AU 60 Missed Practice Test Questions
And Answers
7.
MarcipispappersonalplinespproducerpatpRegionalpInsurancepBrokerage.pOnepofpherpinsuredsp
haspsufferedpthreephomeownersplossespinptheppastpyear,pandpMarcipispconcernedpthatpthepi
nsurerpwillpdeclineptoprenewptheppolicy.pShepcallspthepunderwriter,pJohn,ptopdiscusspthepacc
ount.pJohnphadpinpfactpsetpthepfileptopnonrenew.pMarcipexplainspthatpthispclientpispverypinflue
ntialpinptownpandphaspreferredpmanypclientsptopher.pShepwantspJohnptoprenewpthepaccount.p
Afterpsomepdiscussion,pJohnpagreesptoprenewpthepaccountpprovidedpthatpMarcipdiscussespt
hepclaimspfrequencypwithpthepinsuredpandpincreasespthepdeductibleptop$5,000.pMarcipagree
s.pThispispanpexamplepofpwhichponepofpthepfollowingpnegotiationpstyles?
Chooseponepanswer.
p
A.pCollaborating
p
B.pCompeting
p
C.pAccommodating
p
D.pCompromisingp-pCORRECTppANSWER-D.pCompromising
Apbuildingpownerphasphiredpaproofingpcontractorptopreplaceptheproofpofpapbuildingplocatedpon
papbusypurbanpstreet.pThepbuildingpownerpwantsptopbepprotectedpforpanypclaimspresultingpfro
mptheproofingpcontractor'spworkponphispproperty.pWhichponepofpthepfollowingpmethodspwoul
dpbepmostpbeneficialptopthepbuildingpowner?
p
A.pAddingptheproofingpcontractorpaspanpadditionalpinsuredptopthepbuildingpowner'spliabilitypp
olicy
B.pApseparatepownerspandpcontractorspprotectivepliabilityppolicypinpthepnamepofpthepbuilding
powner
C.pAddingpthepBuildingpOwnerpLosspPayablepprovisionptopthepbuildingpowner'sppropertyppol
icy
D.pApseparatepownerspandpcontractorspprotectivepliabilityppolicypinpthepnamepofptheproofingp
contractorp-pCORRECTppANSWER-
B.pApseparatepownerspandpcontractorspprotectivepliabilityppolicypinpthepnamepofpthepbuilding
powner
Apcompany'spcommon-
sizepstatementplistsptwopyears,p20X3pandp20X4.pInp20X3,pthepinventoriesplinepwaspfivepperc
,ent,pandpinp20X4pthepinventoriesplinepwaspsevenppercent.pWhichponepofpthepfollowingpcouldp
anpunderwriterpinferpfrompthispinformation?
p
A.pInventoriespfellpbyptwoppercent
p
B.pInventoriespincreasedpbyptwoppercent
p
C.pTheppercentagepofpinventoriesptoptotalpassetspincreased
p
D.pPercentpofpinventoriespchangedpwithpinflationp-pCORRECTppANSWER-
C.pTheppercentagepofpinventoriesptoptotalpassetspincreased
Givenpthepinventoriesppercentagespforptwopyears,pthepunderwriterpcanpinferpthatptheppercen
tagepofpinventoriesptoptotalpassetspincreased.
Apgrouppofppoliciespwithpapcommonpcharacteristic,psuchpaspapterritoryporptypepofpcoverage,p
orpallppoliciespwrittenpbypapparticularpinsurer,pproducer,porpagencypispreferredptopas
Chooseponepanswer.
p
A.pApbookpofpbusiness.
p
B.pApcoverageppool.
p
C.pAplinepofpbusiness.
p
D.pAppolicypgroup.p-pCORRECTppANSWER-A.pApbookpofpbusiness.
Apgrouppofppoliciespwithpapcommonpcharacteristic,psuchpaspapterritoryporptypepofpcoverage,p
orpallppoliciespwrittenpbypapparticularpinsurer,pproducer,porpagencypispreferredptopas
Chooseponepanswer.
p
A.pApbookpofpbusiness.
p
B.pApcoverageppool.
p
C.pAplinepofpbusiness.
p
D.pAppolicypgroup.p-pCORRECTppANSWER-A.pApbookpofpbusiness.
Apprimarypsourcepofprevenuepforpinsurerspisppremiumspearned.pAnotherpmajorpsourcepofpre
venuepis
Chooseponepanswer.
p
A.pRecoverablespfrompreinsurers.
p
B.pCouponppaymentsponpfixedpincomepsecurities.
p
C.pSubrogationpproceeds.
p
D.pAmortizedppremiumponpbondpinvestments.p-pCORRECTppANSWER-
B.pCouponppaymentsponpfixedpincomepsecurities.
