CPCU 520 COMPREHENSIVE UPDATED EXAM QUESTIONS
AND ANSWERS GUARANTEE A+
✔✔Activity log - ✔✔A record of all the activities and analyses that occur while handling
a claim.
✔✔Subrogation - ✔✔The process by which an insurer can, after it has paid a loss under
the policy, recover the amount paid from any party (other than the insured) who caused
the loss or is otherwise legally liable for the loss.
✔✔Mediation - ✔✔An alternative dispute resolution (ADR) method by which disputing
parties use a neutral outside party to examine the issues and develop a mutually
agreeable settlement.
✔✔Arbitration - ✔✔An alternative dispute resolution (ADR) method by which disputing
parties use a neutral outside party to examine the issues and develop a settlement,
which can be final and binding.
✔✔Appraisal - ✔✔A method of resolving disputes between insurers and insureds over
the amount owed on a covered loss.
✔✔Mini-trial - ✔✔An alternative dispute resolution method by which a case undergoes
an abbreviated version of a trial before a panel or an adviser who poses questions and
offers opinions on the outcome of a trial, based on the evidence presented.
✔✔Summary jury trial - ✔✔An alternative dispute resolution method by which disputing
parties participate in an abbreviated trial, presenting the evidence of a few witnesses to
a panel of mock jurors who decide the case
✔✔Manuscript policy or manuscript endorsement - ✔✔An insurance policy or
endorsement that is specifically drafted according to terms negotiated between a
specific insured (or group of insureds) and an insurer.
✔✔Book of business - ✔✔A group of policies with a common characteristic, such as
territory or type of coverage, or all policies written by a particular insurer or agency.
✔✔Adverse selection - ✔✔In general, the tendency for people with the greatest
probability of loss to be the ones most likely to purchase insurance.
✔✔Policyholders' surplus - ✔✔Under statutory accounting principles (SAP), an insurer's
total admitted assets minus its total liabilities.
, ✔✔Underwriting guidelines (underwriting guide) - ✔✔A written manual that
communicates an insurer's underwriting policy and that specifies the attributes of an
account that an insurer is willing to insure.
✔✔Predictive modeling - ✔✔A process in which historical data based on behaviors and
events is blended with multiple variables and used to construct models of anticipated
future outcomes.
✔✔Catastrophe model - ✔✔A type of computer program that estimates losses from
future potential catastrophic events.
✔✔Capacity - ✔✔The amount of business an insurer is able to write, usually based on a
comparison of the insurer's written premiums to its policyholders' surplus.
✔✔Common-size statement - ✔✔A financial statement in which amounts are reported
as a percentage of a base figure.
✔✔Hazard - ✔✔A condition that increases the frequency or severity of a loss.
✔✔Credit scoring - ✔✔A decision-making tool that uses credit report information to
develop a predictive score on the creditworthiness of an applicant for additional credit.
✔✔Loss history - ✔✔A listing of past claims, including the date of occurrence, the line of
business, the type or description of the claim, the date of the claim, the amount paid, the
amount reserved, and the claim's current status.
✔✔Usage-based insurance - ✔✔A type of auto insurance in which the premium is
based on the policyholder's driving behavior.
✔✔Generalized linear model (GLM) - ✔✔A statistical technique that increases the
flexibility of a linear model by linking it with a nonlinear function.
✔✔Machine learning - ✔✔Artificial intelligence in which computers continually teach
themselves to make better decisions based on previous results and new data.
✔✔Focus group - ✔✔A small group of customers or potential customers brought
together to provide opinions about a specific product, service, need, or other issue
✔✔Hit ratio - ✔✔The ratio of insurance policies written to those that have been quoted
to applicants for insurance.
✔✔Retention ratio - ✔✔The percentage of insurance policies renewed.
AND ANSWERS GUARANTEE A+
✔✔Activity log - ✔✔A record of all the activities and analyses that occur while handling
a claim.
✔✔Subrogation - ✔✔The process by which an insurer can, after it has paid a loss under
the policy, recover the amount paid from any party (other than the insured) who caused
the loss or is otherwise legally liable for the loss.
✔✔Mediation - ✔✔An alternative dispute resolution (ADR) method by which disputing
parties use a neutral outside party to examine the issues and develop a mutually
agreeable settlement.
✔✔Arbitration - ✔✔An alternative dispute resolution (ADR) method by which disputing
parties use a neutral outside party to examine the issues and develop a settlement,
which can be final and binding.
✔✔Appraisal - ✔✔A method of resolving disputes between insurers and insureds over
the amount owed on a covered loss.
✔✔Mini-trial - ✔✔An alternative dispute resolution method by which a case undergoes
an abbreviated version of a trial before a panel or an adviser who poses questions and
offers opinions on the outcome of a trial, based on the evidence presented.
✔✔Summary jury trial - ✔✔An alternative dispute resolution method by which disputing
parties participate in an abbreviated trial, presenting the evidence of a few witnesses to
a panel of mock jurors who decide the case
✔✔Manuscript policy or manuscript endorsement - ✔✔An insurance policy or
endorsement that is specifically drafted according to terms negotiated between a
specific insured (or group of insureds) and an insurer.
✔✔Book of business - ✔✔A group of policies with a common characteristic, such as
territory or type of coverage, or all policies written by a particular insurer or agency.
✔✔Adverse selection - ✔✔In general, the tendency for people with the greatest
probability of loss to be the ones most likely to purchase insurance.
✔✔Policyholders' surplus - ✔✔Under statutory accounting principles (SAP), an insurer's
total admitted assets minus its total liabilities.
, ✔✔Underwriting guidelines (underwriting guide) - ✔✔A written manual that
communicates an insurer's underwriting policy and that specifies the attributes of an
account that an insurer is willing to insure.
✔✔Predictive modeling - ✔✔A process in which historical data based on behaviors and
events is blended with multiple variables and used to construct models of anticipated
future outcomes.
✔✔Catastrophe model - ✔✔A type of computer program that estimates losses from
future potential catastrophic events.
✔✔Capacity - ✔✔The amount of business an insurer is able to write, usually based on a
comparison of the insurer's written premiums to its policyholders' surplus.
✔✔Common-size statement - ✔✔A financial statement in which amounts are reported
as a percentage of a base figure.
✔✔Hazard - ✔✔A condition that increases the frequency or severity of a loss.
✔✔Credit scoring - ✔✔A decision-making tool that uses credit report information to
develop a predictive score on the creditworthiness of an applicant for additional credit.
✔✔Loss history - ✔✔A listing of past claims, including the date of occurrence, the line of
business, the type or description of the claim, the date of the claim, the amount paid, the
amount reserved, and the claim's current status.
✔✔Usage-based insurance - ✔✔A type of auto insurance in which the premium is
based on the policyholder's driving behavior.
✔✔Generalized linear model (GLM) - ✔✔A statistical technique that increases the
flexibility of a linear model by linking it with a nonlinear function.
✔✔Machine learning - ✔✔Artificial intelligence in which computers continually teach
themselves to make better decisions based on previous results and new data.
✔✔Focus group - ✔✔A small group of customers or potential customers brought
together to provide opinions about a specific product, service, need, or other issue
✔✔Hit ratio - ✔✔The ratio of insurance policies written to those that have been quoted
to applicants for insurance.
✔✔Retention ratio - ✔✔The percentage of insurance policies renewed.
