AINS 101 FINAL EXAMINATION TEST 2026
QUESTIONS AND SOLUTIONS 100% CORRECT
● Adverse selection. Answer: Insuring individuals with a high
probability of loss at a cost lower than the insurer would normally
charge for that risk because it wasn't aware of the actual risk involved.
● Binder. Answer: A temporary written or oral agreement to provide
insurance coverage until a formal written policy is issued.
● Book of business. Answer: A group of policies with a common
characteristic, such as territory or type of coverage, or all policies
written by a particular insurer or agency.
● Broker. Answer: An independent producer who represents insurance
customers.
● Brokerage. Answer: Compensation in the form of a flat fee or a
commission that is paid by the reinsurer to the reinsurance intermediary
for services provided.
, ● Capacity. Answer: The amount of business an insurer is able to write,
usually based on a comparison of the insurer's written premiums to its
policyholders' surplus
● Catastrophe model. Answer: A type of computer program that
estimates losses from future potential catastrophic events.
● Certificate of insurance. Answer: A brief description of insurance
coverage prepared by an insurer or its agent and commonly used by
policyholders to provide evidence of insurance.
● Claim. Answer: A demand by a person or business seeking to recover
from an insurer for a loss that may be covered by an insurance policy.
● Claimant. Answer: A party that makes a claim and that can be either a
first-party claimant or a third-party claimant.
● Claims representative. Answer: A person responsible for investigating,
evaluating, and settling claims.
● Compensatory damages. Answer: A payment awarded by a court to
reimburse a victim for actual harm.
● Condition. Answer: Any provision in an insurance policy that qualifies
an otherwise enforceable promise of the insurer.
QUESTIONS AND SOLUTIONS 100% CORRECT
● Adverse selection. Answer: Insuring individuals with a high
probability of loss at a cost lower than the insurer would normally
charge for that risk because it wasn't aware of the actual risk involved.
● Binder. Answer: A temporary written or oral agreement to provide
insurance coverage until a formal written policy is issued.
● Book of business. Answer: A group of policies with a common
characteristic, such as territory or type of coverage, or all policies
written by a particular insurer or agency.
● Broker. Answer: An independent producer who represents insurance
customers.
● Brokerage. Answer: Compensation in the form of a flat fee or a
commission that is paid by the reinsurer to the reinsurance intermediary
for services provided.
, ● Capacity. Answer: The amount of business an insurer is able to write,
usually based on a comparison of the insurer's written premiums to its
policyholders' surplus
● Catastrophe model. Answer: A type of computer program that
estimates losses from future potential catastrophic events.
● Certificate of insurance. Answer: A brief description of insurance
coverage prepared by an insurer or its agent and commonly used by
policyholders to provide evidence of insurance.
● Claim. Answer: A demand by a person or business seeking to recover
from an insurer for a loss that may be covered by an insurance policy.
● Claimant. Answer: A party that makes a claim and that can be either a
first-party claimant or a third-party claimant.
● Claims representative. Answer: A person responsible for investigating,
evaluating, and settling claims.
● Compensatory damages. Answer: A payment awarded by a court to
reimburse a victim for actual harm.
● Condition. Answer: Any provision in an insurance policy that qualifies
an otherwise enforceable promise of the insurer.