Apsignificantpdifferencepbetweenpthepcurrentpratiopandpthepacid-testpratiopispthatp
Chooseponepanswer.
p
,A.pThepcurrentpratiopusespbalancepsheetpdatapinpthepcalculation.
p
B.pThepcurrentpratiopispapmorepconservativepmeasurepofpliquidity.
p
C.pCashpispexcludedpfrompthepcalculationpofpthepacid-testpratio.
p
D.pInventorypispexcludedpfrompthepcalculationpofpthepacid-testpratio.p-
pCORRECTppANSWER-D.pInventorypispexcludedpfrompthepcalculationpofpthepacid-testpratio.
Apsignificantpdifferencepbetweenpthepcurrentpratiopandpthepacid-
testpratiopispthatpinventorypispexcludedpfrompthepcalculationpofpthepacid-testpratio.
AaronpispappropertypunderwriterpforpCromleypInsurancepCompanyp(Cromley).pHepreceivedp
apnewpbusinesspsubmissionpforpapcompanypthatpcurrentlyphaspautopcoveragepwithpCromley
.pThepproducerpispexpectingpAaronptopofferpapquickpproposalponptheppropertypcoveragepbec
ausephephaspaccessptopthepinformationpinpthepautopfile.pWhichponepofpthepfollowingpimporta
ntpsourcespofppropertypunderwritingpinformationpwouldpbepmissingpfrompthepautopfile?
Chooseponepanswer.
p
A.pAppraisalpofpvalues
p
B.pLossphistory
p
C.pFinancialpanalysis
p
D.pSafetypconsciousnessp-pCORRECTppANSWER-A.pAppraisalpofpvalues
Aaron,papseniorpproducerpforpBlithepInsurancepCompanyp(Blithe)phaspoverp15pyearspexperi
encepinpthepfield.pHepknowspBlithe'spunderwritingpguidelinespandpispfamiliarpwithptheptypepofp
businesspBlithepwants.pHeptakesppridepinptheplosspratiopproducedpbyphispofficepandpalsoppro
ducedpbypBlithepaspapcompany.pHepoftenptrainspnewpagentspinphispofficepbecausepofphisplow
prejectionpratiopofpapplicationsphepwrites.pHepispknownpaspapfront-
linepunderwriterpforpBlithe.pWhichponepofpthepfollowingpispapbenefitpofpAaron'spfieldpunderwrit
ing?
Chooseponepanswer.
p
A.pSavespBlithepfromphavingptopevaluatepaccountspthatptheypwillpultimatelypreject
p
B.pSavepBlitheptrainingptimepspentponpnewpunderwriters
p
C.pServespaspapresourcepforpBlitheponpmarketingpclimate
p
D.pProvidespfeedbackptopBlitheponpunderwritingpproceduresp-pCORRECTppANSWER-
A.pSavespBlithepfromphavingptopevaluatepaccountspthatptheypwillpultimatelypreject
ApresultpofpAaron'spfieldpunderwritingpispthatpitpsavespBlithepfromphavingptopevaluatepaccoun
tspthatptheypwillpultimatelypreject.
ABCpCorp.pisplookingptopinsureptwopbuildingspunderpapblanketpinsuranceppolicy.pEachpbuildi
ngphaspanpinsurablepvaluepofp$1,000,000.pThepunderwriterpassignspthepbuildingspapratingpof
p$1.25pandp$0.75pperp$100prespectively.pIfpthepunderwriterppricespthepinsurancepusingpblan
ketpaverageprate,pwhatpshouldpABCpCorp.'sppremiumpbe?
Chooseponepanswer.
, p
A.p$10,000
p
B.p$12,500
p
C.p$20,000
p
D.p$25,000p-pCORRECTppANSWER-C.p$20,000
Correct.pABCpCorp.'sppremiumpshouldpbep$20,000p=p(1,000,000p*p2p/p100)p*p(1.25p+p0.75)p/p
2
ABCpInsurancepCompany'spratiopofppremiumsptopsurpluspisp2ptop1.pIfpthepstateprequirementp
wherepABCptransactspbusinesspisp3ptop1,pthenpABC
Chooseponepanswer.
p
A.pNeedsptopissuepmoreppoliciesptopbepinpcompliancepwithpstatepsurplusprequirements.
p
B.pCanpnoplongerpwritepnewpbusinesspinpthatpstate.
p
C.pIsplikelyptopbepthepsubjectpofpapDepartmentpofpInsurancepmarketpconductpexaminationpdu
eptopitspsolvencypindicators.
p
D.pIspmeetingpthepstate'spsurplusprequirement.p-pCORRECTppANSWER-
D.pIspmeetingpthepstate'spsurplusprequirement.
