CPCU 500 UPDATED ACTUAL QUESTIONS
AND CORRECT ANSWERS
COMPREHENSIVE STUDY GUIDE
●● The insurance industry is evolving as a result of two key,
overarching factors that are influencing virtually every aspect of the
insurance value chain:
Answer: the growing demand for risk management consulting
new technology that's helping organizations predict and prevent losses
●● Examples of Technology Used to Predict and Prevent Losses
Answer: Telematics- has greatly influenced vehicle and driver safety
Wearables
IoT Sensors
Smartphones
Cloud Storage
,Predictive Models
Artificial Intelligence
●● Law of Large Numbers
Answer: A mathematical principle stating that as the number of similar
but independent exposure units increases, the relative accuracy of
predictions about future outcomes (losses) also increases.
Oscar's custom-built vehicle looks like a sausage sandwich on wheels.
He plans to drive it to special events at schools around the country where
it will serve as a mobile billboard to promote his product. Oscar is
surprised to learn that insurers are reluctant to insure his vehicle because
it fails to meet one of the ideal characteristics of an insurable risk. Which
characteristic is Oscar's vehicle least likely to meet?
●● Smart Product
Answer: An innovative item that uses sensors; wireless sensor networks;
and data collection, transmission, and analysis to further enable the item
to be faster, more useful, or otherwise improved.
●● Sensor
Answer: A device that detects and measures stimuli in its environment.
,●● Wireless sensor network (WSN)
Answer: A wireless network consisting of individual sensors placed at
various locations to exchange data.
●● Big data
Answer: Sets of data that are too large to be gathered and analyzed by
traditional methods.
●● Internet of Things (IoT)
Answer: A network of objects that transmit data to computers.
●● Predictive analytics
Answer: Statistical and analytical techniques used to develop models
that predict future events or behaviors.
●● Data science
Answer: An interdisciplinary field involving the design and use of
techniques to process very large amounts of data from a variety of
sources and to provide knowledge based on the data.
●● These decisions can have far-reaching effects across the insurance
value chain:
Answer: Determining the appropriate coverage limits for an individual
policy
, Choosing whether to have a prospective customer elaborate on
information provided in an insurance application
Deciding what data to include in a predictive model and where it should
come from
Determining whether a claim shows signs of fraud and should be
reported to the special investigation unit (SIU)
Deciding the best way to respond empathetically to a customer's claim
Determining how to describe your ideal job candidate for an open
position to a recruiter or hiring manager
●● What's the difference between occurrence and claims-made coverage
Answer: Under an occurrence policy, coverage is triggered for losses
that happen within the policy period, even if the policy has expired.
Under a claims-made policy, coverage is triggered for claims that occur
after the policy's coverage began (the retroactive date) and are reported
within the policy's reporting period.
●● social inflation
AND CORRECT ANSWERS
COMPREHENSIVE STUDY GUIDE
●● The insurance industry is evolving as a result of two key,
overarching factors that are influencing virtually every aspect of the
insurance value chain:
Answer: the growing demand for risk management consulting
new technology that's helping organizations predict and prevent losses
●● Examples of Technology Used to Predict and Prevent Losses
Answer: Telematics- has greatly influenced vehicle and driver safety
Wearables
IoT Sensors
Smartphones
Cloud Storage
,Predictive Models
Artificial Intelligence
●● Law of Large Numbers
Answer: A mathematical principle stating that as the number of similar
but independent exposure units increases, the relative accuracy of
predictions about future outcomes (losses) also increases.
Oscar's custom-built vehicle looks like a sausage sandwich on wheels.
He plans to drive it to special events at schools around the country where
it will serve as a mobile billboard to promote his product. Oscar is
surprised to learn that insurers are reluctant to insure his vehicle because
it fails to meet one of the ideal characteristics of an insurable risk. Which
characteristic is Oscar's vehicle least likely to meet?
●● Smart Product
Answer: An innovative item that uses sensors; wireless sensor networks;
and data collection, transmission, and analysis to further enable the item
to be faster, more useful, or otherwise improved.
●● Sensor
Answer: A device that detects and measures stimuli in its environment.
,●● Wireless sensor network (WSN)
Answer: A wireless network consisting of individual sensors placed at
various locations to exchange data.
●● Big data
Answer: Sets of data that are too large to be gathered and analyzed by
traditional methods.
●● Internet of Things (IoT)
Answer: A network of objects that transmit data to computers.
●● Predictive analytics
Answer: Statistical and analytical techniques used to develop models
that predict future events or behaviors.
●● Data science
Answer: An interdisciplinary field involving the design and use of
techniques to process very large amounts of data from a variety of
sources and to provide knowledge based on the data.
●● These decisions can have far-reaching effects across the insurance
value chain:
Answer: Determining the appropriate coverage limits for an individual
policy
, Choosing whether to have a prospective customer elaborate on
information provided in an insurance application
Deciding what data to include in a predictive model and where it should
come from
Determining whether a claim shows signs of fraud and should be
reported to the special investigation unit (SIU)
Deciding the best way to respond empathetically to a customer's claim
Determining how to describe your ideal job candidate for an open
position to a recruiter or hiring manager
●● What's the difference between occurrence and claims-made coverage
Answer: Under an occurrence policy, coverage is triggered for losses
that happen within the policy period, even if the policy has expired.
Under a claims-made policy, coverage is triggered for claims that occur
after the policy's coverage began (the retroactive date) and are reported
within the policy's reporting period.
●● social inflation
