AU 60 ACTUAL EXAM SCRIPT 2026 FULL
ANSWERS VERIFIED A+
◉ Professional Employer Organization (PEO). Answer: a company
that leases workers to small or medium sized client companies to
supply the clients permanent workforce, making the client an
indirect employer; these relationships create insurance implications
related to employee status
◉ Independant Contractor. Answer: a person (or organization) hired
to perform services without being subject to the hirer's direction
and control regarding work details
◉ general contractor. Answer: An independent contractor who
obtains the primary contract for a project and either completes all
the work or subcontracts portions (or all) of the work to other
independent contractors who specialize in such work.
◉ Subcontractor (specialty contractor). Answer: an independent
contractor who specializes in a particular kind of work and who is
engaged by a general contractor to perform a particular portion of
the general contractor's contract
◉ Cyber risk loss exposure. Answer: Any condition that presents the
possibility of financial loss to an organization from property, net
,income, or liability losses as a consequence of advanced technology
transmissions, operations, maintenance, development, or support.
◉ pricing. Answer: the process of setting a price for a product or
service and establishing the terms and conditions for the insurance
agreement
◉ rate. Answer: The price per exposure unit for insurance coverage
◉ loss costs. Answer: the portion of the rate that covers projected
claim payments and loss adjusting expenses
◉ Loss adjustment expense (LAE). Answer: The expense that an
insurer incurs to investigate, defend, and settle claims according to
the terms specified in the insurance policy.
◉ premium. Answer: the price of the insurance coverage provided
for a specified period
◉ rate manual. Answer: A resource for classifying accounts and
developing premiums for given types of insurance; includes
necessary rules, factors, and guidelines to apply those rates.
,◉ endorsement. Answer: A document that amends an insurance
policy.
◉ class rate. Answer: a type of insurance rate that applies to all
insureds in the same rating category or rating class
◉ Pure Premium Method. Answer: a method for calculating
insurance rates using estimates of future losses and expenses,
including a profit and contingencies factor
◉ pure premium. Answer: the average amount of money an insurer
must charge per exposure unit in order to be able to cover the total
anticipated losses for that line of business
◉ loss ratio method. Answer: A method for determining insurance
rates based on a comparison of actual and expected loss ratios
◉ Judgement ratemaking method. Answer: A method for
determining insurance rates that relies heavily on the experience
and knowledge of an actuary or an underwriter who makes little or
no use of loss experience data
◉ retrospective rating plan. Answer: A rating plan that adjusts the
insured's premium for the current policy period based on the
, insured's loss experience during the current period; paid losses or
incurred losses may be used to determine loss experience.
◉ Experience modification factor. Answer: A factor that tailors
manual rates to an insured's experience based on the insured's
payroll and loss record of certain prior years.
◉ Credibility Factor. Answer: the factor applied in ratemaking to
adjust for the predictive value of loss data and used to minimize the
variations in the rates that result from purely chance variations in
losses
◉ Paid loss retrospective rating plan. Answer: A retrospective rating
plan in which the insured pays a deposit premium at the beginning
of the policy period and makes additional payments, usually
monthly, to reimburse the insurer for the insured's losses as they are
paid and in which the total amount paid is subject to the minimum
and maximum premium.
◉ schedule rating plan. Answer: A rating plan that awards debits
and credits based on specific categories, such as the care and
condition of the premises or the training and selection of employees,
to modify the final premium to reflect factors that the class rate does
not include.
ANSWERS VERIFIED A+
◉ Professional Employer Organization (PEO). Answer: a company
that leases workers to small or medium sized client companies to
supply the clients permanent workforce, making the client an
indirect employer; these relationships create insurance implications
related to employee status
◉ Independant Contractor. Answer: a person (or organization) hired
to perform services without being subject to the hirer's direction
and control regarding work details
◉ general contractor. Answer: An independent contractor who
obtains the primary contract for a project and either completes all
the work or subcontracts portions (or all) of the work to other
independent contractors who specialize in such work.
◉ Subcontractor (specialty contractor). Answer: an independent
contractor who specializes in a particular kind of work and who is
engaged by a general contractor to perform a particular portion of
the general contractor's contract
◉ Cyber risk loss exposure. Answer: Any condition that presents the
possibility of financial loss to an organization from property, net
,income, or liability losses as a consequence of advanced technology
transmissions, operations, maintenance, development, or support.
◉ pricing. Answer: the process of setting a price for a product or
service and establishing the terms and conditions for the insurance
agreement
◉ rate. Answer: The price per exposure unit for insurance coverage
◉ loss costs. Answer: the portion of the rate that covers projected
claim payments and loss adjusting expenses
◉ Loss adjustment expense (LAE). Answer: The expense that an
insurer incurs to investigate, defend, and settle claims according to
the terms specified in the insurance policy.
◉ premium. Answer: the price of the insurance coverage provided
for a specified period
◉ rate manual. Answer: A resource for classifying accounts and
developing premiums for given types of insurance; includes
necessary rules, factors, and guidelines to apply those rates.
,◉ endorsement. Answer: A document that amends an insurance
policy.
◉ class rate. Answer: a type of insurance rate that applies to all
insureds in the same rating category or rating class
◉ Pure Premium Method. Answer: a method for calculating
insurance rates using estimates of future losses and expenses,
including a profit and contingencies factor
◉ pure premium. Answer: the average amount of money an insurer
must charge per exposure unit in order to be able to cover the total
anticipated losses for that line of business
◉ loss ratio method. Answer: A method for determining insurance
rates based on a comparison of actual and expected loss ratios
◉ Judgement ratemaking method. Answer: A method for
determining insurance rates that relies heavily on the experience
and knowledge of an actuary or an underwriter who makes little or
no use of loss experience data
◉ retrospective rating plan. Answer: A rating plan that adjusts the
insured's premium for the current policy period based on the
, insured's loss experience during the current period; paid losses or
incurred losses may be used to determine loss experience.
◉ Experience modification factor. Answer: A factor that tailors
manual rates to an insured's experience based on the insured's
payroll and loss record of certain prior years.
◉ Credibility Factor. Answer: the factor applied in ratemaking to
adjust for the predictive value of loss data and used to minimize the
variations in the rates that result from purely chance variations in
losses
◉ Paid loss retrospective rating plan. Answer: A retrospective rating
plan in which the insured pays a deposit premium at the beginning
of the policy period and makes additional payments, usually
monthly, to reimburse the insurer for the insured's losses as they are
paid and in which the total amount paid is subject to the minimum
and maximum premium.
◉ schedule rating plan. Answer: A rating plan that awards debits
and credits based on specific categories, such as the care and
condition of the premises or the training and selection of employees,
to modify the final premium to reflect factors that the class rate does
not include.