ABCpInsurancepispconsideringpenteringpnewpstatespasppartpofpitspgrowthpplan.pThepexecutiv
espofpABCpdecidepnotptoppursuepnewpbusinesspinplow-
incomepareaspofpstatespandpprovidepunderwriterspwithpapmappindicatingpthepareaspfrompwhi
chptheyparepnotptopacceptpapplications.pThisppositionplikelypviolatespregulationspthat
Chooseponepanswer.
p
A.pConstrainpinsurers'pabilityptopaccept,pmodify,porpdeclineplosspexposures.
p
B.pLimitpallowablepclassifications.
p
C.pRestrictptheptimingpandpconditionspofpcoveragepcancellationspandpnonrenewals.
p
D.pSpecifyppolicyptermspandpconditions.p-pCORRECTppANSWER-
A.pConstrainpinsurers'pabilityptopaccept,pmodify,porpdeclineplosspexposures.
ABCpInsurancepispconsideringpenteringpnewpstatespasppartpofpitspgrowthpplan.pThepexecutiv
espofpABCpdecidepnotptoppursuepnewpbusinesspinplow-
incomepareaspofpstatespandpprovidepunderwriterspwithpapmappindicatingpthepareaspfrompwhi
chptheyparepnotptopacceptpapplications.pThisppositionplikelypviolatespregulationspthat
Chooseponepanswer.
p
A.pConstrainpinsurers'pabilityptopaccept,pmodify,porpdeclineplosspexposures.
p
B.pLimitpallowablepclassifications.
p
C.pRestrictptheptimingpandpconditionspofpcoveragepcancellationspandpnonrenewals.
p
D.pSpecifyppolicyptermspandpconditions.p-pCORRECTppANSWER-
A.pConstrainpinsurers'pabilityptopaccept,pmodify,porpdeclineplosspexposures.
And Answers
7.
MarcipispappersonalplinespproducerpatpRegionalpInsurancepBrokerage.pOnepofpherpinsuredsp
haspsufferedpthreephomeownersplossespinptheppastpyear,pandpMarcipispconcernedpthatpthepi
nsurerpwillpdeclineptoprenewptheppolicy.pShepcallspthepunderwriter,pJohn,ptopdiscusspthepacc
ount.pJohnphadpinpfactpsetpthepfileptopnonrenew.pMarcipexplainspthatpthispclientpispverypinflue
ntialpinptownpandphaspreferredpmanypclientsptopher.pShepwantspJohnptoprenewpthepaccount.p
Afterpsomepdiscussion,pJohnpagreesptoprenewpthepaccountpprovidedpthatpMarcipdiscussespt
hepclaimspfrequencypwithpthepinsuredpandpincreasespthepdeductibleptop$5,000.pMarcipagree
s.pThispispanpexamplepofpwhichponepofpthepfollowingpnegotiationpstyles?
Chooseponepanswer.
p
A.pCollaborating
p
B.pCompeting
p
C.pAccommodating
p
D.pCompromisingp-pCORRECTppANSWER-D.pCompromising
Apbuildingpownerphasphiredpaproofingpcontractorptopreplaceptheproofpofpapbuildingplocatedpon
papbusypurbanpstreet.pThepbuildingpownerpwantsptopbepprotectedpforpanypclaimspresultingpfro
mptheproofingpcontractor'spworkponphispproperty.pWhichponepofpthepfollowingpmethodspwoul
dpbepmostpbeneficialptopthepbuildingpowner?
p
A.pAddingptheproofingpcontractorpaspanpadditionalpinsuredptopthepbuildingpowner'spliabilitypp
olicy
B.pApseparatepownerspandpcontractorspprotectivepliabilityppolicypinpthepnamepofpthepbuilding
powner
C.pAddingpthepBuildingpOwnerpLosspPayablepprovisionptopthepbuildingpowner'sppropertyppol
icy
D.pApseparatepownerspandpcontractorspprotectivepliabilityppolicypinpthepnamepofptheproofingp
contractorp-pCORRECTppANSWER-
B.pApseparatepownerspandpcontractorspprotectivepliabilityppolicypinpthepnamepofpthepbuilding
powner
Apcompany'spcommon-
sizepstatementplistsptwopyears,p20X3pandp20X4.pInp20X3,pthepinventoriesplinepwaspfivepperc
,ent,pandpinp20X4pthepinventoriesplinepwaspsevenppercent.pWhichponepofpthepfollowingpcouldp
anpunderwriterpinferpfrompthispinformation?
