AINS 101 NEWEST ACTUAL EXAM &
PRACTICE QUESTIONBANK 370
QUESTIONS AND DETAILED CORRECT
ANSWERS 2025 | GUARANTEED PASS
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 insurers can remain solvent.
Correct Answer Insurance regulation protects customers
by guaranteeing insurance is available and accessible to
everyone who needs it.
,All of the following appear on an insurer's balance sheet,
EXCEPT:
A. Liabilities
B. Assets
C. Net income
D. Policyholders' surplus Correct Answer Net income
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. Correct Answer
Snapshot of its financial position
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 Correct Answer 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.)
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?
Correct Answer (3/4) + (2/5) = .115 (115%)
How do you get combined ratio? Correct Answer Loss
Ratio + Expense Ratio = (Incurred Losses/Earned
Premiums) + (Incurred Underwriting Expenses/Written
Premiums)
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? Correct Answer
4/10 = .4 (40%)
How do you get expense ratio? Correct Answer Incurred
underwriting expenses / Written premiums
How do you get loss ratio? Correct Answer Incurred
Losses / Earned Premiums
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. Correct
Answer Anchoy can use group marketing to target large
numbers of recent local college graduates.
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. Correct Answer Is free to work
with as many different insurers as it wants.
The key to the direct writer marketing system is that
A. Customers purchase insurance through call centers.
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