AIIM Certified Specialist Lines Underwriter CSLU
Exam
Question 1. **What is the primary distinction between admitted and surplus (non‑admitted)
carriers?**
A) Admitted carriers are regulated by state insurance departments, while surplus carriers are
not.
B) Surplus carriers can only write personal lines, whereas admitted carriers write commercial
lines.
C) Admitted carriers must offer the same rates to all applicants, while surplus carriers can price
individually.
D) Surplus carriers are required to participate in state guaranty funds, while admitted carriers
are not.
Answer: A
Explanation: Admitted carriers are licensed and regulated by the state, must file rates, and are
part of guaranty funds. Surplus lines operate outside the admitted market and are not subject
to those regulations.
---
Question 2. **Which of the following lines is most commonly placed through a wholesale
broker rather than a retail broker?**
A) Commercial Property
B) Workers’ Compensation
C) Aviation Hull Insurance
D) General Liability
Answer: C
Explanation: Aviation hull risks are highly specialized and often require the expertise of
wholesale brokers who have access to niche carriers.
---
,AIIM Certified Specialist Lines Underwriter CSLU
Exam
Question 3. **In a hard market cycle, which of the following is most likely to occur?**
A) Underwriting appetite expands and capacity increases.
B) Premiums decrease across most lines.
C) Loss ratios improve dramatically.
D) Underwriters tighten risk selection and raise rates.
Answer: D
Explanation: A hard market is characterized by reduced capacity, tighter underwriting standards,
and higher premiums.
---
Question 4. **Which hazard type refers to the attitudes, values, and behaviors of a company’s
employees that can affect loss experience?**
A) Physical hazard
B) Moral hazard
C) Morale hazard
D) Legal hazard
Answer: C
Explanation: Morale hazard describes careless or indifferent behavior that increases the
likelihood of a loss, distinct from moral hazard (intentional fraud).
---
Question 5. **When evaluating a prospect’s financial stability, which financial statement
provides the most insight into liquidity?**
,AIIM Certified Specialist Lines Underwriter CSLU
Exam
A) Income Statement
B) Balance Sheet
C) Statement of Cash Flows
D) Notes to Financial Statements
Answer: B
Explanation: The balance sheet lists current assets and liabilities, allowing assessment of the
company’s ability to meet short‑term obligations.
---
Question 6. **A “named‑peril” policy differs from an “all‑risk” policy in that it:**
A) Covers only losses caused by perils specifically listed in the policy.
B) Provides coverage for any loss unless specifically excluded.
C) Requires a claims‑made trigger.
D) Is only available for marine cargo.
Answer: A
Explanation: Named‑peril policies limit coverage to perils expressly named; all‑risk (open‑peril)
policies cover any peril not excluded.
---
Question 7. **Which of the following is a typical characteristic of a “claims‑made” liability
policy?**
A) Coverage attaches at the time of loss.
B) A retroactive date is required to define the earliest loss that can be reported.
C) It cannot be extended with an endorsement.
, AIIM Certified Specialist Lines Underwriter CSLU
Exam
D) It is always written on a surplus lines carrier.
Answer: B
Explanation: Claims‑made policies provide coverage for claims reported during the policy
period, and a retroactive date limits coverage to losses after that date.
---
Question 8. **In cyber insurance, which coverage is most likely to be excluded in a standard
policy?**
A) Data breach response costs
B) Business interruption due to a cyber event
C) Losses from state‑sponsored cyber attacks
D) Network security liability
Answer: C
Explanation: Many cyber policies exclude losses arising from acts of war or state‑sponsored
attacks, treating them as acts of terrorism.
---
Question 9. **Which regulation governs the “diligent effort” requirement for surplus line
placements in the United States?**
A) NAIC Model Act
B) Sarbanes‑Oxley Act
C) Dodd‑Frank Act
D) Health Insurance Portability and Accountability Act (HIPAA)
Answer: A
Exam
Question 1. **What is the primary distinction between admitted and surplus (non‑admitted)
carriers?**
A) Admitted carriers are regulated by state insurance departments, while surplus carriers are
not.
B) Surplus carriers can only write personal lines, whereas admitted carriers write commercial
lines.
C) Admitted carriers must offer the same rates to all applicants, while surplus carriers can price
individually.
D) Surplus carriers are required to participate in state guaranty funds, while admitted carriers
are not.
Answer: A
Explanation: Admitted carriers are licensed and regulated by the state, must file rates, and are
part of guaranty funds. Surplus lines operate outside the admitted market and are not subject
to those regulations.
---
Question 2. **Which of the following lines is most commonly placed through a wholesale
broker rather than a retail broker?**
A) Commercial Property
B) Workers’ Compensation
C) Aviation Hull Insurance
D) General Liability
Answer: C
Explanation: Aviation hull risks are highly specialized and often require the expertise of
wholesale brokers who have access to niche carriers.
---
,AIIM Certified Specialist Lines Underwriter CSLU
Exam
Question 3. **In a hard market cycle, which of the following is most likely to occur?**
A) Underwriting appetite expands and capacity increases.
B) Premiums decrease across most lines.
C) Loss ratios improve dramatically.
D) Underwriters tighten risk selection and raise rates.
Answer: D
Explanation: A hard market is characterized by reduced capacity, tighter underwriting standards,
and higher premiums.
---
Question 4. **Which hazard type refers to the attitudes, values, and behaviors of a company’s
employees that can affect loss experience?**
A) Physical hazard
B) Moral hazard
C) Morale hazard
D) Legal hazard
Answer: C
Explanation: Morale hazard describes careless or indifferent behavior that increases the
likelihood of a loss, distinct from moral hazard (intentional fraud).
---
Question 5. **When evaluating a prospect’s financial stability, which financial statement
provides the most insight into liquidity?**
,AIIM Certified Specialist Lines Underwriter CSLU
Exam
A) Income Statement
B) Balance Sheet
C) Statement of Cash Flows
D) Notes to Financial Statements
Answer: B
Explanation: The balance sheet lists current assets and liabilities, allowing assessment of the
company’s ability to meet short‑term obligations.
---
Question 6. **A “named‑peril” policy differs from an “all‑risk” policy in that it:**
A) Covers only losses caused by perils specifically listed in the policy.
B) Provides coverage for any loss unless specifically excluded.
C) Requires a claims‑made trigger.
D) Is only available for marine cargo.
Answer: A
Explanation: Named‑peril policies limit coverage to perils expressly named; all‑risk (open‑peril)
policies cover any peril not excluded.
---
Question 7. **Which of the following is a typical characteristic of a “claims‑made” liability
policy?**
A) Coverage attaches at the time of loss.
B) A retroactive date is required to define the earliest loss that can be reported.
C) It cannot be extended with an endorsement.
, AIIM Certified Specialist Lines Underwriter CSLU
Exam
D) It is always written on a surplus lines carrier.
Answer: B
Explanation: Claims‑made policies provide coverage for claims reported during the policy
period, and a retroactive date limits coverage to losses after that date.
---
Question 8. **In cyber insurance, which coverage is most likely to be excluded in a standard
policy?**
A) Data breach response costs
B) Business interruption due to a cyber event
C) Losses from state‑sponsored cyber attacks
D) Network security liability
Answer: C
Explanation: Many cyber policies exclude losses arising from acts of war or state‑sponsored
attacks, treating them as acts of terrorism.
---
Question 9. **Which regulation governs the “diligent effort” requirement for surplus line
placements in the United States?**
A) NAIC Model Act
B) Sarbanes‑Oxley Act
C) Dodd‑Frank Act
D) Health Insurance Portability and Accountability Act (HIPAA)
Answer: A
