CPCU ETHICS CERTIFICATION SCRIPT 2026
QUESTIONS WITH SOLUTIONS GRADED A+
◍ Greater North American Insurance Company operates according to the laws
and regulations of the various states in which it conducts business. Which
one of the following statements regarding laws is most accurate?Select
one:A. Laws cannot describe the ethical response to every conflict.B. Laws
do not factor into ethical decision making.C. Laws are not concerned with
insurer solvency.D. Laws will clearly define the ethical response to any
conflict..
Answer: A. Laws cannot describe the ethical response to every conflict.
◍ Which one of the following situations represents a potential obstacle to
thinking and acting independently for an insurance professional?Select
one:A. A claims rep is compensated in part based on the number of claims
he processes weekly.B. A producer pursues continuing education provided
by an industry association she serves in a volunteer leadership role.C. A
claims rep refuses to join industry associations, citing a lack of time.D. A
producer receives a referral and proposes the exact same coverage for the
new customer as the one who referred her..
Answer: A. A claims rep is compensated in part based on the number of
claims he processes weekly.
◍ An underwriter has realized that most of the potential insureds in the poor
section of town will not qualify for homeowners insurance because of
below-standards roofing. This disturbs her and she is using an ethical
dilemma decision making flow chart to decide whether there is an ethical
obligation to underwrite their properties anyway. If she is concerned with
the perspective of the potential insureds, then she is at which one of the
following steps of the flow chart?Select one:A. Analyzing whether the issue
is hers to resolveB. Reviewing the dilemma from the three decision (rules-,
, situation-, and people-based) perspectivesC. Considering whether an
application of a professional standard will resolve the issueD. Determining
which values and principles are at stake.
Answer: B. Reviewing the dilemma from the three decision (rules-,
situation-, and people-based) perspectives
◍ Which one of the following situations primarily represents a moral, as
opposed to legal or ethical, failure?Select one:A. An agent continues to sell
insurance coverage despite having her license suspended.B. An applicant
misrepresents previous work experience to land a position.C. An insurer
inflates the pricing for a certain product line for which they have little
competition.D. An insurer unfairly discriminates against applicants who live
in certain ZIP codes..
Answer: B. An applicant misrepresents previous work experience to land a
position.
◍ Altruism serves the needs of the individual as well as of society. Which one
of the following statements is most true of altruism?Select one:A. Altruism
requires that insurance practitioners consider neither their own nor their
employer's needs.B. An altruistic manner is the basis of the trust placed in
the insurer to keep its promises.C. An altruistic manner does not preclude
the opportunity to find personal rewards for the actions taken.D. Altruism
requires professionals to develop a sense of equity and fairness..
Answer: C. An altruistic manner does not preclude the opportunity to find
personal rewards for the actions taken.
◍ Clarence is a claims representative for a commercial liability insurer that has
a code of conduct governing all employees. Its first rule is that employees
shall "do the right thing" at all times.Clarence is handling several claims that
have been reported to the reinsurer. The reinsurer informed him that its
auditor planned to visit to review those claim files and asked that the entire
file for each be made available. Clarence knows he did a poor job writing
the summaries in the files. He is embarrassed to have the representative see
them, so he is contemplating hiding them during the audit. He does not think
, that they are relevant to the ultimate outcome of the claims anyway.Which
one of the following statements is true?Select one:B. Clarence should look
to the code of conduct for guidance and decide to provide the summaries
even if they are not done well..
Answer: B. Clarence should look to the code of conduct for guidance and
decide to provide the summaries even if they are not done well.
◍ Billie was recently hired as an underwriter in training by a large national
insurer. In training, she will learn thatSelect one:A. High ethical standards
are not required in all professions.B. In insurance, high ethical standards are
only required of insurers.C. An insurance professional should avoid being
overly candid with insureds and claimants.D. A standard of "utmost good
faith" exists for many practitioners who work on behalf of insurers..
Answer: D. A standard of "utmost good faith" exists for many practitioners
who work on behalf of insurers.
◍ Mitsuki visited a local insurance agent to obtain coverage for her yacht. She
requested liability coverage in the amount of $100,000 and hull coverage in
the amount of $150,000. She asked the agent to submit her request to
Watercraft Insurers. The higher the coverage limits, the more money the
agent makes in commissions. Which one of the following is the most
appropriate action for the agent?Select one:A. The agent should submit a
request to Watercraft Insurers with the coverage requested just as Mitsuki
asked.B. The agent should refuse to submit a request to Watercraft Insurers
until it is determined whether greater coverage limits are advisable.C. The
agent should refuse to submit a request to Watercraft Insurers until it is
determined whether lower coverage limits are advisable.D. The agent should
review the situation with Mitsuki to determine what would be reasonable
amounts of coverages..
