AINS 101 CORRECT ACTUAL EXAMS QUESTIONS AND
ANSWERS RATED A+
✔✔Reciprocal insurance exchange - ✔✔each member is both an insured and an
insurer
✔✔Captive insurer - ✔✔formed to cover the loss exposures of specific organizations
✔✔Risk Quadrants - ✔✔Hazard, Operational, Financial, Strategic
✔✔Hazard risk - ✔✔arises from property, liability, or personnel loss exposures.
✔✔Operational risk - ✔✔arises from people, processes, systems, or controls
✔✔Financial risk - ✔✔arises from the effect of market forces on financial assets or
liabilities
✔✔Strategic risk - ✔✔arises from trends in the economy and society
✔✔Artificial intelligence - ✔✔enables computers to perform tasks that require critical
thinking, such as making decisions
✔✔Sensors - ✔✔detect and measure objects or conditions continuously to warn of
problems and malfunctions. Smart sensors may trigger a response to an issue, which
helps reduce losses
✔✔Computer vision - ✔✔helps a machine recognize an object and respond to it as a
human would
✔✔Insurance regulations protects consumers by: - ✔✔1. Verifying that insurance
policies, which can be hard to understand, truly benefit the customer
, 2. Requiring insurers to pay legitimate claims and honestly represent the benefits of a
policy
3. Guaranteeing that insurance is available and accessible to everyone who needs it
✔✔The government regulates insurance for 3 reasons: - ✔✔1. To protect consumers
2. To maintain insurer solvency
3. To prevent destructive competition
✔✔Insurance regulation protects consumers by - ✔✔1. Verifying that insurance policies,
which can be hard to understand, truly benefit the customer
2. Requiring insurers to pay legitimate claims and honestly represent the benefits of a
policy
3. Guaranteeing that insurance is available and accessible to everyone who needs it
✔✔Regulators enact and enforce rules that encourage insurers to maintain and
enhance their financial position to: - ✔✔1. Guarantee that insurers have enough cash
on hand to pay for future claims made on all the policies they issue, even the ones for
which they long ago collected the premium
2. Ensure that a catastrophe that affects lot of policyholders at once doesn't deplete
insurer's resources and make them unable to pay claims
3. Prevent an insurer from recklessly investing it profits or engaging in fraudulent
activities that could jeopardize its reserves
✔✔Regulation seeks to keep insurers from pricing too low for two main reasons: - ✔✔1.
Not charging enough premium could leave the insurer without enough cash on hand to
pay covered losses
2. Charging low rates could be an attempt to drive competitors out of business
✔✔An income statement shows: - ✔✔1. Total revenue
2. Total expenses
3. Net income for a time period
✔✔Balance sheet includes - ✔✔Insurers assets such as:
1. Cash
2. Liabilities
3. Surplus
✔✔Admitted assets - ✔✔items that insurers can easily turn into cash, such as stocks,
bonds, and real estate
✔✔Non-admitted assets - ✔✔types of property that insurers cannot easily convert into
cash
✔✔Insurance is commonly sold through: - ✔✔1. Independent agents and brokers
2. Exclusive agencies
ANSWERS RATED A+
✔✔Reciprocal insurance exchange - ✔✔each member is both an insured and an
insurer
✔✔Captive insurer - ✔✔formed to cover the loss exposures of specific organizations
✔✔Risk Quadrants - ✔✔Hazard, Operational, Financial, Strategic
✔✔Hazard risk - ✔✔arises from property, liability, or personnel loss exposures.
✔✔Operational risk - ✔✔arises from people, processes, systems, or controls
✔✔Financial risk - ✔✔arises from the effect of market forces on financial assets or
liabilities
✔✔Strategic risk - ✔✔arises from trends in the economy and society
✔✔Artificial intelligence - ✔✔enables computers to perform tasks that require critical
thinking, such as making decisions
✔✔Sensors - ✔✔detect and measure objects or conditions continuously to warn of
problems and malfunctions. Smart sensors may trigger a response to an issue, which
helps reduce losses
✔✔Computer vision - ✔✔helps a machine recognize an object and respond to it as a
human would
✔✔Insurance regulations protects consumers by: - ✔✔1. Verifying that insurance
policies, which can be hard to understand, truly benefit the customer
, 2. Requiring insurers to pay legitimate claims and honestly represent the benefits of a
policy
3. Guaranteeing that insurance is available and accessible to everyone who needs it
✔✔The government regulates insurance for 3 reasons: - ✔✔1. To protect consumers
2. To maintain insurer solvency
3. To prevent destructive competition
✔✔Insurance regulation protects consumers by - ✔✔1. Verifying that insurance policies,
which can be hard to understand, truly benefit the customer
2. Requiring insurers to pay legitimate claims and honestly represent the benefits of a
policy
3. Guaranteeing that insurance is available and accessible to everyone who needs it
✔✔Regulators enact and enforce rules that encourage insurers to maintain and
enhance their financial position to: - ✔✔1. Guarantee that insurers have enough cash
on hand to pay for future claims made on all the policies they issue, even the ones for
which they long ago collected the premium
2. Ensure that a catastrophe that affects lot of policyholders at once doesn't deplete
insurer's resources and make them unable to pay claims
3. Prevent an insurer from recklessly investing it profits or engaging in fraudulent
activities that could jeopardize its reserves
✔✔Regulation seeks to keep insurers from pricing too low for two main reasons: - ✔✔1.
Not charging enough premium could leave the insurer without enough cash on hand to
pay covered losses
2. Charging low rates could be an attempt to drive competitors out of business
✔✔An income statement shows: - ✔✔1. Total revenue
2. Total expenses
3. Net income for a time period
✔✔Balance sheet includes - ✔✔Insurers assets such as:
1. Cash
2. Liabilities
3. Surplus
✔✔Admitted assets - ✔✔items that insurers can easily turn into cash, such as stocks,
bonds, and real estate
✔✔Non-admitted assets - ✔✔types of property that insurers cannot easily convert into
cash
✔✔Insurance is commonly sold through: - ✔✔1. Independent agents and brokers
2. Exclusive agencies
