AU 60 Final Exam Test Questions and
Answers
Samuel is a commercial accounts underwriter working on a new application with five
buildings located within the same territory. Samuel would like a photo of each building,
and some nontechnical information about the condition of the parking lots and the
neighboring buildings. Which one of the following would be the most reliable and cost
effective source of this information? CORRECT ANSWERS Marketing representative
The principal purpose of underwriting is to CORRECT ANSWERS Develop and
maintain a profitable book of business for the insurer.
The goal of actuaries and underwriters in designing a rating system is to make each
class CORRECT ANSWERS As homogeneous as possible without sacrificing the
predictive accuracy that large numbers create.
When insuring a partnership, it is essential to identify which one of the following on the
policy declaration page? CORRECT ANSWERS The partnership
Which one of the following statements is correct with regard to the submission
evaluation step in the underwriting process? CORRECT ANSWERS Government
reports that provide underwriting information include motor vehicle reports, criminal
records, and civil court records.
Which one of the following is true regarding ratio analysis? CORRECT ANSWERS
Ratio analysis can be used to both analyze single companies and make inter-company
comparisons.
ABC Insurance Company's actuary has calculated the pure premium for the company's
homeowner's insurance line as $40. Fixed expenses for the line are $2.50 per exposure
unit and variable expenses are 12 percent. The company's loading for profits and
contingencies is 5 percent. Using the pure premium ratemaking method and rounding to
the nearest whole dollar, which one of the following is the rate per exposure unit that
ABC needs to charge? CORRECT ANSWERS $51
All of the following are advantages of the sole proprietorship type of business
ownership, EXCEPT: CORRECT ANSWERS Limited liability
Answers
Samuel is a commercial accounts underwriter working on a new application with five
buildings located within the same territory. Samuel would like a photo of each building,
and some nontechnical information about the condition of the parking lots and the
neighboring buildings. Which one of the following would be the most reliable and cost
effective source of this information? CORRECT ANSWERS Marketing representative
The principal purpose of underwriting is to CORRECT ANSWERS Develop and
maintain a profitable book of business for the insurer.
The goal of actuaries and underwriters in designing a rating system is to make each
class CORRECT ANSWERS As homogeneous as possible without sacrificing the
predictive accuracy that large numbers create.
When insuring a partnership, it is essential to identify which one of the following on the
policy declaration page? CORRECT ANSWERS The partnership
Which one of the following statements is correct with regard to the submission
evaluation step in the underwriting process? CORRECT ANSWERS Government
reports that provide underwriting information include motor vehicle reports, criminal
records, and civil court records.
Which one of the following is true regarding ratio analysis? CORRECT ANSWERS
Ratio analysis can be used to both analyze single companies and make inter-company
comparisons.
ABC Insurance Company's actuary has calculated the pure premium for the company's
homeowner's insurance line as $40. Fixed expenses for the line are $2.50 per exposure
unit and variable expenses are 12 percent. The company's loading for profits and
contingencies is 5 percent. Using the pure premium ratemaking method and rounding to
the nearest whole dollar, which one of the following is the rate per exposure unit that
ABC needs to charge? CORRECT ANSWERS $51
All of the following are advantages of the sole proprietorship type of business
ownership, EXCEPT: CORRECT ANSWERS Limited liability