Answer: D. The agent should review the situation with Mitsuki to determine
what would be reasonable amounts of coverages.
◍ John is an employee of an adjusting firm. He is applying for financial aid to
help with tuition for his daughter's education. John does not reveal all of his
, assets so that financial aid will be greater. John's actionSelect one:A. Must
be self-reported to his employer.B. Does not involve the Code of
Professional Ethics—Ethical Guidelines for Insurance Professionals in any
way.C. Violates the purpose of the Code of Professional Ethics—Ethical
Guidelines for Insurance Professionals.D. Is of no concern as it is not
insurance related..
Answer: C. Violates the purpose of the Code of Professional Ethics—Ethical
Guidelines for Insurance Professionals
◍ As an insurance producer, Allison can demonstrate high ethical standards by
helping policyholders understand the coverage provided andSelect one:A.
The likelihood of future cost increases.B. Similar products from
competitors.C. Their responsibilities.D. Applicable insurance regulations..
Answer: C. Their responsibilities.
◍ Sally works for Insurance Company in the underwriting department where
she implements policy changes. In reviewing a policyholder's address
change, Sally realizes that the policyholder deserves a refund because her
policy was being improperly rated at the old address. To make the correction
according to company procedures and legal requirements, Sally would have
to refund the difference in premium for the last ten renewals and would have
to calculate interest on each period. She decides to simply make the address
change and save the insurer some time and money instead. Sally's decision
is clearly unethical under an analysis that isSelect one:A. Function-based.B.
Rules-based.C. People-based.D. Situation-based..
Answer: B. Rules-based.
◍ Oliver is a reinsurance intermediary placing reinsurance for a variety of
insurers with a variety of reinsurers. He has no contact with the public or
policyholders of the insurers for which he places reinsurance. In this
position, Oliver's duties are best characterized by which one of the
following?Select one:A. Oliver still has significant duties to the public and
primary insurer policyholders.B. Oliver owes his primary duties to the
insurance regulators overseeing reinsurance.C. Oliver only owes his duties
QUESTIONS WITH SOLUTIONS GRADED A+
◍ Greater North American Insurance Company operates according to the laws
and regulations of the various states in which it conducts business. Which
one of the following statements regarding laws is most accurate?Select
one:A. Laws cannot describe the ethical response to every conflict.B. Laws
do not factor into ethical decision making.C. Laws are not concerned with
insurer solvency.D. Laws will clearly define the ethical response to any
conflict..
Answer: A. Laws cannot describe the ethical response to every conflict.
◍ Which one of the following situations represents a potential obstacle to
thinking and acting independently for an insurance professional?Select
one:A. A claims rep is compensated in part based on the number of claims
he processes weekly.B. A producer pursues continuing education provided
by an industry association she serves in a volunteer leadership role.C. A
claims rep refuses to join industry associations, citing a lack of time.D. A
producer receives a referral and proposes the exact same coverage for the
new customer as the one who referred her..
Answer: A. A claims rep is compensated in part based on the number of
claims he processes weekly.
◍ An underwriter has realized that most of the potential insureds in the poor
section of town will not qualify for homeowners insurance because of
below-standards roofing. This disturbs her and she is using an ethical
dilemma decision making flow chart to decide whether there is an ethical
obligation to underwrite their properties anyway. If she is concerned with
the perspective of the potential insureds, then she is at which one of the
following steps of the flow chart?Select one:A. Analyzing whether the issue
is hers to resolveB. Reviewing the dilemma from the three decision (rules-,
, situation-, and people-based) perspectivesC. Considering whether an
application of a professional standard will resolve the issueD. Determining
which values and principles are at stake.
Answer: B. Reviewing the dilemma from the three decision (rules-,
situation-, and people-based) perspectives
◍ Which one of the following situations primarily represents a moral, as
opposed to legal or ethical, failure?Select one:A. An agent continues to sell
insurance coverage despite having her license suspended.B. An applicant
misrepresents previous work experience to land a position.C. An insurer
inflates the pricing for a certain product line for which they have little
competition.D. An insurer unfairly discriminates against applicants who live
in certain ZIP codes..
Answer: B. An applicant misrepresents previous work experience to land a
position.
