AU 60 MISSED PRACTICE TEST FINAL EXAM
PAPER 2026 COMPREHENSIVE SOLUTIONS
⫸ Underwriting. Answer: The process of selecting insureds, pricing
coverage, determining insurance policy terms and conditions, and then
monitoring the decisions made.
⫸ Adverse Selection. Answer: In general, the tendency for people with
the greatest probability of loss to be the ones most likely to purchase
insurance.
⫸ Policyholders' Surplus. Answer: Under statutory accounting
principles (SAP), an insurer's total admitted assets minus its total
liabilities.
⫸ Underwriting Guidelines (Underwriting Guide). Answer: A written
manual that communicates an insurer's underwriting policy and that
specifies the attributes of an account that an insurer is willing to insure.
⫸ Predictive Modeling. Answer: A process in which historical data
based on behaviors and events are blended with multiple variables and
used to construct models of anticipated future outcomes.
⫸ Catastrophe Model. Answer: A type of computer program that
estimates losses from future potential catastrophic events.
, ⫸ Telematics. Answer: The use of technological devices to transmit
data via wireless communication and GPS tracking.
⫸ Capacity. Answer: The amount of business an insurer is able to write,
usually based on a comparison of the insurer's written premiums to its
policyholders' surplus.
⫸ Manuscript Policy or Manuscript Endorsement. Answer: An
insurance policy or endorsement that is specifically drafted according to
terms negotiated between a specific insured (or group of insureds) and
an insurer.
⫸ Big Data. Answer: Sets of data that are too large to be gathered and
analyzed by traditional methods.
⫸ Smart Product. Answer: An innovative item that uses sensors;
wireless sensor networks; and data collection, transmission, and analysis
to further enable the item to be faster, more useful, or otherwise
improved.
⫸ Internet of Things (IoT). Answer: A network of objects that transmit
data to each other and to central hubs through the internet.
PAPER 2026 COMPREHENSIVE SOLUTIONS
⫸ Underwriting. Answer: The process of selecting insureds, pricing
coverage, determining insurance policy terms and conditions, and then
monitoring the decisions made.
⫸ Adverse Selection. Answer: In general, the tendency for people with
the greatest probability of loss to be the ones most likely to purchase
insurance.
⫸ Policyholders' Surplus. Answer: Under statutory accounting
principles (SAP), an insurer's total admitted assets minus its total
liabilities.
⫸ Underwriting Guidelines (Underwriting Guide). Answer: A written
manual that communicates an insurer's underwriting policy and that
specifies the attributes of an account that an insurer is willing to insure.
⫸ Predictive Modeling. Answer: A process in which historical data
based on behaviors and events are blended with multiple variables and
used to construct models of anticipated future outcomes.
⫸ Catastrophe Model. Answer: A type of computer program that
estimates losses from future potential catastrophic events.
, ⫸ Telematics. Answer: The use of technological devices to transmit
data via wireless communication and GPS tracking.
⫸ Capacity. Answer: The amount of business an insurer is able to write,
usually based on a comparison of the insurer's written premiums to its
policyholders' surplus.
⫸ Manuscript Policy or Manuscript Endorsement. Answer: An
insurance policy or endorsement that is specifically drafted according to
terms negotiated between a specific insured (or group of insureds) and
an insurer.
⫸ Big Data. Answer: Sets of data that are too large to be gathered and
analyzed by traditional methods.
⫸ Smart Product. Answer: An innovative item that uses sensors;
wireless sensor networks; and data collection, transmission, and analysis
to further enable the item to be faster, more useful, or otherwise
improved.
⫸ Internet of Things (IoT). Answer: A network of objects that transmit
data to each other and to central hubs through the internet.