p
A.pInventoriespfellpbyptwoppercent
p
B.pInventoriespincreasedpbyptwoppercent
p
C.pTheppercentagepofpinventoriesptoptotalpassetspincreased
p
D.pPercentpofpinventoriespchangedpwithpinflationp-pCORRECTppANSWER-
C.pTheppercentagepofpinventoriesptoptotalpassetspincreased
Givenpthepinventoriesppercentagespforptwopyears,pthepunderwriterpcanpinferpthatptheppercen
tagepofpinventoriesptoptotalpassetspincreased.
Apgrouppofppoliciespwithpapcommonpcharacteristic,psuchpaspapterritoryporptypepofpcoverage,p
orpallppoliciespwrittenpbypapparticularpinsurer,pproducer,porpagencypispreferredptopas
Chooseponepanswer.
p
A.pApbookpofpbusiness.
p
B.pApcoverageppool.
p
C.pAplinepofpbusiness.
p
D.pAppolicypgroup.p-pCORRECTppANSWER-A.pApbookpofpbusiness.
Apgrouppofppoliciespwithpapcommonpcharacteristic,psuchpaspapterritoryporptypepofpcoverage,p
orpallppoliciespwrittenpbypapparticularpinsurer,pproducer,porpagencypispreferredptopas
Chooseponepanswer.
p
A.pApbookpofpbusiness.
p
B.pApcoverageppool.
p
C.pAplinepofpbusiness.
p
D.pAppolicypgroup.p-pCORRECTppANSWER-A.pApbookpofpbusiness.
Apprimarypsourcepofprevenuepforpinsurerspisppremiumspearned.pAnotherpmajorpsourcepofpre
venuepis
Chooseponepanswer.
p
A.pRecoverablespfrompreinsurers.
p
B.pCouponppaymentsponpfixedpincomepsecurities.
p
C.pSubrogationpproceeds.
p
D.pAmortizedppremiumponpbondpinvestments.p-pCORRECTppANSWER-
B.pCouponppaymentsponpfixedpincomepsecurities.
Apsignificantpdifferencepbetweenpthepcurrentpratiopandpthepacid-testpratiopispthatp
Chooseponepanswer.
p
,A.pThepcurrentpratiopusespbalancepsheetpdatapinpthepcalculation.
p
B.pThepcurrentpratiopispapmorepconservativepmeasurepofpliquidity.
p
C.pCashpispexcludedpfrompthepcalculationpofpthepacid-testpratio.
p
D.pInventorypispexcludedpfrompthepcalculationpofpthepacid-testpratio.p-
pCORRECTppANSWER-D.pInventorypispexcludedpfrompthepcalculationpofpthepacid-testpratio.
Apsignificantpdifferencepbetweenpthepcurrentpratiopandpthepacid-
testpratiopispthatpinventorypispexcludedpfrompthepcalculationpofpthepacid-testpratio.
AaronpispappropertypunderwriterpforpCromleypInsurancepCompanyp(Cromley).pHepreceivedp
apnewpbusinesspsubmissionpforpapcompanypthatpcurrentlyphaspautopcoveragepwithpCromley
.pThepproducerpispexpectingpAaronptopofferpapquickpproposalponptheppropertypcoveragepbec
ausephephaspaccessptopthepinformationpinpthepautopfile.pWhichponepofpthepfollowingpimporta
ntpsourcespofppropertypunderwritingpinformationpwouldpbepmissingpfrompthepautopfile?
Chooseponepanswer.
p
A.pAppraisalpofpvalues
p
B.pLossphistory
p
C.pFinancialpanalysis
p
D.pSafetypconsciousnessp-pCORRECTppANSWER-A.pAppraisalpofpvalues
Aaron,papseniorpproducerpforpBlithepInsurancepCompanyp(Blithe)phaspoverp15pyearspexperi
encepinpthepfield.pHepknowspBlithe'spunderwritingpguidelinespandpispfamiliarpwithptheptypepofp
businesspBlithepwants.pHeptakesppridepinptheplosspratiopproducedpbyphispofficepandpalsoppro
ducedpbypBlithepaspapcompany.pHepoftenptrainspnewpagentspinphispofficepbecausepofphisplow
prejectionpratiopofpapplicationsphepwrites.pHepispknownpaspapfront-
linepunderwriterpforpBlithe.pWhichponepofpthepfollowingpispapbenefitpofpAaron'spfieldpunderwrit
ing?
