CPCU 520 PRACTICE TEST QUESTIONS & ANSERS
Which one of the following functional areas of Keithly can assist Alex with this audit's
irregularity? - Answers -Special Investigation Unit
Which one of the following best describes a FAIR plan and its insureds? - Answers -
State-run plans with cost spread among private insurers in the state
Which one of the following departments provides information to the underwriting
department to assist in selecting and rating risks? - Answers -Risk control
All corporations are obligated to promote the well-being of society. At the minimum, this
obligation demands that the insurer should - Answers -Avoid causing any public harm.
Which one of the following insurer functions includes calculating insurance rates,
developing rating plans, estimating loss reserves, and providing predictive modeling
services? - Answers -Actuarial
Property-casualty insurers can be classified in which one of the following ways? -
Answers -Licensing status
Which one of the following statements is correct with regard to an insurer's goals? -
Answers -A proprietary insurer must earn competitive profits to raise the capital needed
to operate.
The United States regulatory framework has evolved over time into which one of the
following approaches used by insurance regulators today? - Answers -Risk-focused
approach
Which one of the following statements regarding licensing of insurers or insurance
personnel is true? - Answers -Some states permit the insurance commissioner to deny
a license to an otherwise worthy applicant if the commissioner believes that no
additional insurers are needed in the state.
Which one of the following statements is correct? - Answers -If insurers become
insolvent, future claims might not be paid and the insurance protection already paid for
might become worthless.
One way state insurance regulators help to protect consumers is by reviewing insurance
policy forms to determine whether they benefit consumers and - Answers -Comply with
state consumer protection laws.
Every state insurance department is headed by a state insurance commissioner, a
director, or by a - Answers -Superintendent.
, How often does the National Association of Insurance Commissioners (NAIC) meet to
discuss important problems and issues in insurance regulation? - Answers -Three
times a year
Which one of the following statements is correct? - Answers -An insurer does not know
what its actual expenses will be when a policy is sold.
Filip is quoting to get Osakri's business and is not concerned with the adequacy of
Mellfor's coverage with actual cash value on contents. Filip's behavior involving Osakri
is known as - Answers -Twisting.
All states attempt to ensure that continuous auto insurance coverage is available to
consumers by - Answers -Restricting the rights of insurers to cancel or nonrenew
personal auto insurance policies
Under the terms of her agency contracts, the insurers forward policies promptly to
Rhonda's customers and send a premium invoice with the policy. Insureds are
instructed to remit premium payments to their insurer. The insurers calculate Rhonda's
commissions and forward those commission payments to her monthly. Rhonda is
operating under which one of the following payment procedures? - Answers -Direct bill
basis
Omicron Manufacturing has approached Delta Insurance Brokerage to develop and
implement a voluntary insurance program for life, health, and disability insurance for
Omicron's employees. Delta puts together a program in which employees receive the
coverage at discounted rates, and premiums are deducted from the employees'
paychecks. Omicron and Delta are using which one of the following types of group
marketing to offer this program? - Answers -Franchise marketing
The principal method of determining a prospect's insurance needs is through - Answers
-Completing a risk management review for the prospect.
An agency bill process in which the producer is usually not required to pay the insurer
until the premium is collected from the policyholder is known as - Answers -The item
basis.
Which one of the following statements is true regarding traditional marketing systems
for insurance? - Answers -A principal characteristic that distinguishes one traditional
marketing system from another is the ownership of policy expirations.
Which one of the following insurance consumer groups would have the most risk
financing alternatives available to them? - Answers -National accounts
Martin Insurance Company targets international manufacturers of specialty products. Its
insureds place a high value on producer expertise, responsiveness, and confidentiality.
Martin wants to expand into similar markets. Which one of the following insurance
Which one of the following functional areas of Keithly can assist Alex with this audit's
irregularity? - Answers -Special Investigation Unit
Which one of the following best describes a FAIR plan and its insureds? - Answers -
State-run plans with cost spread among private insurers in the state
Which one of the following departments provides information to the underwriting
department to assist in selecting and rating risks? - Answers -Risk control
All corporations are obligated to promote the well-being of society. At the minimum, this
obligation demands that the insurer should - Answers -Avoid causing any public harm.
Which one of the following insurer functions includes calculating insurance rates,
developing rating plans, estimating loss reserves, and providing predictive modeling
services? - Answers -Actuarial
Property-casualty insurers can be classified in which one of the following ways? -
Answers -Licensing status
Which one of the following statements is correct with regard to an insurer's goals? -
Answers -A proprietary insurer must earn competitive profits to raise the capital needed
to operate.
The United States regulatory framework has evolved over time into which one of the
following approaches used by insurance regulators today? - Answers -Risk-focused
approach
Which one of the following statements regarding licensing of insurers or insurance
personnel is true? - Answers -Some states permit the insurance commissioner to deny
a license to an otherwise worthy applicant if the commissioner believes that no
additional insurers are needed in the state.
Which one of the following statements is correct? - Answers -If insurers become
insolvent, future claims might not be paid and the insurance protection already paid for
might become worthless.
One way state insurance regulators help to protect consumers is by reviewing insurance
policy forms to determine whether they benefit consumers and - Answers -Comply with
state consumer protection laws.
Every state insurance department is headed by a state insurance commissioner, a
director, or by a - Answers -Superintendent.
, How often does the National Association of Insurance Commissioners (NAIC) meet to
discuss important problems and issues in insurance regulation? - Answers -Three
times a year
Which one of the following statements is correct? - Answers -An insurer does not know
what its actual expenses will be when a policy is sold.
Filip is quoting to get Osakri's business and is not concerned with the adequacy of
Mellfor's coverage with actual cash value on contents. Filip's behavior involving Osakri
is known as - Answers -Twisting.
All states attempt to ensure that continuous auto insurance coverage is available to
consumers by - Answers -Restricting the rights of insurers to cancel or nonrenew
personal auto insurance policies
Under the terms of her agency contracts, the insurers forward policies promptly to
Rhonda's customers and send a premium invoice with the policy. Insureds are
instructed to remit premium payments to their insurer. The insurers calculate Rhonda's
commissions and forward those commission payments to her monthly. Rhonda is
operating under which one of the following payment procedures? - Answers -Direct bill
basis
Omicron Manufacturing has approached Delta Insurance Brokerage to develop and
implement a voluntary insurance program for life, health, and disability insurance for
Omicron's employees. Delta puts together a program in which employees receive the
coverage at discounted rates, and premiums are deducted from the employees'
paychecks. Omicron and Delta are using which one of the following types of group
marketing to offer this program? - Answers -Franchise marketing
The principal method of determining a prospect's insurance needs is through - Answers
-Completing a risk management review for the prospect.
An agency bill process in which the producer is usually not required to pay the insurer
until the premium is collected from the policyholder is known as - Answers -The item
basis.
Which one of the following statements is true regarding traditional marketing systems
for insurance? - Answers -A principal characteristic that distinguishes one traditional
marketing system from another is the ownership of policy expirations.
Which one of the following insurance consumer groups would have the most risk
financing alternatives available to them? - Answers -National accounts
Martin Insurance Company targets international manufacturers of specialty products. Its
insureds place a high value on producer expertise, responsiveness, and confidentiality.
Martin wants to expand into similar markets. Which one of the following insurance
