AU 60 ADVANCED PRACTICE TEST 2026
COMPLETE SET INCLUDING TWO
VERSIONS AND PRACTICE QUESTIONS
GUARANTEED CORRECT ANSWERS
GRADED A+
⩥ underwriting. Answer: The process of selecting insureds, pricing
coverage, determining insurance policy terms and conditions, and then
monitoring the underwriting 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 (UW 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 is blended with multiple variables and used to
construct models of anticipated future outcomes.
,⩥ catastrophe model. Answer: A type of computer 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 insure is able to write,
usually based on a comparison of the insurer's written premiums to its
policyholder's surplus.
⩥ manuscript policy or manuscript endorsement. Answer: An insurance
policy or endorsement that 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 central hubs through the internet.
,⩥ artificial intelligence (AI). Answer: Computer processing or output
that simulates human reasoning or knowledge
⩥ Machine learning. Answer: artificial intelligence in which computers
continually teach themselves to make better decisions based on previous
results and new data
⩥ Deep Learning. Answer: Insights into data use and processing gained
by combining artificial intelligence and machine learning. It is based on
algorithms derived from artificial neural networks.
⩥ data mining. Answer: The analysis of large amounts of data to find
new relationships and patterns that will assist in developing business
solutions.
⩥ Unfair Discrimination. Answer: applying different standards or
methods of treatment to insureds who have the same basic
characteristics and loss potential, such as charging higher-than-normal
rates for an auto insurance applicant based solely on the applicant's race,
religion, or ethnic background
⩥ declination. Answer: An insurer's refusal to provide coverage to an
applicant who has made a written request to the insurer or its producer,
or a producer's refusal to forward such a written request to an insurer.
, ⩥ termination. Answer: An insurer's cancellation of a policy during the
policy term or nonrenewable of coverage at the end of a policy term.
⩥ notification requirements. Answer: regulatory requirements relating to
timing and contents of an insurers notice to an insured of the declination,
termination and nonrenewal of insurance coverage
⩥ Market Conduct Examination. Answer: An analysis of an insurer's
practices in four operational areas: sales and advertising, underwriting,
ratemaking, and claim handling.
⩥ Premium-to-surplus ratio, or capacity ratio. Answer: A capacity ratio
that indicates an insurer's financial strength by relating net written
premiums to policyholders' surplus
⩥ application. Answer: A legal document that provides information
obtained directly from an applicant requesting insurance and that an
insurer can use for underwriting and claim handling purposes.
⩥ loss history. Answer: A listing of past claims, including the date of
occurrence, the line of business, the type or description of the claim, the
date of the claim, the amount paid, the amount reserved, and the claim's
current status.
COMPLETE SET INCLUDING TWO
VERSIONS AND PRACTICE QUESTIONS
GUARANTEED CORRECT ANSWERS
GRADED A+
⩥ underwriting. Answer: The process of selecting insureds, pricing
coverage, determining insurance policy terms and conditions, and then
monitoring the underwriting 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 (UW 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 is blended with multiple variables and used to
construct models of anticipated future outcomes.
,⩥ catastrophe model. Answer: A type of computer 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 insure is able to write,
usually based on a comparison of the insurer's written premiums to its
policyholder's surplus.
⩥ manuscript policy or manuscript endorsement. Answer: An insurance
policy or endorsement that 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 central hubs through the internet.
,⩥ artificial intelligence (AI). Answer: Computer processing or output
that simulates human reasoning or knowledge
⩥ Machine learning. Answer: artificial intelligence in which computers
continually teach themselves to make better decisions based on previous
results and new data
⩥ Deep Learning. Answer: Insights into data use and processing gained
by combining artificial intelligence and machine learning. It is based on
algorithms derived from artificial neural networks.
⩥ data mining. Answer: The analysis of large amounts of data to find
new relationships and patterns that will assist in developing business
solutions.
⩥ Unfair Discrimination. Answer: applying different standards or
methods of treatment to insureds who have the same basic
characteristics and loss potential, such as charging higher-than-normal
rates for an auto insurance applicant based solely on the applicant's race,
religion, or ethnic background
⩥ declination. Answer: An insurer's refusal to provide coverage to an
applicant who has made a written request to the insurer or its producer,
or a producer's refusal to forward such a written request to an insurer.
, ⩥ termination. Answer: An insurer's cancellation of a policy during the
policy term or nonrenewable of coverage at the end of a policy term.
⩥ notification requirements. Answer: regulatory requirements relating to
timing and contents of an insurers notice to an insured of the declination,
termination and nonrenewal of insurance coverage
⩥ Market Conduct Examination. Answer: An analysis of an insurer's
practices in four operational areas: sales and advertising, underwriting,
ratemaking, and claim handling.
⩥ Premium-to-surplus ratio, or capacity ratio. Answer: A capacity ratio
that indicates an insurer's financial strength by relating net written
premiums to policyholders' surplus
⩥ application. Answer: A legal document that provides information
obtained directly from an applicant requesting insurance and that an
insurer can use for underwriting and claim handling purposes.
⩥ loss history. Answer: A listing of past claims, including the date of
occurrence, the line of business, the type or description of the claim, the
date of the claim, the amount paid, the amount reserved, and the claim's
current status.
