AINS 21 - Segment A | 137 Questions with
100 % correct answers | Verified& Updated
2024 | Already Passed
Though premiums are an obvious cost of insurance, many insureds believe they are too high
because
A. Premiums are not a regular cost of living.
B. Insurers only use eighty cents from every premium dollar to pay losses.
C. Benefits are intangible until a loss occurs.
D. Insureds do not deliberately cause losses. - ✔✔C. Benefits are intangible until a loss occurs.
A type of insurer that has a board of directors elected by policyholders and that may pay
dividends to policyholders as a return of a portion of premiums paid is a
A. Stock insurer.
B. Mutual insurer.
C. Reciprocal insurance exchange.
D. Captive insurer. - ✔✔A. Mutual insurer.
A mutual insurance company is owned by
A. Policyholders.
B. Mutual funds.
C. Independent investors.
D. State insurance departments. - ✔✔A. Policyholders.
,All of the following are types of private insurers, EXCEPT:
A. Stock insurers
B. Reciprocal insurance exchanges
C. Mutual insurers
D. State workers compensation funds - ✔✔D. State workers compensation funds
A stock insurer differs from a reciprocal insurance exchange in which one of the following
ways?
A. A stock insurer provides insurance to its policyholder-owners. A reciprocal insurance
exchange provides insurance to investors.
B. Both are owned by stockholders. However, the reciprocal insurance exchange provides
coverage to investors.
C. Stockholders own a stock insurer. Subscribers own a reciprocal insurance exchange.
D. Both are formed to provide profit to investors. However, the stock insurer is managed
through a board of directors. - ✔✔C. Stockholders own a stock insurer. Subscribers own a
reciprocal insurance exchange.
all of the following describe Lloyd's, EXCEPT:
A. Insurance underwritten by a Name
B. Primarily insurers unusual exposures
C. Operated by syndicates
D. A marketplace - ✔✔B. Primarily insurers unusual exposures
A reciprocal insurance exchange
A. Transfers potential costs of insured loss exposures from one insurer to another insurer.
,B. Is a stock corporation providing insurance for its policyholders.
C. Is a subsidiary that provides all or part of the insurance for a parent company.
D. Is an unincorporated association providing insurance coverage to its subscribers. - ✔✔D. Is
an unincorporated association providing insurance coverage to its subscribers.
Insurance Company wrote a commercial liability policy for a manufacturer of off-road
motorcycles. The potential costs of the insured's loss exposure exceed Insurance Company's
capacity. Insurance Company could consider which type of contractual transferring agreement
to meet its needs?
A. Reciprocal insurance
B. Mutual insurance
C. Reinsurance
D. Interinsurance - ✔✔C. Reinsurance
Small U.S. unincorporated insurance associations, domiciled mainly in Texas, are known as
A. American captives.
B. American mutuals.
C. American Lloyds.
D. American reciprocals. - ✔✔C. American Lloyds.
An insurer that was formed for the purpose of earning a profit for its stockholders is a
A. Captive insurer.
B. Mutual insurer.
C. Stock insurer.
, D. Reciprocal insurance exchange. - ✔✔C. Stock insurer.
A company interested in improving cash flow should consider meeting its insurance needs
through which one of the following types of insurance organizations?
A. Captive insurers
B. Stock insurers
C. Reciprocal insurance exchanges
D. Mutual insurers - ✔✔A. Captive insurers
Risk control is intended to prevent or reduce losses. When practicing sound risk control, an
organization
A. Will not be required to expend economic resources to insure those loss exposures.
B. Is likely to see the same economic benefit as compared to insurance.
C. Is likely to use insurance to treat those loss exposures.
D. Will often be able to eliminate losses from those loss exposures. - ✔✔C. Is likely to use
insurance to treat those loss exposures.
The size of an employer's loss exposure for workers compensation insurance is based
on A. The amount of its payroll.
B. The number of its employees.
C. The extent of its operations.
D. The final premium audit. - ✔✔A. The amount of its payroll.
The premium charged for an insurance policy should be
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