AU 60 - Complete Set Questions and Answers
100% Solved
Korey is an underwriter in the field. He just evaluated an application for insurance and
determined that the producer requested coverage for the applicant's loss exposures that is broader
than the insurer is willing to provide. Rather than denying the application, what course of action
could Korey t Korey may elect to offer a more limited form of coverage that involves
covering fewer causes of loss and/or charging a higher deductible
Elena is a corporate underwriter. How can she best work with management to ensure profitable
risk selection for the insurer? • Research the market. • Formulate underwriting policy. •
Revise underwriting guidelines. • Research and develop coverage forms. • Review rates. •
Educate and train. • Arrange reinsurance. • Assist others with complex accounts. • Conduct
underwriting audits
ABC Insurance has become one of the market leaders for property insurance on the East Coast.
However, in recent years, wind and hailstorms have increased in frequency and intensity in the
region. What should ABC do to help maintain the profitability of its East Coast portfolio?
ABC should develop catastrophe models to assess the effect that catastrophic events (such
as storms) can have on its in-force policies. Companies widely use these models to manage their
exposure to catastrophe risk.
,Why are insurers allowed to discriminate against different groups of customers? Not only
is it legal for insurers to discriminate against different groups of insureds or applicants, it's often
necessary. In insurance, discrimination isn't necessarily a negative term; it's a descriptive term
that means to distinguish, differentiate, or categorize. Fair discrimination is needed to ensure that
each insured pays for the risk it presents to the insurer.
Sofie, a property underwriter for Cintriell Insurance Company is reviewing a new homeowners
application. Sofie has changed the protection class to unprotected, as the fire protection class
listed by the producer is an eight and is incorrect. Which one of the following line underwriter
activities is Sofie performing? Classifying and pricing accounts
Which one of the following statements is correct with respect to market conduct examinations?
1. They protect both insurers and consumers from unfair insurer practices.
2. The Department of Insurance (DOI) may suspend or revoke the insurer's certificate of
authority if it finds that an insurer has violated a law
Adam is an analyst conducting a market conduct examination at DEF Insurance in response to a
consumer complaint. During the course of his review, he discovers that DEF has failed to apply
,newly implemented underwriting and rating factors to renewals, failed to use mutually exclusive
underwriting guidelines for the company's different programs, failed to use correct forms and
rates, and failed to apply underwriting guidelines consistently by occasionally allowing
producers exceptions. Which one of these practices will Adam most likely allow the insurer to
continue? Allowing producers exceptions in some cases
Underwriting regulations seek to ensure correct classification of insureds because
Misclassification can result in inadequate premiums and drain an insurer's surplus
Which one of the following statements is correct with regard to state regulation and the
underwriting function? Underwriters are affected by rate regulation, solvency regulation,
and auto insurance laws.
Corporate underwriters share research of the market responsibilities with actuarial and marketing
departments. Research includes an ongoing evaluation of which one of the following?
Optimal product mix in the book of business
Which one of the following is the most common use of predictive modeling in the underwriting
of small commercial accounts? Rating
, With advancements in technology, underwriting data is becoming increasingly abundant and
more reliable. These technological advancements changed underwriting in which one of the
following ways? More insurers are turning to automated systems.
ABC Insurance is considering entering new states as part of its growth plan. The executives of
ABC decide not to pursue new business in low-income areas of states and provide underwriters
with a map indicating the areas from which they are not to accept applications. This position
likely violates regulations that Constrain insurers' ability to accept, modify, or decline
loss exposures.
An insurance company must have adequate policyholders' surplus if it wishes to Increase
its written premium volume.
