AU 60 CERTIFICATION EXAM STUDY GUIDE
2026 QUESTIONS SOLUTIONS REVIEWED
◉ Underwriters can best minimize the effects of adverse selection
by
A. accepting all applicants that are submitted by the producer
B. choosing to insure only those risks with a high profitability of loss
C. rejecting applicants who have had prior losses
D. carefully selecting the applicants whose loss exposures they are
willing to insure. Answer: D. carefully selecting the applicants whose
loss exposures they are willing to insure
◉ Victor, the sales manager for Hallbinger's Insurance Company,
wants the company to grow in written premium. He wants his
agents to write more auto and homeowners business. In order to do
so, the company must have adequate capacity. Which one of the
following impacts Victor's agents and the company the most
concerning surplus and capacity?
A. sales must submit business with lower-than-average chance of
loss
B. research and development must create policies which are
marketable
C. claims must pay only covered losses and have low expenses
,D. underwriting practices must generate policy premiums that
exceed losses and expenses. Answer: D. underwriting practices must
generate policy premiums that exceed losses and expenses
◉ An insurance company must have adequate policyholders' surplus
if it wishes to
A. avoid adverse selection
B. generate premiums that exceed losses
C. produce profitable business
D. increase its written premium volume. Answer: D. increase its
written premium volume
◉ which one of the following will draft a manuscript policy or
endorsement that is worded to address the specific needs of the
insured?
A. producer
B. field underwriter
C. underwriting supervisor
D. corporate underwriter. Answer: D. corporate underwriter
◉ Which one of the following tasks is the responsibility of a
corporate underwriter as opposed to a field underwriter?
A. prepare premium quotes
,B. verify policies are issued with appropriate forms and
endorsements
C. review and revise rating plans
D. assist producers and insureds in determining appropriate
coverage. Answer: C. review and revise rating plans
◉ While developing goals for its book of business, an insurer's
corporate underwriter decides to increase its market share of
workers compensation insurance in the construction industry. This
type of underwriting activity in known as
A. developing underwriting guides
B. reviewing and revising rating plans
C. formulating underwriting policy
D. providing assistance to policyholders. Answer: C. formulating
underwriting policy
◉ Corporate underwriters share research of the market
responsibilities with actuarial and marketing departments. Research
included an ongoing evaluation of which one of the following?
A. revision of coverage forms
B. optimal product mix in the book of business
C. average loss ratio for a book of business
D. the hit ratios by underwriter. Answer: B. optimal product mix in
the book of business
, ◉ Maja, who has 29 years of experience as a professional liability
underwriter, works in the home office of Richley Insurance
Company. Her primary responsibilities involve formulating
underwriting policy and revising underwriting guides for various
lines of professional liability insurance that will be used by
personnel in the company's field offices. Maja is functioning as a
A. field underwriter
B. corporate underwriter
C. chartered underwriter
D. line underwriter. Answer: B. corporate underwriter
◉ during a mid-year review of one of her large accounts, Annette
noticed that the frequency and severity of auto losses had been
trending downward over the past 18 months. When she consulted
with the account's risk management team, she learned that the
insured had installed telematics devices in many of their vehicles.
This information would help support Annette's decision to
A. propose a premium increase at renewal time
B. add a special endorsement to the policy
C. propose a premium reduction at renewal time
D. increase the physical damage deductible. Answer: C. propose a
premium reduction at renewal time
2026 QUESTIONS SOLUTIONS REVIEWED
◉ Underwriters can best minimize the effects of adverse selection
by
A. accepting all applicants that are submitted by the producer
B. choosing to insure only those risks with a high profitability of loss
C. rejecting applicants who have had prior losses
D. carefully selecting the applicants whose loss exposures they are
willing to insure. Answer: D. carefully selecting the applicants whose
loss exposures they are willing to insure
◉ Victor, the sales manager for Hallbinger's Insurance Company,
wants the company to grow in written premium. He wants his
agents to write more auto and homeowners business. In order to do
so, the company must have adequate capacity. Which one of the
following impacts Victor's agents and the company the most
concerning surplus and capacity?
A. sales must submit business with lower-than-average chance of
loss
B. research and development must create policies which are
marketable
C. claims must pay only covered losses and have low expenses
,D. underwriting practices must generate policy premiums that
exceed losses and expenses. Answer: D. underwriting practices must
generate policy premiums that exceed losses and expenses
◉ An insurance company must have adequate policyholders' surplus
if it wishes to
A. avoid adverse selection
B. generate premiums that exceed losses
C. produce profitable business
D. increase its written premium volume. Answer: D. increase its
written premium volume
◉ which one of the following will draft a manuscript policy or
endorsement that is worded to address the specific needs of the
insured?
A. producer
B. field underwriter
C. underwriting supervisor
D. corporate underwriter. Answer: D. corporate underwriter
◉ Which one of the following tasks is the responsibility of a
corporate underwriter as opposed to a field underwriter?
A. prepare premium quotes
,B. verify policies are issued with appropriate forms and
endorsements
C. review and revise rating plans
D. assist producers and insureds in determining appropriate
coverage. Answer: C. review and revise rating plans
◉ While developing goals for its book of business, an insurer's
corporate underwriter decides to increase its market share of
workers compensation insurance in the construction industry. This
type of underwriting activity in known as
A. developing underwriting guides
B. reviewing and revising rating plans
C. formulating underwriting policy
D. providing assistance to policyholders. Answer: C. formulating
underwriting policy
◉ Corporate underwriters share research of the market
responsibilities with actuarial and marketing departments. Research
included an ongoing evaluation of which one of the following?
A. revision of coverage forms
B. optimal product mix in the book of business
C. average loss ratio for a book of business
D. the hit ratios by underwriter. Answer: B. optimal product mix in
the book of business
, ◉ Maja, who has 29 years of experience as a professional liability
underwriter, works in the home office of Richley Insurance
Company. Her primary responsibilities involve formulating
underwriting policy and revising underwriting guides for various
lines of professional liability insurance that will be used by
personnel in the company's field offices. Maja is functioning as a
A. field underwriter
B. corporate underwriter
C. chartered underwriter
D. line underwriter. Answer: B. corporate underwriter
◉ during a mid-year review of one of her large accounts, Annette
noticed that the frequency and severity of auto losses had been
trending downward over the past 18 months. When she consulted
with the account's risk management team, she learned that the
insured had installed telematics devices in many of their vehicles.
This information would help support Annette's decision to
A. propose a premium increase at renewal time
B. add a special endorsement to the policy
C. propose a premium reduction at renewal time
D. increase the physical damage deductible. Answer: C. propose a
premium reduction at renewal time
