency
Is free to work with as many different insurers as it wants
As it continues to grow, Anchoy Insurance is examining
other distribution channels to more effectively market its
with 100% Verified Answers 2025 A+
The insurance agent suggested that Sally's Snack Shop buy
a policy that combines property, crime, and liability
coverages into one policy. This is referred to as a(n)
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?
Workers compensation insurance
All of the following are types of private insurers, EXCEPT:
State workers compensation funds
An insurer that was formed for the purpose of earning a
profit for its stockholders is a
Stock insurer
In an effort to reduce expenses, increase profitability, and
reduce human errors; ABC Insurance Company decided to
automate most of its personal lines underwriting function.
The company now uses standardized application forms that
are submitted electronically to one of the company's regional
offices. At each regional office, a computer with a scanner
reads the applications. The computer has been programmed
with acceptable answers to the questions. If the answers on
the application are all acceptable, the policy is automatically
issued. Rejected applications are automatically forwarded to
a human underwriter who reviews them. The use of this
technology has reduced the company's expense ratio by two
and a half percent, and reduced the time it takes to issue a
policy. ABC Insurance Company's use of computers to
evaluate applications electronically is an application of
,Artificial Intelligence
Mutual Fund Company (MFC) offers a wide array of mutual
fund options to investors. Each mutual fund has a different
fund objective and set of investment guidelines that apply to
the fund. While MFC gives considerable freedom to its fund
portfolio managers, they are required to abide by the fund's
investment guidelines. To monitor compliance, MFC
developed a computer algorithm. The computer algorithm
continuously monitors each fund's compliance with
investment guidelines. If a fund manager violates the
investment guidelines, the computer immediately notifies
MFC's internal control director, and corrective action is
taken. MFC's use of the computer algorithm to monitor
investment compliance and to provide notification when
corrective action is necessary illustrates use of
Artificial intelligence
Carlos is new to the insurance business and is learning
about insurance regulation and what he, now working with
Grady Insurance, will need to be aware of regarding the
subject of compliance. Which one of the following will Carlos
find is accurate as he better understands why insurance is
regulated?
Insurance regulation protects customers by guaranteeing
insurance is available and accessible to everyone who needs it.
One of the reasons for insurance regulation is to prevent
destructive competition. In which one of the following
scenarios would destructive competition be exhibited?
East insurance comes up with a new rate structure allowing
"preferred customers" discounted policies when they continually
renew year after year; East eventually loses needed revenue but
is rewarded by its competitors leaving the market.
Renegade Insurance prides itself on its upstanding
reputation through its commitment to small communities'
homeowners coverage needs over the past twenty years.
Which one of Renegade's actions over this time would best
, illustrate its continued commitment to maintaining its
solvency?
Renegade keeps enough cash assets on hand to cover claims on
policies long after it collected the premiums from customers.
An insurer's income statement shows amounts for all of the
following, EXCEPT:
Policyholders' surplus
Which one of the following is shown on the balance sheet of
an insurer?
Cash and short-term investments
An insurer's financial statement shows a loss reserve and an
unearned premium reserve. These reserves are part of the
insurer's
Total liabilities
The financial report for Hometown Insurer contains the
following information:
Earned premiums $4,000,000
Written premiums $5,000,000
Net investment income $1,000,000
Incurred losses $3,000,000
Incurred underwriting expenses $2,000,000
What was the Hometown Insurer's combined ratio?
115%
Insurance Company J has a loss ratio of 72 and an expense
ratio of 25. What is Company J's combined ratio?
The combined ratio is 97 which means the company has an
underwriting gain.
The key to the direct writer marketing system is that
The insurer is using its own employees as producers
Spencer Insurance Associates is an independent agency
selling primarily homeowners policies. This agency
Is free to work with as many different insurers as it wants
As it continues to grow, Anchoy Insurance is examining
other distribution channels to more effectively market its
