CPCU 520 Practice Test Questions with Correct Answers Verified 100% Correct

CPCU 520 Practice Test Questions with Correct Answers Verified 100% Correct How often does the National Association of Insurance Commissioners (NAIC) meet to discuss important problems and issues in insurance regulation? - ANSWER -Three times a year Which one of the following statements is correct? - ANSWER -An insurer does not know what its actual expenses will be when a policy is sold. Filip is quoting to get Osakri's business and is not concerned with the adequacy of Mellfor's coverage with actual cash value on contents. Filip's behavior involving Osakri is known as - ANSWER -Twisting. All states attempt to ensure that continuous auto insurance coverage is available to consumers by - ANSWER -Restricting the rights of insurers to cancel or nonrenew personal auto insurance policies Under the terms of her agency contracts, the insurers forward policies promptly to Rhonda's customers and send a premium invoice with the policy. Insureds are instructed to remit premium payments to their insurer. The insurers calculate Rhonda's commissions and forward those commission payments to her monthly. Rhonda is operating under which one of the following payment procedures? - ANSWER -Direct bill basis Omicron Manufacturing has approached Delta Insurance Brokerage to develop and implement a voluntary insurance program for life, health, and disability insurance for Omicron's employees. Delta puts together a program in which employees receive the coverage at discounted rates, and premiums are deducted from the employees' paychecks. Omicron and Delta are using which one of the following types of group marketing to offer this program? - ANSWER -Franchise marketing The principal method of determining a prospect's insurance needs is through - ANSWER -Completing a risk management review for the prospect. An agency bill process in which the producer is usually not required to pay the insurer until the premium is collected from the policyholder is known as - ANSWER -The item basis. Which one of the following statements is true regarding traditional marketing systems for insurance? - ANSWER -A principal characteristic that distinguishes one traditional marketing system from another is the ownership of policy expirations. Which one of the following insurance consumer groups would have the most risk financing alternatives available to them? - ANSWER National accounts Martin Insurance Company targets international manufacturers of specialty products. Its insureds place a high value on producer expertise, responsiveness, and confidentiality. Martin wants to expand into similar markets. Which one of the following insurance marketing distribution systems is most appropriate for Martin Insurance Company? - ANSWER -Direct writer Tania, an underwriting trainee for Keithly Insurance Company, has received a new homeowners application for Nanami. The home is to be insured for $150,000. It is a frame house with a swimming pool and trampoline in the back yard. The grass needs mowing and the shrubbery needs trimming. Nanami has a marginal credit score. What is Tania's first step in underwriting the policy for Nanami? - ANSWER -Check to see if she has the underwriting authority to make the decision. Which one of the following is a major constraint of underwriting policy? - ANSWER -Reinsurance Once an underwriter has evaluated a submission, selected and applied any appropriate modifications, and determined the premium, the next step is to implement the underwriting decision. To implement the decision, the underwriter should first - ANSWER -Communicate the decision to the producer. A management control tool used to determine whether line underwriters are properly implementing underwriting policy is known as an underwriting - ANSWER -Audit Which one of the following statements is correct with respect to estimating losses for use in the ratemaking process? - ANSWER -Rates are based on incomplete loss experience. Which one of the following statements is true regarding the establishment of loss reserves? - ANSWER -Case reserves are established by the claim department while IBNR reserves are established by actuaries.