AINS 101 Exam Prep Questions
AINS 101 Exam Questions with 100%
Verified Answers 2025 A+
Risk - CORRECT ANSWER-Which one of the following represents uncertainty about
outcomes that can be negative or positive?
A. Loss exposure
B. Transfer
C. Risk
D. Pooling
Commercial crime insurance. - CORRECT ANSWER-Coverage for money and other
business property from various causes of loss such as burglary, robbery, theft, and
employee dishonesty typically is provided by
Artificial Intelligence - CORRECT ANSWER-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
Indemnify individuals and organizations for covered losses - CORRECT ANSWER-The
primary role of insurance is to
Insureds share the cost of each other's losses. - CORRECT ANSWER-Which one of the
following best describes the concept of pooling?
A. Insureds share the cost of each other's losses.
B. Risk management is concerned with positive and negative risks.
C. The financial consequences of unanticipated losses are transferred to an insurer.
D. Insurance benefits society as a whole.
Mutual insurer. - CORRECT ANSWER-A type of insurer that is owned by policyholders
and may pay dividends to policyholders as a return of a portion of premiums paid is a
Auto insurance is compulsory, and the program makes it possible for all drivers to have
reasonably priced insurance. - CORRECT ANSWER-The state of Maryland operates a
residual auto plan (the Maryland Auto Insurance Fund—MAIF) that provides coverage
for drivers who are unable to obtain coverage from private insurers. Which one of the
following is the best rationale for the MAIF program?
,AINS 101 Exam Prep Questions
A. Private insurers face limited competition, and the state increases competitive
pressures by operating this type of plan.
B. Auto insurance is compulsory, and the program makes it possible for all drivers to
have reasonably priced insurance.
C. Private insurers overcharge for auto insurance, and the state provides a low-cost
alternative.
D. Auto insurance for high-risk drivers is profitable, and the program enables the state
to share in the profits.
Strategic Risk - CORRECT ANSWER-ABC Company experienced a dramatic
ideological shift in corporate policies after a national election. This is an example of
which one of the following quadrants of risk?
A. Operational risk
B. Financial risk
C. Strategic risk
D. Hazard risk
Renegade keeps enough cash assets on hand to cover claims on policies long after it
collected the premiums from customers. - CORRECT ANSWER-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?
A. Renegade emphasizes that its insurance is readily available and accessible to
customers in its service area that need it.
B. Renegade's producers know policy language well so that they can easily and
understandably answer policyholders' questions.
C. Renegade keeps enough cash assets on hand to cover claims on policies long after
it collected the premiums from customers.
D. Renegade is committed to branching out in the near future to include more
coverages for specialized small businesses.
Solvency - CORRECT ANSWER-What term refers to the ability of an insurer to meet its
obligations as they become due?
Insurance regulation protects customers by guaranteeing insurance is available and
accessible to everyone who needs it. - CORRECT ANSWER-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?
A. Insurance regulation protects customers by guaranteeing insurance is available and
accessible to everyone who needs it.
B. The U.S. insurance industry is governed by federal laws that protect citizens by
leveling the playing field for insurers and policyholders.
C. Insurance regulation speaks to the types of risks insurers may cover, but does not
play a part in how they invest their profits.
D. Insurance regulation prevents insurers from covering catastrophic occurrences so
,AINS 101 Exam Prep Questions
insurers can remain solvent.
Net income - CORRECT ANSWER-All of the following appear on an insurer's balance
sheet, EXCEPT:
A. Liabilities
B. Assets
C. Net income
D. Policyholders' surplus
Snapshot of its financial position - CORRECT ANSWER-An insurer's balance sheet can
best be described as a
A. Relationship between revenue and liabilities.
B. Snapshot of its financial position.
C. Relationship between assets and expenses.
D. Summary of premiums written.
Policyholders' surplus (The major categories of liabilities found on an insurer's financial
statements are loss and loss expense reserves, unearned premium reserves, and other
liabilities. Policyholders' surplus is not a liability category.) - CORRECT ANSWER-All of
the following are categories of liabilities found on an insurer's balance sheet, EXCEPT:
A. Loss and loss expense reserves
B. Policyholders' surplus
C. Unearned premium reserves
D. Other liabilities
(3/4) + (2/5) = .115 (115%) - CORRECT ANSWER-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?
Loss Ratio + Expense Ratio = (Incurred Losses/Earned Premiums) + (Incurred
Underwriting Expenses/Written Premiums) - CORRECT ANSWER-How do you get
combined ratio?
4/10 = .4 (40%) - CORRECT ANSWER-The financial report for LMN Insurance contains
the following information:
Earned premiums $8,000,000
Written premiums $10,000,000
Incurred losses $6,000,000
Incurred underwriting expenses $4,000,000
What is LMN Insurance's expense ratio?
