AINS 101 Complete Questions And Answers Graded A+

AINS 101 Complete Questions And Answers Graded A+ Loss exposure Correct Answer: Any condition or situation that presents a possibility of loss, whether or not an actual loss occurs. Premium Correct Answer: The price of the insurance provided for a specific period. Indemnify Correct Answer: To restore a party who has sustained a loss to the same financial position that party held before the loss occurred. Insured Correct Answer: Any person or organization who is insured under an insurance policy. Property -casualty insurance Correct Answer: One of the tw o main sectors of the insurance industry, encompassing numerous types of insurance, most of which cover the financial consequences of damage to one's own property or legal liability to others. Life-health insurance Correct Answer: One of the two main sect ors of the insurance industry, encompassing numerous types of insurance that cover the financial consequences of death, injury or sickness. Stock insurer Correct Answer: An insurer that is owned by its stockholders and formed as a corporation for the purp ose of earning a profit for the stockholders. Mutual insurer Correct Answer: An insurer that is owned by its policyholders and formed as a corporation for the purpose of providing insurance to them. Surplus lines insurer Correct Answer: A nonadmitted ins urer that is eligible to insure risks that have been exported by a surplus lines licensee in accordance with a surplus lines law. Reinsurance Correct Answer: The transfer of insurance risk from one insurer to another through a contractual agreement under which one insurer (the reinsurer) agrees, in return for a reinsurance premium, to indemnify another insurer (the primary insurer) for some or all of the financial consequences of certain loss exposures covered by the primary's insurance policies. Pure ris k Correct Answer: A chance of loss or no loss, but no chance of gain. Speculative risk Correct Answer: A chance of loss, no loss or gain. Solvency Correct Answer: The agility of an insurer to meet its financial obligations as they become due, even those resulting from insured losses that may be claimed several years in the future. Income statement Correct Answer: The financial statement that reports an organization's profit or loss for a specific period by comparing the revenues generated with the expenses incurred to produce those revenues. Earned premiums Correct Answer: The port ion of the written premiums that apply to the part of the policy period that has already occurred. Underwriting income Correct Answer: Income an insurer earns from premiums paid by policyholders minus incurred losses and underwriting expenses. Balance sh eet Correct Answer: The financial statement that reports the assets, liabilities and owners' equity of an organization as of a specific date. Policyholders surplus Correct Answer: An insurer's assets minus its liabilities, which represents its net worth. Loss adjustment expenses Correct Answer: The expense that an insurer incurs to investigate, defend and settle claims according to the terms specified in the insurance policy. Assets Correct Answer: Types of property, both tangible and intangible, owned b y an entity. Liabilities Correct Answer: Financial obligations, or debts, owed by a company to another entity, usually the policyholder in the case of an insurer. Investment income Correct Answer: Interest, dividends and net capital gains received by an insurer from the insurer's financial assets, minus its investment expenses. Loss reserve Correct Answer: An estimate of the amount of money the insurer expects to pay in the future for losses that have occurred. Unearned premium reserve Correct Answer: A n insurer liability representing the amount of premiums received from policyholders that are not yet earned. Loss ratio Correct Answer: A ratio that measures losses and loss adjustment expenses against earned premiums and that reflects the percentage of p remiums being consumed by losses. Expense ratio Correct Answer: An insurer's incurred underwriting expenses for a given period divided by its written premiums for the same period. Combined ratio Correct Answer: A profitability ratio that indicates whethe r an insurer has made an underwriting loss or gain.