AFSB 152 THE INSTITUTES FINAL PAPER
2026 VERIFIED QUESTIONS WITH
SOLUTIONS GRADED A+
⩥ Which one of the following statements is true regarding the surety
underwriter's use of information received from financial institutions?
Answer: If the principal is highly dependent on a financial institution as
determined from the information, then the conditions of the credit line
are increasingly important to the surety.
⩥ Which one of the following statements is true regarding the principal
as a source of underwriting information for bonding?
Answer: The principal is the primary source of direct information,
including identification, historical, management, financial, bank, and
performance information.
⩥ Under which heading of the Payment section of D&B's Business
Information Report (BIR) is there a summary of the company's payment
history, including each vendor's experience during the previous twelve
months?
Answer: Paying Record
,⩥ One of Dun & Bradstreet, Inc.'s (D&B) primary sources of
information for its reporting database comes from which one of these
sources?
Answer: The surety principal
⩥ Which one of the following controls the information that consumer
credit report providers place in their files and how they place it?
Answer: The Equal Credit Opportunity Act and the Fair Credit
Reporting Act.
⩥ Which one of the following statements is correct?
Answer: From a regulator's perspective, if an insurer's ratio of written
premium to policyholders' surplus exceeds 3 to 1, the insurer is selling
more insurance than is prudent relative to the size of its net worth.
⩥ Which one of the following statements regarding reinsurance is true?
Answer: Reinsurance agreements typically require the primary company
to retain part of its original liability.
⩥ Facultative reinsurance
Answer: Involves more administrative expense than treaty reinsurance
transactions.
, ⩥ Which one of the following describes a type of excess of loss
reinsurance that anticipates a regular pattern of reinsured losses and is
typically rated using an experience-sensitive mechanism?
Answer: Working cover reinsurance
⩥ In surplus work program reinsurance, when is surplus ceded to the
reinsurer?
Answer: When the surety's expression of aggregate risk appetite for each
contractor is reached, the surplus is ceded to the reinsurer.
⩥ Reinsurance pools, syndicates, and associations are
Answer: Groups of insurers that share the loss exposures of the group,
usually through reinsurance.
⩥ Fidelity bond claims
Answer: Can expose an insurer to waiver of a condition precedent of
bond contracts and defamation actions, if they are not handled properly.
⩥ Which one of the following statements regarding surety compliance
with statutes and regulations is true?
Answer: Surety and fidelity contracts are often prescribed by statute or
regulation, including requirements for many license and permit bonds,
fidelity coverages, and public official bonds.
2026 VERIFIED QUESTIONS WITH
SOLUTIONS GRADED A+
⩥ Which one of the following statements is true regarding the surety
underwriter's use of information received from financial institutions?
Answer: If the principal is highly dependent on a financial institution as
determined from the information, then the conditions of the credit line
are increasingly important to the surety.
⩥ Which one of the following statements is true regarding the principal
as a source of underwriting information for bonding?
Answer: The principal is the primary source of direct information,
including identification, historical, management, financial, bank, and
performance information.
⩥ Under which heading of the Payment section of D&B's Business
Information Report (BIR) is there a summary of the company's payment
history, including each vendor's experience during the previous twelve
months?
Answer: Paying Record
,⩥ One of Dun & Bradstreet, Inc.'s (D&B) primary sources of
information for its reporting database comes from which one of these
sources?
Answer: The surety principal
⩥ Which one of the following controls the information that consumer
credit report providers place in their files and how they place it?
Answer: The Equal Credit Opportunity Act and the Fair Credit
Reporting Act.
⩥ Which one of the following statements is correct?
Answer: From a regulator's perspective, if an insurer's ratio of written
premium to policyholders' surplus exceeds 3 to 1, the insurer is selling
more insurance than is prudent relative to the size of its net worth.
⩥ Which one of the following statements regarding reinsurance is true?
Answer: Reinsurance agreements typically require the primary company
to retain part of its original liability.
⩥ Facultative reinsurance
Answer: Involves more administrative expense than treaty reinsurance
transactions.
, ⩥ Which one of the following describes a type of excess of loss
reinsurance that anticipates a regular pattern of reinsured losses and is
typically rated using an experience-sensitive mechanism?
Answer: Working cover reinsurance
⩥ In surplus work program reinsurance, when is surplus ceded to the
reinsurer?
Answer: When the surety's expression of aggregate risk appetite for each
contractor is reached, the surplus is ceded to the reinsurer.
⩥ Reinsurance pools, syndicates, and associations are
Answer: Groups of insurers that share the loss exposures of the group,
usually through reinsurance.
⩥ Fidelity bond claims
Answer: Can expose an insurer to waiver of a condition precedent of
bond contracts and defamation actions, if they are not handled properly.
⩥ Which one of the following statements regarding surety compliance
with statutes and regulations is true?
Answer: Surety and fidelity contracts are often prescribed by statute or
regulation, including requirements for many license and permit bonds,
fidelity coverages, and public official bonds.