Incurred underwriting expenses / Written premiums - CORRECT ANSWER-How do you
, AINS 101 Exam Prep Questions
get expense ratio?
Incurred Losses / Earned Premiums - CORRECT ANSWER-How do you get loss ratio?
Anchoy can use group marketing to target large numbers of recent local college
graduates. - CORRECT ANSWER-As it continues to grow, Anchoy Insurance is
examining other distribution channels to more effectively market its products. Through
this experience, which of one the following will Anchoy most likely learn?
A. No matter what it selects, Anchoy must use a producer to effectively sell its products.
B. Anchoy can use group marketing to target large numbers of recent local college
graduates.
C. Using call centers will take away its need for customer service representatives or
chatbots.
D. It will market through banks and financial services when utilizing the exclusive
agency distribution channel.
Is free to work with as many different insurers as it wants. - CORRECT ANSWER-
Spencer Insurance Associates is an independent agency selling primarily homeowners
policies. This agency
A. Is free to work with as many different insurers as it wants.
B. Generally represents its customers rather than insurance companies.
C. Can use the policyholder expiration lists, but they are owned by insurers.
D. Cannot commit an insurer to write a policy, unlike a broker, who usually can.
The insurer is using its own employees as producers. - CORRECT ANSWER-The key
to the direct writer marketing system is that
A. Customers purchase insurance through call centers.
B. An agency is contracted to sell insurance for one insurer or group of insurers.
C. The insurer is using its own employees as producers.
D. Customers can get quotes for coverage through web-based portals.
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. - CORRECT
ANSWER-One of the reasons for insurance regulation is to prevent destructive
competition. In which one of the following scenarios would destructive competition be
exhibited?
A. North Insurance is trying to break into a specialized type of insurance market that is
generally out of range for most customers; North decides to price its coverages
commensurate with other insurers offering similar policies.
B. South Insurance purposely writes its policies with hard-to-understand terminology
that only its agents can explain, so that its insureds will purchase its products without
asking a lot of questions.
C. West Insurance has had three straight years of record-setting low claims and has
accumulated more than expected profits; it plans on the trend continuing and
overspends on new long-term investments.
D. East Insurance comes up with a new rate structure allowing "preferred customers"
AINS 101 Exam Questions with 100%
Verified Answers 2025 A+
Risk - CORRECT ANSWER-Which one of the following represents uncertainty about
outcomes that can be negative or positive?
A. Loss exposure
B. Transfer
C. Risk
D. Pooling
Commercial crime insurance. - CORRECT ANSWER-Coverage for money and other
business property from various causes of loss such as burglary, robbery, theft, and
employee dishonesty typically is provided by
Artificial Intelligence - CORRECT ANSWER-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
Indemnify individuals and organizations for covered losses - CORRECT ANSWER-The
primary role of insurance is to
Insureds share the cost of each other's losses. - CORRECT ANSWER-Which one of the
following best describes the concept of pooling?
A. Insureds share the cost of each other's losses.
B. Risk management is concerned with positive and negative risks.
C. The financial consequences of unanticipated losses are transferred to an insurer.
D. Insurance benefits society as a whole.
Mutual insurer. - CORRECT ANSWER-A type of insurer that is owned by policyholders
and may pay dividends to policyholders as a return of a portion of premiums paid is a
Auto insurance is compulsory, and the program makes it possible for all drivers to have
reasonably priced insurance. - CORRECT ANSWER-The state of Maryland operates a
residual auto plan (the Maryland Auto Insurance Fund—MAIF) that provides coverage
for drivers who are unable to obtain coverage from private insurers. Which one of the
following is the best rationale for the MAIF program?
,AINS 101 Exam Prep Questions
A. Private insurers face limited competition, and the state increases competitive
pressures by operating this type of plan.
B. Auto insurance is compulsory, and the program makes it possible for all drivers to
have reasonably priced insurance.
C. Private insurers overcharge for auto insurance, and the state provides a low-cost
alternative.
D. Auto insurance for high-risk drivers is profitable, and the program enables the state
to share in the profits.
Strategic Risk - CORRECT ANSWER-ABC Company experienced a dramatic
ideological shift in corporate policies after a national election. This is an example of
which one of the following quadrants of risk?
A. Operational risk
B. Financial risk
C. Strategic risk
D. Hazard risk
Renegade keeps enough cash assets on hand to cover claims on policies long after it
collected the premiums from customers. - CORRECT ANSWER-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?
A. Renegade emphasizes that its insurance is readily available and accessible to
customers in its service area that need it.
