CPCU 520 FINAL REVIEW QUESTIONS
Which one of the following statements is correct regarding rate regulation - Answers -
An insurer should expect at least some minimum rate of return on the equity invested in
its insurance operations.
Which one of the following statements is true regarding insurance policies? - Answers -
They are regulated through legislation.
When adjusting a property loss, a claim representative must determine whether or not
the loss was caused by a covered peril. Insurance that covers every cause of direct
physical loss or damage that is not specifically excluded is referred to as - Answers -
Special form coverage
Which one of the following statements is correct with respect to increased limits above
the basic coverage limits? - Answers -Charges to increase commercial liability
insurance limits frequently exceed 100 percent of the charge for basic coverage limits.
Which one of the following statements is true regarding ratemaking in different types of
insurance? - Answers -Trending of losses in fire insurance is generally restricted to
claim severity.
Which one of the following statements is true regarding insurance ratemaking methods?
- Answers -The loss ratio ratemaking method cannot be used to determine rates for a
new type of insurance.
Which one of the following types of reinsurance is generally chosen by newly
incorporated insurers or insurers with limited capital because it is effective in providing
surplus relief? - Answers -Pro rata
Per risk excess of loss reinsurance covers - Answers -Property insurance and applies
separately to each loss occurring to each risk.
Which one of the following statements is correct regarding the available sources of
reinsurance? - Answers -Reinsurance intermediaries can often help secure high
coverage limits and catastrophe coverage.
Which one of the following is correct with regard to an insurer's line and large-line
capacity? - Answers -An insurer's line is influenced by the maximum amount of
insurance or limit of liability allowed by insurance regulations.
Under a per policy excess of loss treaty, the attachment point and the reinsurance limit
apply - Answers -Separately to each insurance policy regardless of the number of
losses occurring under each policy.
Which one of the following statements is correct regarding rate regulation - Answers -
An insurer should expect at least some minimum rate of return on the equity invested in
its insurance operations.
Which one of the following statements is true regarding insurance policies? - Answers -
They are regulated through legislation.
When adjusting a property loss, a claim representative must determine whether or not
the loss was caused by a covered peril. Insurance that covers every cause of direct
physical loss or damage that is not specifically excluded is referred to as - Answers -
Special form coverage
Which one of the following statements is correct with respect to increased limits above
the basic coverage limits? - Answers -Charges to increase commercial liability
insurance limits frequently exceed 100 percent of the charge for basic coverage limits.
Which one of the following statements is true regarding ratemaking in different types of
insurance? - Answers -Trending of losses in fire insurance is generally restricted to
claim severity.
Which one of the following statements is true regarding insurance ratemaking methods?
- Answers -The loss ratio ratemaking method cannot be used to determine rates for a
new type of insurance.
Which one of the following types of reinsurance is generally chosen by newly
incorporated insurers or insurers with limited capital because it is effective in providing
surplus relief? - Answers -Pro rata
Per risk excess of loss reinsurance covers - Answers -Property insurance and applies
separately to each loss occurring to each risk.
Which one of the following statements is correct regarding the available sources of
reinsurance? - Answers -Reinsurance intermediaries can often help secure high
coverage limits and catastrophe coverage.
Which one of the following is correct with regard to an insurer's line and large-line
capacity? - Answers -An insurer's line is influenced by the maximum amount of
insurance or limit of liability allowed by insurance regulations.
Under a per policy excess of loss treaty, the attachment point and the reinsurance limit
apply - Answers -Separately to each insurance policy regardless of the number of
losses occurring under each policy.
