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CPCU 520 Exam 2025 — Insurance Operations Study
Guide, Practice Test & Exam Prep
Prepare for the CPCU 520 Exam 2025 with a complete Insurance Operations study guide,
practice questions, and review materials. Master essential concepts in insurance operations,
risk management, underwriting, claims, and reinsurance to confidently pass your Chartered
Property Casualty Underwriter (CPCU) 520 exam and advance your insurance career.
• CPCU 520 exam 2025
• CPCU 520 Insurance Operations study guide
• CPCU 520 practice test questions
• CPCU 520 exam prep 2025
Which one of the following financial ratios is key for evaluating insurer solvency?
Select one:
A. Retention ratio
B. Loss ratio
C. Expense ratio
• D. Premium to surplus ratio - ANSWER-D. Premium to surplus ratio
Which one of the following statements is correct?
Select one:
A. Some states require insurance consultants who give advice or opinions about polices to be licensed.
B. Licensing requirements for insurance brokers are standardized among all the states.
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C. Public adjusters, who represent insureds for a fee, are not subject to licensing requirements.
D. Insurance agents are not subject to licensing requirements in most states. - ANSWER-A. Some states
require insurance consultants who give advice or opinions about polices to be licensed.
There are many types of controls used by organizations to gauge their progress toward meeting their
goals. In the insurance industry, expense ratios and loss ratios are examples of which one of the
following types of controls?
Select one:
A. Process
B. Financial
C. Behavioral
D. Operational - ANSWER-B. Financial
The Five Forces Model is a commonly used method of
Select one:
A. Monitoring corporate goals.
B. Measuring the company's financial, physical, and human assets.
C. Benchmarking strengths of management team against competition.
D. Analyzing the competitive environment. - ANSWER-D. Analyzing the competitive environment.
Which one of the following statements is correct with regard to the regulation of insurance policies?
Select one:
A. Most states have adopted "speed to market" laws that allow policy wordings to be used prior to
regulatory approval.
B. Legislation might require that certain standard mandatory policy provisions appear in certain types of
insurance policies.
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C. Legislation requiring insurance policies to meet a readability test is an effective way to measure
understandability.
D. Insurers in a given state cannot be required by law to use standardized policy wordings, because this
would eliminate competition. - ANSWER-B. Legislation might require that certain standard mandatory
policy provisions appear in certain types of insurance policies.
Workers compensation insurance benefits are established by statute. If legislation or a court decision
changes these benefits, past losses must be adjusted to
Select one:
A. A state specific percentage of benefits level.
B. Mandatory minimum benefit requirements.
C. Current inflation levels.
D. Current benefit levels. - ANSWER-D. Current benefit levels.
Every insurer has its own set of unique challenges, which can hinder the complete alignment of
information technology (IT) and business strategies. Which one of the following statements best
describes how an organization can overcome one of those challenges?
Select one:
A. Have IT staff guide internal and external customers through the learning curve and encourage
acceptance of IT initiatives.
B. Tie IT staff's job security to the success with which they explain and rationalize the development and
launch of new IT projects.
C. Focus primarily on retention and retrofitting of legacy systems and existing infrastructure rather than
updating to new ones.
D. Ensure that IT personnel see themselves as a separate unit apart from the insurance part of the
organization. - ANSWER-A. Have IT staff guide internal and external customers through the learning
curve and encourage acceptance of IT initiatives.
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Claims departments use techniques such as network analysis and clustering to help them
Select one:
A. Acknowledge and assign claims.
B. Resolve claims through alternative dispute resolution.
C. Set fair and adequate reserves.
D. Identify and prevent fraud. - ANSWER-D. Identify and prevent fraud.
When an insurer is selecting a market segment to target, which one of the following is an important
factor of the external environment the insurer should consider?
Select one:
A. Distribution channels
B. Technical resources
C. Product mix
D. Laws and regulations - ANSWER-D. Laws and regulations
Erin has recently graduated from college and relocated to Chicago. She has purchased a car and rented
an apartment and now needs to purchase insurance. Erin is looking for minimum coverages and the
lowest price available. Which one of the following is likely the best distribution system to meet Erin's
needs?
Select one:
A. Financial institution
B. Independent agent
C. Regional broker
D. Direct writer Internet search - ANSWER-
Which one of the following is a limitation of the loss development method of estimating loss reserves?
