CPCU 520 Practice Exam 1 UPDATED ACTUAL Questions And Correct Answers
C
Terms in this set (75)
The expenses associated with adjusting claims are B. Loss adjustment expenses.
referred to as
Select one:
A. Prospective loss costs.
B. Loss adjustment expenses.
C. Claims costs.
D. Operating expenses.
Insurer Y is small but has a specialty insurance market for B. Insurer Y can be more nimble, allowing it to respond quickly to an emerging
high-value vehicles. In competing with a larger insurer trend or change.
with a broader market, Insurer Y is likely to have which
one of the following advantages?
Select one:
A. Insurer Y would have more capital surplus available
than a larger insurer would have.
B. Insurer Y can be more nimble, allowing it to respond
quickly to an emerging trend or change.
C. Because Insurer Y has a niche market, a larger insurer
would not be able to compete on price due to state rate
regulation.
D. Insurer Y is better able to invest in research and
product development due to a more narrow market
focus.
Which one of the following statements is correct? A. Some of the five ideal characteristics of rates conflict with others, and
Select one: compromises are often necessary.
A. Some of the five ideal characteristics of rates conflict
with others, and compromises are often necessary.
B. Rates are based on what consumers would be willing
to pay for insurance coverage, which can be difficult to
determine.
C. A rate can be adequate or it can be competitive, but it
cannot be both adequate and competitive at the same
time.
D. From the insurer's perspective, the primary goal of
ratemaking is to implement the highest rates that
regulators will allow so as to maximize insurer profits.
,To be successful, the differentiation business-level C. Accurately determine customers' preferences to develop products perceived
strategy must as distinctive.
Select one:
A. Produce short-term profits while phasing out a
product line or existing market.
B. Seek efficiency in all areas of operation to build a
competitive advantage.
C. Accurately determine customers' preferences to
develop products perceived as distinctive.
D. Focus on one group of customers and offer a low-
price product or service.
Which one of the following statements is correct with A. Identifying internal strengths and weaknesses involves considering financial,
respect to SWOT analysis? physical, human, and organizational assets.
Select one:
A. Identifying internal strengths and weaknesses involves
considering financial, physical, human, and organizational
assets.
B. Managers use SWOT analysis to predict the future state
of their companies.
C. SWOT analysis considers a company's internal
environment rather than the external environment.
D. Customers are generally not considered in a SWOT
analysis because the focus is on the assets an
organization owns.
Samuelson Insurance has developed special programs to D. Demographic
market personal insurance to members of college alumni
and professional associations. This is an example of which
one of the following types of market segmentation?
Select one:
A. Psychographic
B. Behavioristic
C. Geographic
D. Demographic
All of the following are challenges that an insurer may C. IT professionals assured of their job security
face that can hinder a complete alignment of information
technology (IT) and business strategies, EXCEPT:
Select one:
A. Changing IT or business metrics
B. An overly complex IT infrastructure
C. IT professionals assured of their job security
D. IT operating as a separate unit
, An applicant for commercial property insurance is found B. Requiring risk control measures
unacceptable by an underwriter due to the nature of its
operations and the construction of the building it
occupies. If the applicant installs an automatic fire-
extinguishing sprinkler system, the underwriter will
approve the application. This type of underwriting
modification is known as
Select one:
A. Changing insurance rates, rating plans, or policy limits.
B. Requiring risk control measures.
C. Using facultative reinsurance.
D. Amending the policy terms and conditions.
Which one of the following insurer performance goals is A. Meeting social responsibilities
the most difficult to evaluate?
Select one:
A. Meeting social responsibilities
B. Meeting profitability goals
C. Meeting customer needs
D. Meeting legal requirements
Which one of the following insurance consumer groups D. National accounts
would have the most risk financing alternatives available
to them?
Select one:
A. Small business
B. Individuals
C. Middle markets
D. National accounts
C
Terms in this set (75)
The expenses associated with adjusting claims are B. Loss adjustment expenses.
referred to as
Select one:
A. Prospective loss costs.
B. Loss adjustment expenses.
C. Claims costs.
D. Operating expenses.
Insurer Y is small but has a specialty insurance market for B. Insurer Y can be more nimble, allowing it to respond quickly to an emerging
high-value vehicles. In competing with a larger insurer trend or change.
with a broader market, Insurer Y is likely to have which
one of the following advantages?
Select one:
A. Insurer Y would have more capital surplus available
than a larger insurer would have.
B. Insurer Y can be more nimble, allowing it to respond
quickly to an emerging trend or change.
C. Because Insurer Y has a niche market, a larger insurer
would not be able to compete on price due to state rate
regulation.
D. Insurer Y is better able to invest in research and
product development due to a more narrow market
focus.
Which one of the following statements is correct? A. Some of the five ideal characteristics of rates conflict with others, and
Select one: compromises are often necessary.
A. Some of the five ideal characteristics of rates conflict
with others, and compromises are often necessary.
B. Rates are based on what consumers would be willing
to pay for insurance coverage, which can be difficult to
determine.
C. A rate can be adequate or it can be competitive, but it
cannot be both adequate and competitive at the same
time.
D. From the insurer's perspective, the primary goal of
ratemaking is to implement the highest rates that
regulators will allow so as to maximize insurer profits.
,To be successful, the differentiation business-level C. Accurately determine customers' preferences to develop products perceived
strategy must as distinctive.
Select one:
A. Produce short-term profits while phasing out a
product line or existing market.
B. Seek efficiency in all areas of operation to build a
competitive advantage.
C. Accurately determine customers' preferences to
develop products perceived as distinctive.
D. Focus on one group of customers and offer a low-
price product or service.
Which one of the following statements is correct with A. Identifying internal strengths and weaknesses involves considering financial,
respect to SWOT analysis? physical, human, and organizational assets.
Select one:
A. Identifying internal strengths and weaknesses involves
considering financial, physical, human, and organizational
assets.
B. Managers use SWOT analysis to predict the future state
of their companies.
C. SWOT analysis considers a company's internal
environment rather than the external environment.
D. Customers are generally not considered in a SWOT
analysis because the focus is on the assets an
organization owns.
Samuelson Insurance has developed special programs to D. Demographic
market personal insurance to members of college alumni
and professional associations. This is an example of which
one of the following types of market segmentation?
Select one:
A. Psychographic
B. Behavioristic
C. Geographic
D. Demographic
All of the following are challenges that an insurer may C. IT professionals assured of their job security
face that can hinder a complete alignment of information
technology (IT) and business strategies, EXCEPT:
Select one:
A. Changing IT or business metrics
B. An overly complex IT infrastructure
C. IT professionals assured of their job security
D. IT operating as a separate unit
, An applicant for commercial property insurance is found B. Requiring risk control measures
unacceptable by an underwriter due to the nature of its
operations and the construction of the building it
occupies. If the applicant installs an automatic fire-
extinguishing sprinkler system, the underwriter will
approve the application. This type of underwriting
modification is known as
Select one:
A. Changing insurance rates, rating plans, or policy limits.
B. Requiring risk control measures.
C. Using facultative reinsurance.
D. Amending the policy terms and conditions.
Which one of the following insurer performance goals is A. Meeting social responsibilities
the most difficult to evaluate?
Select one:
A. Meeting social responsibilities
B. Meeting profitability goals
C. Meeting customer needs
D. Meeting legal requirements
Which one of the following insurance consumer groups D. National accounts
would have the most risk financing alternatives available
to them?
Select one:
A. Small business
B. Individuals
C. Middle markets
D. National accounts