Chooseponepanswer.
p
A.pSavespBlithepfromphavingptopevaluatepaccountspthatptheypwillpultimatelypreject
p
B.pSavepBlitheptrainingptimepspentponpnewpunderwriters
p
C.pServespaspapresourcepforpBlitheponpmarketingpclimate
p
D.pProvidespfeedbackptopBlitheponpunderwritingpproceduresp-pCORRECTppANSWER-
A.pSavespBlithepfromphavingptopevaluatepaccountspthatptheypwillpultimatelypreject
ApresultpofpAaron'spfieldpunderwritingpispthatpitpsavespBlithepfromphavingptopevaluatepaccoun
tspthatptheypwillpultimatelypreject.
ABCpCorp.pisplookingptopinsureptwopbuildingspunderpapblanketpinsuranceppolicy.pEachpbuildi
ngphaspanpinsurablepvaluepofp$1,000,000.pThepunderwriterpassignspthepbuildingspapratingpof
p$1.25pandp$0.75pperp$100prespectively.pIfpthepunderwriterppricespthepinsurancepusingpblan
ketpaverageprate,pwhatpshouldpABCpCorp.'sppremiumpbe?
Chooseponepanswer.
, p
A.p$10,000
p
B.p$12,500
p
C.p$20,000
p
D.p$25,000p-pCORRECTppANSWER-C.p$20,000
Correct.pABCpCorp.'sppremiumpshouldpbep$20,000p=p(1,000,000p*p2p/p100)p*p(1.25p+p0.75)p/p
2
ABCpInsurancepCompany'spratiopofppremiumsptopsurpluspisp2ptop1.pIfpthepstateprequirementp
wherepABCptransactspbusinesspisp3ptop1,pthenpABC
Chooseponepanswer.
p
A.pNeedsptopissuepmoreppoliciesptopbepinpcompliancepwithpstatepsurplusprequirements.
p
B.pCanpnoplongerpwritepnewpbusinesspinpthatpstate.
p
C.pIsplikelyptopbepthepsubjectpofpapDepartmentpofpInsurancepmarketpconductpexaminationpdu
eptopitspsolvencypindicators.
p
D.pIspmeetingpthepstate'spsurplusprequirement.p-pCORRECTppANSWER-
D.pIspmeetingpthepstate'spsurplusprequirement.
ABCpInsurancepispconsideringpenteringpnewpstatespasppartpofpitspgrowthpplan.pThepexecutiv
espofpABCpdecidepnotptoppursuepnewpbusinesspinplow-
incomepareaspofpstatespandpprovidepunderwriterspwithpapmappindicatingpthepareaspfrompwhi
chptheyparepnotptopacceptpapplications.pThisppositionplikelypviolatespregulationspthat
Chooseponepanswer.
p
A.pConstrainpinsurers'pabilityptopaccept,pmodify,porpdeclineplosspexposures.
p
B.pLimitpallowablepclassifications.
p
C.pRestrictptheptimingpandpconditionspofpcoveragepcancellationspandpnonrenewals.
p
D.pSpecifyppolicyptermspandpconditions.p-pCORRECTppANSWER-
A.pConstrainpinsurers'pabilityptopaccept,pmodify,porpdeclineplosspexposures.
ABCpInsurancepispconsideringpenteringpnewpstatespasppartpofpitspgrowthpplan.pThepexecutiv
espofpABCpdecidepnotptoppursuepnewpbusinesspinplow-
incomepareaspofpstatespandpprovidepunderwriterspwithpapmappindicatingpthepareaspfrompwhi
chptheyparepnotptopacceptpapplications.pThisppositionplikelypviolatespregulationspthat
Chooseponepanswer.
p
A.pConstrainpinsurers'pabilityptopaccept,pmodify,porpdeclineplosspexposures.
p
B.pLimitpallowablepclassifications.
p
C.pRestrictptheptimingpandpconditionspofpcoveragepcancellationspandpnonrenewals.
p
D.pSpecifyppolicyptermspandpconditions.p-pCORRECTppANSWER-
A.pConstrainpinsurers'pabilityptopaccept,pmodify,porpdeclineplosspexposures.
