AINS 103 CHAPTER 1 CERTIFICATION
EVALUATION COMPLETE QUESTIONS AND
ANSWERS GRADED A PLUS
●● Premium
Answer: the price of the insurance coverage provided for a specified
period
●● Indemnify
Answer: to restore a party who has sustained a loss to the same financial
position that party held before the loss occurred
●● Insured
Answer: any person or organization who is insured under an insurance
policy
●● Property-casualty insurance
Answer: one of the two 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
,Answer: one of the two main sectors of the insurance industry
encompassing numerous types of insurance that cover the financial
●● Stock insurer
Answer: an insurer that is owned by its stockholders and formed as a
corporation for the purpose of earning a profit for the stockholders
●● Mutual insurer
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
Answer: a non-admitted insurer that is eligible to insure risks that have
been exported by a surplus lines licensee in accordance with a surplus
lines law
●● Reinsurance
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 risk
, Answer: a chance of loss or no loss, but no chance of gain
●● Speculative risk
Answer: a chance of loss, no loss, or gain
●● Solvency
Answer: the ability 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
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
Answer: the portion of the written premiums that apply to the part of the
policy period that has already occurred
●● Underwriting income
Answer: income an insurer earns from premiums paid by policyholders
minus incurred losses and underwriting expenses
●● Balance sheet
EVALUATION COMPLETE QUESTIONS AND
ANSWERS GRADED A PLUS
●● Premium
Answer: the price of the insurance coverage provided for a specified
period
●● Indemnify
Answer: to restore a party who has sustained a loss to the same financial
position that party held before the loss occurred
●● Insured
Answer: any person or organization who is insured under an insurance
policy
●● Property-casualty insurance
Answer: one of the two 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
,Answer: one of the two main sectors of the insurance industry
encompassing numerous types of insurance that cover the financial
●● Stock insurer
Answer: an insurer that is owned by its stockholders and formed as a
corporation for the purpose of earning a profit for the stockholders
●● Mutual insurer
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
Answer: a non-admitted insurer that is eligible to insure risks that have
been exported by a surplus lines licensee in accordance with a surplus
lines law
●● Reinsurance
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 risk
, Answer: a chance of loss or no loss, but no chance of gain
●● Speculative risk
Answer: a chance of loss, no loss, or gain
●● Solvency
Answer: the ability 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
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
Answer: the portion of the written premiums that apply to the part of the
policy period that has already occurred
●● Underwriting income
Answer: income an insurer earns from premiums paid by policyholders
minus incurred losses and underwriting expenses
●● Balance sheet