B. Renegade's producers know policy language well so that they can easily and
understandably answer policyholders' questions.
C. Renegade keeps enough cash assets on hand to cover claims on policies long after
it collected the premiums from customers.
D. Renegade is committed to branching out in the near future to include more
coverages for specialized small businesses.
Solvency - CORRECT ANSWER-What term refers to the ability of an insurer to meet its
obligations as they become due?
Insurance regulation protects customers by guaranteeing insurance is available and
accessible to everyone who needs it. - CORRECT ANSWER-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?
A. Insurance regulation protects customers by guaranteeing insurance is available and
accessible to everyone who needs it.
B. The U.S. insurance industry is governed by federal laws that protect citizens by
leveling the playing field for insurers and policyholders.
C. Insurance regulation speaks to the types of risks insurers may cover, but does not
play a part in how they invest their profits.
D. Insurance regulation prevents insurers from covering catastrophic occurrences so
,AINS 101 Exam Prep Questions
insurers can remain solvent.
Net income - CORRECT ANSWER-All of the following appear on an insurer's balance
sheet, EXCEPT:
A. Liabilities
B. Assets
C. Net income
D. Policyholders' surplus
Snapshot of its financial position - CORRECT ANSWER-An insurer's balance sheet can
best be described as a
A. Relationship between revenue and liabilities.
B. Snapshot of its financial position.
C. Relationship between assets and expenses.
D. Summary of premiums written.
Policyholders' surplus (The major categories of liabilities found on an insurer's financial
statements are loss and loss expense reserves, unearned premium reserves, and other
liabilities. Policyholders' surplus is not a liability category.) - CORRECT ANSWER-All of
the following are categories of liabilities found on an insurer's balance sheet, EXCEPT:
A. Loss and loss expense reserves
B. Policyholders' surplus
C. Unearned premium reserves
D. Other liabilities
(3/4) + (2/5) = .115 (115%) - CORRECT ANSWER-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?
Loss Ratio + Expense Ratio = (Incurred Losses/Earned Premiums) + (Incurred
Underwriting Expenses/Written Premiums) - CORRECT ANSWER-How do you get
combined ratio?
4/10 = .4 (40%) - CORRECT ANSWER-The financial report for LMN Insurance contains
the following information:
Earned premiums $8,000,000
Written premiums $10,000,000
Incurred losses $6,000,000
Incurred underwriting expenses $4,000,000
What is LMN Insurance's expense ratio?
Incurred underwriting expenses / Written premiums - CORRECT ANSWER-How do you
, AINS 101 Exam Prep Questions
get expense ratio?
Incurred Losses / Earned Premiums - CORRECT ANSWER-How do you get loss ratio?
Anchoy can use group marketing to target large numbers of recent local college
graduates. - CORRECT ANSWER-As it continues to grow, Anchoy Insurance is
examining other distribution channels to more effectively market its products. Through
this experience, which of one the following will Anchoy most likely learn?
A. No matter what it selects, Anchoy must use a producer to effectively sell its products.
B. Anchoy can use group marketing to target large numbers of recent local college
graduates.
C. Using call centers will take away its need for customer service representatives or
chatbots.
D. It will market through banks and financial services when utilizing the exclusive
agency distribution channel.
Is free to work with as many different insurers as it wants. - CORRECT ANSWER-
Spencer Insurance Associates is an independent agency selling primarily homeowners
policies. This agency
A. Is free to work with as many different insurers as it wants.
B. Generally represents its customers rather than insurance companies.
C. Can use the policyholder expiration lists, but they are owned by insurers.
D. Cannot commit an insurer to write a policy, unlike a broker, who usually can.
The insurer is using its own employees as producers. - CORRECT ANSWER-The key
to the direct writer marketing system is that
A. Customers purchase insurance through call centers.
B. An agency is contracted to sell insurance for one insurer or group of insurers.
C. The insurer is using its own employees as producers.
D. Customers can get quotes for coverage through web-based portals.
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. - CORRECT
ANSWER-One of the reasons for insurance regulation is to prevent destructive
competition. In which one of the following scenarios would destructive competition be
exhibited?
A. North Insurance is trying to break into a specialized type of insurance market that is
generally out of range for most customers; North decides to price its coverages
commensurate with other insurers offering similar policies.
B. South Insurance purposely writes its policies with hard-to-understand terminology
that only its agents can explain, so that its insureds will purchase its products without
asking a lot of questions.
C. West Insurance has had three straight years of record-setting low claims and has
accumulated more than expected profits; it plans on the trend continuing and
overspends on new long-term investments.
D. East Insurance comes up with a new rate structure allowing "preferred customers"