CPCU 520 Exam 2025 — Insurance Operations Study
Guide, Practice Test & Exam Prep
Prepare for the CPCU 520 Exam 2025 with a complete Insurance Operations study guide,
practice questions, and review materials. Master essential concepts in insurance operations,
risk management, underwriting, claims, and reinsurance to confidently pass your Chartered
Property Casualty Underwriter (CPCU) 520 exam and advance your insurance career.
• CPCU 520 exam 2025
• CPCU 520 Insurance Operations study guide
• CPCU 520 practice test questions
• CPCU 520 exam prep 2025
Which one of the following financial ratios is key for evaluating insurer solvency?
Select one:
A. Retention ratio
B. Loss ratio
C. Expense ratio
• D. Premium to surplus ratio - ANSWER-D. Premium to surplus ratio
Which one of the following statements is correct?
Select one:
A. Some states require insurance consultants who give advice or opinions about polices to be licensed.
B. Licensing requirements for insurance brokers are standardized among all the states.
,2|Page
C. Public adjusters, who represent insureds for a fee, are not subject to licensing requirements.
D. Insurance agents are not subject to licensing requirements in most states. - ANSWER-A. Some states
require insurance consultants who give advice or opinions about polices to be licensed.
There are many types of controls used by organizations to gauge their progress toward meeting their
goals. In the insurance industry, expense ratios and loss ratios are examples of which one of the
following types of controls?
Select one:
A. Process
B. Financial
C. Behavioral
D. Operational - ANSWER-B. Financial
The Five Forces Model is a commonly used method of
Select one:
A. Monitoring corporate goals.
B. Measuring the company's financial, physical, and human assets.
C. Benchmarking strengths of management team against competition.
D. Analyzing the competitive environment. - ANSWER-D. Analyzing the competitive environment.
Which one of the following statements is correct with regard to the regulation of insurance policies?
Select one:
A. Most states have adopted "speed to market" laws that allow policy wordings to be used prior to
regulatory approval.
B. Legislation might require that certain standard mandatory policy provisions appear in certain types of
insurance policies.
,3|Page
C. Legislation requiring insurance policies to meet a readability test is an effective way to measure
understandability.
D. Insurers in a given state cannot be required by law to use standardized policy wordings, because this
would eliminate competition. - ANSWER-B. Legislation might require that certain standard mandatory
policy provisions appear in certain types of insurance policies.
Workers compensation insurance benefits are established by statute. If legislation or a court decision
changes these benefits, past losses must be adjusted to
Select one:
A. A state specific percentage of benefits level.
B. Mandatory minimum benefit requirements.
C. Current inflation levels.
D. Current benefit levels. - ANSWER-D. Current benefit levels.
Every insurer has its own set of unique challenges, which can hinder the complete alignment of
information technology (IT) and business strategies. Which one of the following statements best
describes how an organization can overcome one of those challenges?
Select one:
A. Have IT staff guide internal and external customers through the learning curve and encourage
acceptance of IT initiatives.
B. Tie IT staff's job security to the success with which they explain and rationalize the development and
launch of new IT projects.
C. Focus primarily on retention and retrofitting of legacy systems and existing infrastructure rather than
updating to new ones.
D. Ensure that IT personnel see themselves as a separate unit apart from the insurance part of the
organization. - ANSWER-A. Have IT staff guide internal and external customers through the learning
curve and encourage acceptance of IT initiatives.
, 4|Page
Claims departments use techniques such as network analysis and clustering to help them
Select one:
A. Acknowledge and assign claims.
B. Resolve claims through alternative dispute resolution.
C. Set fair and adequate reserves.
D. Identify and prevent fraud. - ANSWER-D. Identify and prevent fraud.
When an insurer is selecting a market segment to target, which one of the following is an important
factor of the external environment the insurer should consider?
Select one:
A. Distribution channels
B. Technical resources
C. Product mix
D. Laws and regulations - ANSWER-D. Laws and regulations
Erin has recently graduated from college and relocated to Chicago. She has purchased a car and rented
an apartment and now needs to purchase insurance. Erin is looking for minimum coverages and the
lowest price available. Which one of the following is likely the best distribution system to meet Erin's
needs?
Select one:
A. Financial institution
B. Independent agent
C. Regional broker
D. Direct writer Internet search - ANSWER-
Which one of the following is a limitation of the loss development method of estimating loss reserves?
