CPCU 520 Terms| Questions and Answers| New Update with 100% Correct Answers
Cost leadership A business-level strategy through which a company seeks cost efficiencies in
all operational areas.
Underwriting The process of selecting insureds, pricing coverage, determining insurance
policy terms and conditions, and then monitoring the underwriting decisions made.
Loss ratio A ratio that measures losses and loss adjustment expenses against earned
premiums and that reflects the percentage of premiums being consumed by losses.
Premium audit Methodical examination of a policyholder's operations, records, and books
of account to determine the actual exposure units and premium for insurance coverages
already provided.
National Association of Insurance Commissioners (NAIC) An association of insurance
commissioners from the 50 U.S. states, the District of Columbia, and the five U.S. territories and
possessions, whose purpose is to coordinate insurance regulation activities among the various
state insurance departments
Model law A document drafted by the NAIC, in a style similar to a state statute, that reflects
the NAIC's proposed solution to a given problem or issue and provides a common basis to the
states for drafting laws that affect the insurance industry. Any state may choose to adopt the
model bill or adopt it with modifications.
Model regulation A draft regulation that may be implemented by a state insurance
department if the model law is passed.
Insolvency A situation in which an entity's current liabilities (as opposed to its total
liabilities) exceed its current assets.
, Indemnify To restore a party who has sustained a loss to the same financial position that
party held before the loss occurred.
Third-party administrator (TPA) An organization that provides administrative services
associated with risk financing and insurance.
Claims representative A person responsible for investigating, evaluating, and settling claims.
Producer Any of several kinds of insurance personnel who place insurance and surety
business with insurers and who represent either insurers or insureds, or both.
Public adjuster An outside organization or person hired by an insured to represent the
insured in a claim in exchange for a fee.
Loss adjustment expense (LAE) The expense that an insurer incurs to investigate, defend,
and settle claims according to the terms specified in the insurance policy
Big data Sets of data that are too large to be gathered and analyzed by traditional methods.
Internet of Things (IoT) A network of objects that transmit data to each other and to central
hubs through the internet.
Telematics The use of technological devices in vehicles with wireless communication and
GPS tracking that transmit data to businesses or government agencies; some return
information for the driver.
Wearable sensor tag A sensor attached to or embedded in clothing and accessories.
Cost leadership A business-level strategy through which a company seeks cost efficiencies in
all operational areas.
Underwriting The process of selecting insureds, pricing coverage, determining insurance
policy terms and conditions, and then monitoring the underwriting decisions made.
Loss ratio A ratio that measures losses and loss adjustment expenses against earned
premiums and that reflects the percentage of premiums being consumed by losses.
Premium audit Methodical examination of a policyholder's operations, records, and books
of account to determine the actual exposure units and premium for insurance coverages
already provided.
National Association of Insurance Commissioners (NAIC) An association of insurance
commissioners from the 50 U.S. states, the District of Columbia, and the five U.S. territories and
possessions, whose purpose is to coordinate insurance regulation activities among the various
state insurance departments
Model law A document drafted by the NAIC, in a style similar to a state statute, that reflects
the NAIC's proposed solution to a given problem or issue and provides a common basis to the
states for drafting laws that affect the insurance industry. Any state may choose to adopt the
model bill or adopt it with modifications.
Model regulation A draft regulation that may be implemented by a state insurance
department if the model law is passed.
Insolvency A situation in which an entity's current liabilities (as opposed to its total
liabilities) exceed its current assets.
, Indemnify To restore a party who has sustained a loss to the same financial position that
party held before the loss occurred.
Third-party administrator (TPA) An organization that provides administrative services
associated with risk financing and insurance.
Claims representative A person responsible for investigating, evaluating, and settling claims.
Producer Any of several kinds of insurance personnel who place insurance and surety
business with insurers and who represent either insurers or insureds, or both.
Public adjuster An outside organization or person hired by an insured to represent the
insured in a claim in exchange for a fee.
Loss adjustment expense (LAE) The expense that an insurer incurs to investigate, defend,
and settle claims according to the terms specified in the insurance policy
Big data Sets of data that are too large to be gathered and analyzed by traditional methods.
Internet of Things (IoT) A network of objects that transmit data to each other and to central
hubs through the internet.
Telematics The use of technological devices in vehicles with wireless communication and
GPS tracking that transmit data to businesses or government agencies; some return
information for the driver.
Wearable sensor tag A sensor attached to or embedded in clothing and accessories.
