AU 60 QUESTIONS AND ANSWERS
(GRADED A+)
Alan is a commercial insurance underwriter. He is reviewing the application for B & L
Restaurant. B & L is open from 6 AM to 2 PM daily and offers both seated dining and
take-out service for breakfast and lunch. The restaurant had a good reputation and
financial reports were strong, but Alan was concerned when he learned that the risk
was part of a franchise agreement. The franchise arrangement raises a concern
about which one of the following leadership characteristics?
Select one:
A. Operational authority
B. Training
C. Quality of work
D. Prudence of operations - ANSWERA. Operational authority
The entity's management may be restricted by their franchise agreement and not
have the authority to implement processes or risk control autonomously
By working with an insurer's data analysts and IT department, underwriters can
better tailor coverage to meet an insured's needs and improve time management.
This allows them to add value through
Select one:
A. Innovation.
B. Persuasion.
C. Negotiation.
D. Motivation. - ANSWERA. Innovation.
Innovation can be an underwriter's greatest tool, allowing an underwriter to work with
an insurer's data analysts and IT department to better tailor coverage to meet an
insured's needs and improve time management.
Which one of the following statements is true regarding professional employer
organizations (PEOs)?
Select one:
A. PEOs must be licensed and certified in all states.
B. PEOs do not generally provide workers compensation coverage.
C. A company that leases employees from a PEO is considered the direct employer
under workers compensation laws.
D. Many small and medium-sized companies lease employees from PEOs to reduce
costs. - ANSWERD. Many small and medium-sized companies lease employees
from PEOs to reduce costs.
Emma is a workers compensation underwriter. She has been advised that one of her
insureds is expanding its operations, and she is not sure how to classify the new
, payroll. Which one of the following of her fellow employees should Emma go to for
help?
Select one:
A. Premium auditor
B. Claims adjuster
C. Risk control representative
D. Producer - ANSWERA. Premium auditor
Which one of the following statements is true regarding additional insureds in liability
insurance?
Select one:
A. Additional insured endorsements commonly extend liability coverage to all
operations of the additional insured.
B. Additional insureds are granted coverage under the insured's liability policy and
have the same rights and duties as named insureds.
C. Most general liability insurance policies are not designed to cover the named
insured's loss exposure created by independent contractors.
D. Sometimes the existence of the particular party requesting to be added as an
additional insured changes the account's underwriting acceptability. - ANSWERD.
Sometimes the existence of the particular party requesting to be added as an
additional insured changes the account's underwriting acceptability.
While reunderwriting its book of personal auto policies, XYZ Insurance Company
noted that it was paying-out significantly more in medical payment benefits in two
territories than in its other fifteen territories combined. A review of policies from the
two territories showed that many of these policies were issued with significantly
higher medical payments limits (e.g. $50,000 per-person) than their other auto
policies. The company also noticed that most of the claims were for soft-tissue
injuries (whiplash, lower lumbar strain, etc.). XYZ underwriters want to keep the auto
physical damage and auto liability business in the two problem territories, but to stop
losing money on the medical payments coverage. The company decided that upon
renewal, a medical payments limit of $5,000 per-person would be strictly enforced in
the two troublesome territories. Which corrective action does this change illustrate?
Select one:
A. - ANSWERD. Modify products or coverages
WC Distribution is located in California and distributes refrigerated foods throughout
the West Coast region. As a commercial lines underwriter evaluating the
organization, you are concerned about threats to the operations and supply chain.
Which one of the following would be a major area of concern for WC Distribution?
Select one:
A. Employment issues or strikes
B. Natural or man-made catastrophes
C. Third-party suppliers
D. Production bottlenecks - ANSWERB. Natural or man-made catastrophes
Natural or man-made catastrophes would be a major area concern for WC
Distribution. Earthquakes, wildfires, and other natural disasters could damage
facilities or interfere with transportation routes. Normal supply and distribution
(GRADED A+)
Alan is a commercial insurance underwriter. He is reviewing the application for B & L
Restaurant. B & L is open from 6 AM to 2 PM daily and offers both seated dining and
take-out service for breakfast and lunch. The restaurant had a good reputation and
financial reports were strong, but Alan was concerned when he learned that the risk
was part of a franchise agreement. The franchise arrangement raises a concern
about which one of the following leadership characteristics?
Select one:
A. Operational authority
B. Training
C. Quality of work
D. Prudence of operations - ANSWERA. Operational authority
The entity's management may be restricted by their franchise agreement and not
have the authority to implement processes or risk control autonomously
By working with an insurer's data analysts and IT department, underwriters can
better tailor coverage to meet an insured's needs and improve time management.
This allows them to add value through
Select one:
A. Innovation.
B. Persuasion.
C. Negotiation.
D. Motivation. - ANSWERA. Innovation.
Innovation can be an underwriter's greatest tool, allowing an underwriter to work with
an insurer's data analysts and IT department to better tailor coverage to meet an
insured's needs and improve time management.
Which one of the following statements is true regarding professional employer
organizations (PEOs)?
Select one:
A. PEOs must be licensed and certified in all states.
B. PEOs do not generally provide workers compensation coverage.
C. A company that leases employees from a PEO is considered the direct employer
under workers compensation laws.
D. Many small and medium-sized companies lease employees from PEOs to reduce
costs. - ANSWERD. Many small and medium-sized companies lease employees
from PEOs to reduce costs.
Emma is a workers compensation underwriter. She has been advised that one of her
insureds is expanding its operations, and she is not sure how to classify the new
, payroll. Which one of the following of her fellow employees should Emma go to for
help?
Select one:
A. Premium auditor
B. Claims adjuster
C. Risk control representative
D. Producer - ANSWERA. Premium auditor
Which one of the following statements is true regarding additional insureds in liability
insurance?
Select one:
A. Additional insured endorsements commonly extend liability coverage to all
operations of the additional insured.
B. Additional insureds are granted coverage under the insured's liability policy and
have the same rights and duties as named insureds.
C. Most general liability insurance policies are not designed to cover the named
insured's loss exposure created by independent contractors.
D. Sometimes the existence of the particular party requesting to be added as an
additional insured changes the account's underwriting acceptability. - ANSWERD.
Sometimes the existence of the particular party requesting to be added as an
additional insured changes the account's underwriting acceptability.
While reunderwriting its book of personal auto policies, XYZ Insurance Company
noted that it was paying-out significantly more in medical payment benefits in two
territories than in its other fifteen territories combined. A review of policies from the
two territories showed that many of these policies were issued with significantly
higher medical payments limits (e.g. $50,000 per-person) than their other auto
policies. The company also noticed that most of the claims were for soft-tissue
injuries (whiplash, lower lumbar strain, etc.). XYZ underwriters want to keep the auto
physical damage and auto liability business in the two problem territories, but to stop
losing money on the medical payments coverage. The company decided that upon
renewal, a medical payments limit of $5,000 per-person would be strictly enforced in
the two troublesome territories. Which corrective action does this change illustrate?
Select one:
A. - ANSWERD. Modify products or coverages
WC Distribution is located in California and distributes refrigerated foods throughout
the West Coast region. As a commercial lines underwriter evaluating the
organization, you are concerned about threats to the operations and supply chain.
Which one of the following would be a major area of concern for WC Distribution?
Select one:
A. Employment issues or strikes
B. Natural or man-made catastrophes
C. Third-party suppliers
D. Production bottlenecks - ANSWERB. Natural or man-made catastrophes
Natural or man-made catastrophes would be a major area concern for WC
Distribution. Earthquakes, wildfires, and other natural disasters could damage
facilities or interfere with transportation routes. Normal supply and distribution