Tobias, a successful producer with Barnley's Insurance Company, is struggling with an intricate
quote on homeowners coverage for his insured, Hanna. Hanna not only has substantial
collections of guns and silverware, but also has a small farm located at her premises. Which one
of the following individuals from Barnley Insurance Company could provide assistance and
support to Tobias? The field underwriter
An insurance company needs to hire an employee with knowledge of insurance policy forms and
the ability to relate policy provisions to the loss exposures of individual policyholders. The
100% Solved
Korey is an underwriter in the field. He just evaluated an application for insurance and
determined that the producer requested coverage for the applicant's loss exposures that is broader
than the insurer is willing to provide. Rather than denying the application, what course of action
could Korey t Korey may elect to offer a more limited form of coverage that involves
covering fewer causes of loss and/or charging a higher deductible
Elena is a corporate underwriter. How can she best work with management to ensure profitable
risk selection for the insurer? • Research the market. • Formulate underwriting policy. •
Revise underwriting guidelines. • Research and develop coverage forms. • Review rates. •
Educate and train. • Arrange reinsurance. • Assist others with complex accounts. • Conduct
underwriting audits
ABC Insurance has become one of the market leaders for property insurance on the East Coast.
However, in recent years, wind and hailstorms have increased in frequency and intensity in the
region. What should ABC do to help maintain the profitability of its East Coast portfolio?
ABC should develop catastrophe models to assess the effect that catastrophic events (such
as storms) can have on its in-force policies. Companies widely use these models to manage their
exposure to catastrophe risk.
,Why are insurers allowed to discriminate against different groups of customers? Not only
is it legal for insurers to discriminate against different groups of insureds or applicants, it's often
necessary. In insurance, discrimination isn't necessarily a negative term; it's a descriptive term
that means to distinguish, differentiate, or categorize. Fair discrimination is needed to ensure that
each insured pays for the risk it presents to the insurer.
Sofie, a property underwriter for Cintriell Insurance Company is reviewing a new homeowners
application. Sofie has changed the protection class to unprotected, as the fire protection class
listed by the producer is an eight and is incorrect. Which one of the following line underwriter
activities is Sofie performing? Classifying and pricing accounts
Which one of the following statements is correct with respect to market conduct examinations?
1. They protect both insurers and consumers from unfair insurer practices.
2. The Department of Insurance (DOI) may suspend or revoke the insurer's certificate of
authority if it finds that an insurer has violated a law
Adam is an analyst conducting a market conduct examination at DEF Insurance in response to a
consumer complaint. During the course of his review, he discovers that DEF has failed to apply
,newly implemented underwriting and rating factors to renewals, failed to use mutually exclusive
underwriting guidelines for the company's different programs, failed to use correct forms and
rates, and failed to apply underwriting guidelines consistently by occasionally allowing
producers exceptions. Which one of these practices will Adam most likely allow the insurer to
continue? Allowing producers exceptions in some cases
Underwriting regulations seek to ensure correct classification of insureds because
Misclassification can result in inadequate premiums and drain an insurer's surplus
Which one of the following statements is correct with regard to state regulation and the
underwriting function? Underwriters are affected by rate regulation, solvency regulation,
and auto insurance laws.
Corporate underwriters share research of the market responsibilities with actuarial and marketing
departments. Research includes an ongoing evaluation of which one of the following?
Optimal product mix in the book of business
Which one of the following is the most common use of predictive modeling in the underwriting
of small commercial accounts? Rating
, With advancements in technology, underwriting data is becoming increasingly abundant and
more reliable. These technological advancements changed underwriting in which one of the
following ways? More insurers are turning to automated systems.
ABC Insurance is considering entering new states as part of its growth plan. The executives of
ABC decide not to pursue new business in low-income areas of states and provide underwriters
with a map indicating the areas from which they are not to accept applications. This position
likely violates regulations that Constrain insurers' ability to accept, modify, or decline
loss exposures.
An insurance company must have adequate policyholders' surplus if it wishes to Increase
its written premium volume.
Tobias, a successful producer with Barnley's Insurance Company, is struggling with an intricate
quote on homeowners coverage for his insured, Hanna. Hanna not only has substantial
collections of guns and silverware, but also has a small farm located at her premises. Which one
of the following individuals from Barnley Insurance Company could provide assistance and
support to Tobias? The field underwriter
An insurance company needs to hire an employee with knowledge of insurance policy forms and
the ability to relate policy provisions to the loss exposures of individual policyholders. The
