AINS 101 Practice questions and 100% Verified Correct Answers Latest Update Guaranteed A+

AINS 101 Practice questions and 100% Verified Correct Answers Latest Update Guaranteed A+
1. As a single mother on a very tight budget, Ciara is tempted to skimp on her insurance.
However, her friend Mehmet tells her not to skimp on insurance, because it will help
manage her cash flows. Which one of the following examples best illustrates Mehmet's
point?
a. When her car's windshield breaks, Ciara has to pay only $100 of the $600 cost of
replacing it
2. Shelton Industries experienced a fire in its manufacturing plant. Several employees suffered
burns and smoke inhalation injuries as they tried to escape the building. Which one of
Shelton Industries' commercial property-casualty policies would pay for the employees'
injuries and illnesses?
a. Workers compensation insurance
3. Coverage for money and other business property from various causes of loss such as
burglary, robbery, theft, and employee dishonesty typically is provided by
a. Commercial crime insurance
4. All of the following are types of private insurers, EXCEPT:
a. State workers compensation funds
5. 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?
a. Auto insurance is compulsory, and the program makes it possible for all drivers to
have reasonably priced insurance
6. 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. Strategic risk
7. 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.
8. What term refers to the ability of an insurer to meet its obligations as they become due?
a. Solvency
9. 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. 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 10. All of the
following are categories of liabilities found on an insurer's balance sheet, EXCEPT:
a. Policyholders' surplus
11. Which one of the following is part of written premiums?
a. Unearned premiums
12. An insurer's balance sheet can best be described as a
.
13. The financial report for Hometown Insurer contains the following information:
a. Earned premiums $4,000,000 Written premiums $5,000,000 Net investment
income $1,000,000 Incurred Losses $3,000,000 Incurred underwriting expense
$2,000,000
What is Hometown Insurer's expense ratio?
b. 40%
14. 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?
a. 40%
Expense Ratio = Incurred underwriting expenses ÷ Written premiums: $4 million ÷
$10 million = .40 (40%)
15. 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.
16. 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. Anchoy can use group marketing to target large numbers of recent local college
graduates.

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