AINS 101 Exam Questions With
Correct Answers
/. Bill is an insurance producer for and employed by ABC Insurance Company (ABC).
He represents only ABC when marketing insurance products, and uses an
administrative staff also employed by ABC. Bill is a producer in the - Answer-✅Direct
writer marketing system
/.Because the insurance company usually determines policy wording and the insured
has little choice but to "take it or leave it," an insurance contract is a - Answer-
✅Contract of adhesion
/.Which one of the following best explains why producers should be alert to changes in
clients' loss exposures? - Answer-✅Implemented risk management techniques may
prove to be ineffective or become obsolete
/.At Greenfield Insurance Company, Bernadette and Rachel are corporate underwriters,
and Tomas and Jose are field underwriters. All of the following are underwriting
activities typically performed by corporate (or staff) underwriters like Bernadette and
Rachel, EXCEPT: - Answer-✅Support producers and insureds
/.Joel is the underwriter for Stanton Industries. He received a notice from the premium
auditor on the account. After a recent visit to the insured's location, the auditor wanted
to make Joel aware of a decline in the business and some questionable business
practices. Which one of the following types of hazards is the auditor identifying? -
Answer-✅Moral hazards
/.Moral hazards - Answer-✅include questionable business practices or a failing
business.
/.James West is a claims rep with Hatters Insurance. As he learns how to handle a
claim from start to finish, which one of the following best describes the correct order for
him to follow during this process? - Answer-✅Identifying the policy, calculating a loss
reserve, determining the cause of loss, preparing a loss statement
/.Margaret was severely injured and scarred due to a recent accident. Which one of the
following is an example of general damages Margaret received? - Answer-
✅Compensation for disfigurement
/.Donna is an insurance producer. She makes an appointment with potential
policyholder Sandie to review her loss exposures. She asks Sandie to complete a
, questionnaire to assist her in this effort. Donna is conducting a - Answer-✅Risk
management review
/.Rachel is a new employee of Westley Insurance, and has been asked to review some
existing policies to become familiar with the types of policies she will be working with.
Which one of the following will Rachel find is true as she conducts her review? -
Answer-✅Rachel finds the policy begins with a coverage overview and then goes into
more coverage details.
/.Sports, Inc. is looking to obtain a commercial property policy on its building for
$400,000. If their insurer decides to charge them a rate of $0.50 per $100 of building
insurance, what premium must Sports, Inc. pay? - Answer-✅$2,000
/.Destructive competition in the insurance industry could result in - Answer-✅Insurance
shortages
/.The financial report for Hometown Insurer contains the following information:
Earned premiums$4,000,000Written premiums$5,000,000Net investment
income$1,000,000Incurred losses$3,000,000Incurred underwriting expenses$2,000,000
What is Hometown Insurer's loss ratio? - Answer-✅75%
/.Loss Ratio - Answer-✅incurred losses divided by its earned premiums
/.Jessie is a new customer service representative (CSR) at the Winfield Agency. Jessie
usually engages in all the following activities, EXCEPT: - Answer-✅Determining
coverage quotes
/.Riley Turner is performing a comprehensive evaluation of Hardwick Enterprises to
make sure its insurance and risk management efforts are serving the organization
appropriately. Which one of the following will be true in regard to this effort? - Answer-
✅Besides risk management goals being attainable, they should also pose a challenge.
/.Rachel is considering investing in the stock of an insurance company. Which one of
the following is likely to provide the best indication of the insurer's financial position at
this point in time? - Answer-✅Balance sheet
/.Balance Sheet - Answer-✅provides the best indication of its financial position because
it shows admitted assets, liabilities, and policyholders' surplus at a particular point in
time.
/.Which one of the following is the amount of business an insurer can write based on
regulatory guidelines, usually a comparsion of the insurer's written premiums to the
policyholders' surplus? - Answer-✅Capacity
Correct Answers
/. Bill is an insurance producer for and employed by ABC Insurance Company (ABC).
He represents only ABC when marketing insurance products, and uses an
administrative staff also employed by ABC. Bill is a producer in the - Answer-✅Direct
writer marketing system
/.Because the insurance company usually determines policy wording and the insured
has little choice but to "take it or leave it," an insurance contract is a - Answer-
✅Contract of adhesion
/.Which one of the following best explains why producers should be alert to changes in
clients' loss exposures? - Answer-✅Implemented risk management techniques may
prove to be ineffective or become obsolete
/.At Greenfield Insurance Company, Bernadette and Rachel are corporate underwriters,
and Tomas and Jose are field underwriters. All of the following are underwriting
activities typically performed by corporate (or staff) underwriters like Bernadette and
Rachel, EXCEPT: - Answer-✅Support producers and insureds
/.Joel is the underwriter for Stanton Industries. He received a notice from the premium
auditor on the account. After a recent visit to the insured's location, the auditor wanted
to make Joel aware of a decline in the business and some questionable business
practices. Which one of the following types of hazards is the auditor identifying? -
Answer-✅Moral hazards
/.Moral hazards - Answer-✅include questionable business practices or a failing
business.
/.James West is a claims rep with Hatters Insurance. As he learns how to handle a
claim from start to finish, which one of the following best describes the correct order for
him to follow during this process? - Answer-✅Identifying the policy, calculating a loss
reserve, determining the cause of loss, preparing a loss statement
/.Margaret was severely injured and scarred due to a recent accident. Which one of the
following is an example of general damages Margaret received? - Answer-
✅Compensation for disfigurement
/.Donna is an insurance producer. She makes an appointment with potential
policyholder Sandie to review her loss exposures. She asks Sandie to complete a
, questionnaire to assist her in this effort. Donna is conducting a - Answer-✅Risk
management review
/.Rachel is a new employee of Westley Insurance, and has been asked to review some
existing policies to become familiar with the types of policies she will be working with.
Which one of the following will Rachel find is true as she conducts her review? -
Answer-✅Rachel finds the policy begins with a coverage overview and then goes into
more coverage details.
/.Sports, Inc. is looking to obtain a commercial property policy on its building for
$400,000. If their insurer decides to charge them a rate of $0.50 per $100 of building
insurance, what premium must Sports, Inc. pay? - Answer-✅$2,000
/.Destructive competition in the insurance industry could result in - Answer-✅Insurance
shortages
/.The financial report for Hometown Insurer contains the following information:
Earned premiums$4,000,000Written premiums$5,000,000Net investment
income$1,000,000Incurred losses$3,000,000Incurred underwriting expenses$2,000,000
What is Hometown Insurer's loss ratio? - Answer-✅75%
/.Loss Ratio - Answer-✅incurred losses divided by its earned premiums
/.Jessie is a new customer service representative (CSR) at the Winfield Agency. Jessie
usually engages in all the following activities, EXCEPT: - Answer-✅Determining
coverage quotes
/.Riley Turner is performing a comprehensive evaluation of Hardwick Enterprises to
make sure its insurance and risk management efforts are serving the organization
appropriately. Which one of the following will be true in regard to this effort? - Answer-
✅Besides risk management goals being attainable, they should also pose a challenge.
/.Rachel is considering investing in the stock of an insurance company. Which one of
the following is likely to provide the best indication of the insurer's financial position at
this point in time? - Answer-✅Balance sheet
/.Balance Sheet - Answer-✅provides the best indication of its financial position because
it shows admitted assets, liabilities, and policyholders' surplus at a particular point in
time.
/.Which one of the following is the amount of business an insurer can write based on
regulatory guidelines, usually a comparsion of the insurer's written premiums to the
policyholders' surplus? - Answer-✅Capacity
