CPCU 520 FINAL EXAM QUESTIONS AND ANSWERS ALREADY PASSED LATEST UPDATE
2025-2026
Property-casualty insurers can be classified in 4 ways - Answers 1. Legal form of ownership
2. Place of Incorporation
3. Licensing status
4. Insurance distribution systems & channels
Legal Form of Ownership - Answers 1. Proprietary Insurers
2. Cooperative Insurers
3. Other Insurers
Proprietary Insurers - Answers 1. Stock insurers
2. Lloyd's of London (Lloyd's)
3. American Lloyds
4. Insurance Exchanges
Stock Insurers - Answers Insurers owned by their stockholders.
Lloyd's of London (Lloyd's) - Answers -Not an Insurer
-Provides the physical and procedural facilities for its members to write insurance.
American Lloyds - Answers -Smaller than Lloyds of London
-Members are called underwriters
Insurance Exchanges - Answers -Proprietary Insurer that acts as a marketplace.
-Members belong to Syndicate and delegate day-to-day operations to the syndicate manager.
Cooperative Insurers - Answers -Owned by it's policyholders
1. Mutual Insurers
2. Pools
3. Government Insurers
4. Reciprocal Insurance Exchanges
5. Fraternal Organizations
,6`. Other Cooperatives
Mutual Insurers - Answers -Policyholders are owners
-Elect the insurer's board of directions that appoints officers to manage the company
-Some profit is retained to increase surplus, and excess profit is usually returned to
policyholders as dividends.
Reciprocal Insurance Exchanges - Answers -Subscribers/Members of the group insure each
other
-Managed by an attorney-in-fact.
Fraternal Organizations - Answers -Resemble Mutual Companies
-Primarily Life & Health Insurance
Other Cooperatives - Answers -Captive Insurers
-Risk Retention Groups
-Purchasing Groups
Captive Insurer (Captives) - Answers -Organization/group of affiliated organizations forms a
subsidiary company to provide all/part of it's insurance a Captive is it's subsidiary. AKA-
"Formalized Self-Insurance".
Other Insurers - Answers -Pools
-Government Insurers
Pools - Answers -Consist of several insurers, not otherwise related, that join together to insure
loss exposures that individual insurers are unwilling to insure.
-Auto Liability Insurance & Workers Comp Coverage.
Government Insurers - Answers -NFIP: National Flood Insurance Program administered by the
Federal Insurance Administration under the
-FEMA: Federal Emergency Management Agency
(FAIR) Fair Access to Insurance Requirements - Answers -plans make property insurance more
redily available to property owners who have exposures to loss over which they have no control.
Place of Incorporation - Answers -Insurance is regulated at the state level
-Foreign Insurers
, -Domestic Insurers
-Alien Insurers
Foreign Insurer - Answers -is a domestic insurer that is licensed to do business in states other
than its domiciled state.
Alien Insurers - Answers -incorporated or formed in another country.
Licensing Status - Answers -Admitted Insurer (Licensed)
-Non-admitted Insurer (Unlicensed)
Insurance Distribution Systems & Channels - Answers -designed to meet particular marketing
objectives
Distribution Systems - Answers -Independent agency & brokerage marketing system
-Direct Writer Marketing System
-Exclusive Agency Marketing System
Common Distribution Channels - Answers - The internet
- Call Centers
- Direct Response
- Group Marketing
- Financial Institutions
Insurers have 5 major goals - Answers -Earn a profit
-Meeting customer needs
-Comply with Legal Requirements
-Diversify Risk
-Fulfill their duty to Society
Meet Customer Needs - Answers -determine what customers need and what price is
competitive and finding the best way to satisfy those needs
-Customers expect prompt service and timely responses to inquiries
-quick and professional assistance requires well-trained, customer-focused personnel and
automated support systems.
2025-2026
Property-casualty insurers can be classified in 4 ways - Answers 1. Legal form of ownership
2. Place of Incorporation
3. Licensing status
4. Insurance distribution systems & channels
Legal Form of Ownership - Answers 1. Proprietary Insurers
2. Cooperative Insurers
3. Other Insurers
Proprietary Insurers - Answers 1. Stock insurers
2. Lloyd's of London (Lloyd's)
3. American Lloyds
4. Insurance Exchanges
Stock Insurers - Answers Insurers owned by their stockholders.
Lloyd's of London (Lloyd's) - Answers -Not an Insurer
-Provides the physical and procedural facilities for its members to write insurance.
American Lloyds - Answers -Smaller than Lloyds of London
-Members are called underwriters
Insurance Exchanges - Answers -Proprietary Insurer that acts as a marketplace.
-Members belong to Syndicate and delegate day-to-day operations to the syndicate manager.
Cooperative Insurers - Answers -Owned by it's policyholders
1. Mutual Insurers
2. Pools
3. Government Insurers
4. Reciprocal Insurance Exchanges
5. Fraternal Organizations
,6`. Other Cooperatives
Mutual Insurers - Answers -Policyholders are owners
-Elect the insurer's board of directions that appoints officers to manage the company
-Some profit is retained to increase surplus, and excess profit is usually returned to
policyholders as dividends.
Reciprocal Insurance Exchanges - Answers -Subscribers/Members of the group insure each
other
-Managed by an attorney-in-fact.
Fraternal Organizations - Answers -Resemble Mutual Companies
-Primarily Life & Health Insurance
Other Cooperatives - Answers -Captive Insurers
-Risk Retention Groups
-Purchasing Groups
Captive Insurer (Captives) - Answers -Organization/group of affiliated organizations forms a
subsidiary company to provide all/part of it's insurance a Captive is it's subsidiary. AKA-
"Formalized Self-Insurance".
Other Insurers - Answers -Pools
-Government Insurers
Pools - Answers -Consist of several insurers, not otherwise related, that join together to insure
loss exposures that individual insurers are unwilling to insure.
-Auto Liability Insurance & Workers Comp Coverage.
Government Insurers - Answers -NFIP: National Flood Insurance Program administered by the
Federal Insurance Administration under the
-FEMA: Federal Emergency Management Agency
(FAIR) Fair Access to Insurance Requirements - Answers -plans make property insurance more
redily available to property owners who have exposures to loss over which they have no control.
Place of Incorporation - Answers -Insurance is regulated at the state level
-Foreign Insurers
, -Domestic Insurers
-Alien Insurers
Foreign Insurer - Answers -is a domestic insurer that is licensed to do business in states other
than its domiciled state.
Alien Insurers - Answers -incorporated or formed in another country.
Licensing Status - Answers -Admitted Insurer (Licensed)
-Non-admitted Insurer (Unlicensed)
Insurance Distribution Systems & Channels - Answers -designed to meet particular marketing
objectives
Distribution Systems - Answers -Independent agency & brokerage marketing system
-Direct Writer Marketing System
-Exclusive Agency Marketing System
Common Distribution Channels - Answers - The internet
- Call Centers
- Direct Response
- Group Marketing
- Financial Institutions
Insurers have 5 major goals - Answers -Earn a profit
-Meeting customer needs
-Comply with Legal Requirements
-Diversify Risk
-Fulfill their duty to Society
Meet Customer Needs - Answers -determine what customers need and what price is
competitive and finding the best way to satisfy those needs
-Customers expect prompt service and timely responses to inquiries
-quick and professional assistance requires well-trained, customer-focused personnel and
automated support systems.
