AINS Practice Exam questions and verified correct answers
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Course
Ains
Institution
Ains
One distinguishing feature between independent agency systems and other marketing systems is the... - correct answer agency expiration list
Foreign Insurer - correct answer An insurer licensed to operate in a state but incorporated in another state
Domestic Insurer - correct answer An insurer...
One distinguishing feature between independent agency systems and other marketing systems is the... -
correct answer agency expiration list
Foreign Insurer - correct answer An insurer licensed to operate in a state but incorporated in another
state
Domestic Insurer - correct answer An insurer doing business in the jurisdiction in which it was
incorporated
Alien Insurer - correct answer An insurer domiciled in a country other than the US
Direct Response Marketing System - correct answer Greatly reduces compensation costs but has higher
advertising costs
Agency Expiration List - correct answer An agency's most valuable asset (does not belong to insurer)
Important consideration when selecting distribution channels - correct answer Does the channel
capitalize on its core capabilities?
Knowledge acquired by the agent is presumed to be.. - correct answer knowledge acquired by the
insurer
Premium collection method used for personal insurance and small commercial accounts - correct answer
Direct Bill
What specifies scope of authority of an agent? - correct answer Agency contract
Agency Bill - correct answer Payment procedure in which a producer sends premium bills to the insured,
collects the premium, and sends the premium to the insurer, less any commission
, AINS Practice Exam Review
Item Basis - correct answer Premium (less commission) is forwarded to the insurer when the producer
collects it or when it comes due. Least complex method
Statement Basis - correct answer Insurer sends statement to the producer showing the premiums due.
Producer is obligated to pay the premiums as due.
Account Current Basis - correct answer Producer periodically prepares a statement showing the
premiums due to the insurer, after deducting appropriate commissions, and transmits the amount to the
insurer. The agency contract will indicate how often the producer must submit the account current
statement (usually monthly). Producer must pay when premium is due, even if policyholder hasn't paid.
Purposes of underwriting - correct answer Develop and maintain a book of business, guard against
adverse selection, ensure adequate policyholder's surplus and enforce underwriting guidelines
Experience Rating - correct answer A rating plan that adjusts the premium for the current policy period
to recognize the loss experience of the insured organization during past policy periods
Schedule Rating - correct answer A rating plan that awards debits and credits based specific categories,
such as the care and condition of premises of the training and selection of employees, to reflect a
modified premium that the class rate does not include
Retrospective Rating - correct answer A ratemaking technique that adjusts the insured's premium for the
current policy period based on the insured's loss experience during the current period; paid losses or
incurred losses may be used to determine loss experience
Class Rating - correct answer A rating approach that uses rates reflecting the average probability of loss
for businesses within large groups of similar risks; the predominant method for determining rate for
commercial properties
Law of large numbers - correct answer A mathematical principal that state that as the number of similar
but independent exposure units increases, the relative accuracy about the future outcomes (losses) also
increases
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