CPCU 520 FINAL EXAM LATEST ACTUAL EXAM
QUESTIONS AND STUDY GUIDE ALL QUESTIONS AND
CORRECT DETAILED ANSWERS ALREADY GRADED A+
A key step in the ratemaking process involves the determination of territorial
relativities. As used in this context, relativities refers to
Select one:
A. Differences in rate structure based on location within a state.
B. Relationships among rates in similar rating classes within a state
C. Differences in producer commission structures by state.
D. Adjustments to loss development factors by state. - (ANSWER)A. Differences in
rate structure based on location within a state.
John is a risk management specialist for XYZ Company. John examines XYZ's
financial statements on a quarterly basis. Which one of the following best
describes a reason for this analysis?
Select one:
A. A review of the financial statements helps John to evaluate XYZ's ability to
finance premiums.
B. A review of the financial statements helps John to determine XYZ's ability to
pay upcoming insurance premiums.
C. A review of the financial statements helps John to determine XYZ's insurance
needs.
D. A review of the financial statements helps John to assess XYZ's compliance with
loan covenants. - (ANSWER)C. A review of the financial statements helps John to
determine XYZ's insurance needs.
,Which one of the following would be considered a duty of the state insurance
commissioner, rather than an activity performed by the state insurance
department?
Select one:
A. Issuing cease-and-desist orders
B. Investigating policyholder complaints
C. Holding hearings on insurance issues
D. Rehabilitating or liquidating insolvent insurers - (ANSWER)C. Holding hearings
on insurance issues
Issuing cease-and-desist orders and investigating policyholder complaints, would
be performed by:
A. State insurance commissioner
B. State insurance department
C. Federal insurance commissioner
D. Federal insurance department - (ANSWER)B. State insurance department
Liquidating or rehabilitating insolvent insurers would be performed by:
A. State insurance commissioner
B. State insurance department
, C. Federal insurance commissioner
D. Federal insurance department - (ANSWER)B. State insurance department
Premium audits accomplish all of the following, EXCEPT:
Select one:
A. Uncover fraud during routine audits
B. Help ensure equitable and accurate insurance rates.
C. Fulfill a requirement to meet state workers compensation regulations
D. Create less work for several different insurer departments. - (ANSWER)D.
Create less work for several different insurer departments.
Which one of the following best describes underwriting information that would
be categorized as desirable?
Select one:
A. Details that would be helpful if available quickly and at reasonable cost
B. Information that is absolutely necessary to arrive at an underwriting decision
C. Any facts about an account that can be obtained, regardless of the cost
D. All information available about an account whether or not it is relevant to the
underwriting decision - (ANSWER)A. Details that would be helpful if available
quickly and at reasonable cost
Sheldon Insurance Company has decided to use a broker marketing system for its
reinsurance needs. A potential advantage of a broker marketing system for
reinsurance over the direct writing system is
QUESTIONS AND STUDY GUIDE ALL QUESTIONS AND
CORRECT DETAILED ANSWERS ALREADY GRADED A+
A key step in the ratemaking process involves the determination of territorial
relativities. As used in this context, relativities refers to
Select one:
A. Differences in rate structure based on location within a state.
B. Relationships among rates in similar rating classes within a state
C. Differences in producer commission structures by state.
D. Adjustments to loss development factors by state. - (ANSWER)A. Differences in
rate structure based on location within a state.
John is a risk management specialist for XYZ Company. John examines XYZ's
financial statements on a quarterly basis. Which one of the following best
describes a reason for this analysis?
Select one:
A. A review of the financial statements helps John to evaluate XYZ's ability to
finance premiums.
B. A review of the financial statements helps John to determine XYZ's ability to
pay upcoming insurance premiums.
C. A review of the financial statements helps John to determine XYZ's insurance
needs.
D. A review of the financial statements helps John to assess XYZ's compliance with
loan covenants. - (ANSWER)C. A review of the financial statements helps John to
determine XYZ's insurance needs.
,Which one of the following would be considered a duty of the state insurance
commissioner, rather than an activity performed by the state insurance
department?
Select one:
A. Issuing cease-and-desist orders
B. Investigating policyholder complaints
C. Holding hearings on insurance issues
D. Rehabilitating or liquidating insolvent insurers - (ANSWER)C. Holding hearings
on insurance issues
Issuing cease-and-desist orders and investigating policyholder complaints, would
be performed by:
A. State insurance commissioner
B. State insurance department
C. Federal insurance commissioner
D. Federal insurance department - (ANSWER)B. State insurance department
Liquidating or rehabilitating insolvent insurers would be performed by:
A. State insurance commissioner
B. State insurance department
, C. Federal insurance commissioner
D. Federal insurance department - (ANSWER)B. State insurance department
Premium audits accomplish all of the following, EXCEPT:
Select one:
A. Uncover fraud during routine audits
B. Help ensure equitable and accurate insurance rates.
C. Fulfill a requirement to meet state workers compensation regulations
D. Create less work for several different insurer departments. - (ANSWER)D.
Create less work for several different insurer departments.
Which one of the following best describes underwriting information that would
be categorized as desirable?
Select one:
A. Details that would be helpful if available quickly and at reasonable cost
B. Information that is absolutely necessary to arrive at an underwriting decision
C. Any facts about an account that can be obtained, regardless of the cost
D. All information available about an account whether or not it is relevant to the
underwriting decision - (ANSWER)A. Details that would be helpful if available
quickly and at reasonable cost
Sheldon Insurance Company has decided to use a broker marketing system for its
reinsurance needs. A potential advantage of a broker marketing system for
reinsurance over the direct writing system is