◍ Altruism serves the needs of the individual as well as of society. Which one
of the following statements is most true of altruism?Select one:A. Altruism
requires that insurance practitioners consider neither their own nor their
employer's needs.B. An altruistic manner is the basis of the trust placed in
the insurer to keep its promises.C. An altruistic manner does not preclude
the opportunity to find personal rewards for the actions taken.D. Altruism
requires professionals to develop a sense of equity and fairness..
Answer: C. An altruistic manner does not preclude the opportunity to find
personal rewards for the actions taken.
◍ Clarence is a claims representative for a commercial liability insurer that has
a code of conduct governing all employees. Its first rule is that employees
shall "do the right thing" at all times.Clarence is handling several claims that
have been reported to the reinsurer. The reinsurer informed him that its
auditor planned to visit to review those claim files and asked that the entire
file for each be made available. Clarence knows he did a poor job writing
the summaries in the files. He is embarrassed to have the representative see
them, so he is contemplating hiding them during the audit. He does not think
, that they are relevant to the ultimate outcome of the claims anyway.Which
one of the following statements is true?Select one:B. Clarence should look
to the code of conduct for guidance and decide to provide the summaries
even if they are not done well..
Answer: B. Clarence should look to the code of conduct for guidance and
decide to provide the summaries even if they are not done well.
◍ Billie was recently hired as an underwriter in training by a large national
insurer. In training, she will learn thatSelect one:A. High ethical standards
are not required in all professions.B. In insurance, high ethical standards are
only required of insurers.C. An insurance professional should avoid being
overly candid with insureds and claimants.D. A standard of "utmost good
faith" exists for many practitioners who work on behalf of insurers..
Answer: D. A standard of "utmost good faith" exists for many practitioners
who work on behalf of insurers.
◍ Mitsuki visited a local insurance agent to obtain coverage for her yacht. She
requested liability coverage in the amount of $100,000 and hull coverage in
the amount of $150,000. She asked the agent to submit her request to
Watercraft Insurers. The higher the coverage limits, the more money the
agent makes in commissions. Which one of the following is the most
appropriate action for the agent?Select one:A. The agent should submit a
request to Watercraft Insurers with the coverage requested just as Mitsuki
asked.B. The agent should refuse to submit a request to Watercraft Insurers
until it is determined whether greater coverage limits are advisable.C. The
agent should refuse to submit a request to Watercraft Insurers until it is
determined whether lower coverage limits are advisable.D. The agent should
review the situation with Mitsuki to determine what would be reasonable
amounts of coverages..
Answer: D. The agent should review the situation with Mitsuki to determine
what would be reasonable amounts of coverages.
◍ John is an employee of an adjusting firm. He is applying for financial aid to
help with tuition for his daughter's education. John does not reveal all of his
, assets so that financial aid will be greater. John's actionSelect one:A. Must
be self-reported to his employer.B. Does not involve the Code of
Professional Ethics—Ethical Guidelines for Insurance Professionals in any
way.C. Violates the purpose of the Code of Professional Ethics—Ethical
Guidelines for Insurance Professionals.D. Is of no concern as it is not
insurance related..
Answer: C. Violates the purpose of the Code of Professional Ethics—Ethical
Guidelines for Insurance Professionals
◍ As an insurance producer, Allison can demonstrate high ethical standards by
helping policyholders understand the coverage provided andSelect one:A.
The likelihood of future cost increases.B. Similar products from
competitors.C. Their responsibilities.D. Applicable insurance regulations..
Answer: C. Their responsibilities.
◍ Sally works for Insurance Company in the underwriting department where
she implements policy changes. In reviewing a policyholder's address
change, Sally realizes that the policyholder deserves a refund because her
policy was being improperly rated at the old address. To make the correction
according to company procedures and legal requirements, Sally would have
to refund the difference in premium for the last ten renewals and would have
to calculate interest on each period. She decides to simply make the address
change and save the insurer some time and money instead. Sally's decision
is clearly unethical under an analysis that isSelect one:A. Function-based.B.
Rules-based.C. People-based.D. Situation-based..
Answer: B. Rules-based.
◍ Oliver is a reinsurance intermediary placing reinsurance for a variety of
insurers with a variety of reinsurers. He has no contact with the public or
policyholders of the insurers for which he places reinsurance. In this
position, Oliver's duties are best characterized by which one of the
following?Select one:A. Oliver still has significant duties to the public and
primary insurer policyholders.B. Oliver owes his primary duties to the
insurance regulators overseeing reinsurance.C. Oliver only owes his duties
