CPCU 540 FINAL PAPER 2026
SOLVED QUESTIONS VERIFIED
ANSWERS 100 PERCENT CORRECT
FULL STUDY SHEET
◉ Big data. Answer: Sets of data that are too large to be gathered and
analyzed by traditional methods
◉ Good-faith claims handling. Answer: The manner of handling claims
that requires an insurer to give consideration to the insured's interests
that is at least equal to the consideration it gives its own interests
◉ Primary insurer. Answer: In reinsurance, the insurer (also referred to
as the ceding company) that transfers or cedes all or part of the insurance
risk it has assumed to another insurer in a contractual arrangement
◉ Reinsurer. Answer: The insurer that assumes some or all of the
potential costs of insured loss exposures of the primary insurer in a
reinsurance contractual agreement
◉ Ceding commission. Answer: An amount paid by the reinsurer to the
primary insurer to cover part or all of the primary insurer's policy
acquisition expenses and other costs
◉ Large-line capacity. Answer: An insurer's ability to provide larger
amounts of insurance for property loss exposures, or higher limits of
, liability for liability loss exposures, than it is otherwise willing to
provide
◉ Surplus relief. Answer: A flow of funds into an insurer's
policyholders' surplus when policyholders' surplus has been reduced by
the insurer's rapid growth in written premiums
◉ Line underwriter. Answer: An underwriter who is primarily
responsible for implementing the steps in the underwriting process
◉ Staff underwriter. Answer: An underwriter who assists underwriting
management with making and implementing underwriting policy
◉ Combined ratio. Answer: A profitability ratio that indicates whether
an insurer has made an underwriting loss or gain
◉ Hit ratio. Answer: The ratio of insurance policies written to those that
have been quoted to applicants for insurance
◉ Loss ratio. Answer: A ratio that measures losses and loss adjustment
expenses against earned premiums and that reflects the percentage of
premiums being consumed by losses
◉ Reserve. Answer: The amount the insurer estimates and sets aside to
pay on an existing claim
SOLVED QUESTIONS VERIFIED
ANSWERS 100 PERCENT CORRECT
FULL STUDY SHEET
◉ Big data. Answer: Sets of data that are too large to be gathered and
analyzed by traditional methods
◉ Good-faith claims handling. Answer: The manner of handling claims
that requires an insurer to give consideration to the insured's interests
that is at least equal to the consideration it gives its own interests
◉ Primary insurer. Answer: In reinsurance, the insurer (also referred to
as the ceding company) that transfers or cedes all or part of the insurance
risk it has assumed to another insurer in a contractual arrangement
◉ Reinsurer. Answer: The insurer that assumes some or all of the
potential costs of insured loss exposures of the primary insurer in a
reinsurance contractual agreement
◉ Ceding commission. Answer: An amount paid by the reinsurer to the
primary insurer to cover part or all of the primary insurer's policy
acquisition expenses and other costs
◉ Large-line capacity. Answer: An insurer's ability to provide larger
amounts of insurance for property loss exposures, or higher limits of
, liability for liability loss exposures, than it is otherwise willing to
provide
◉ Surplus relief. Answer: A flow of funds into an insurer's
policyholders' surplus when policyholders' surplus has been reduced by
the insurer's rapid growth in written premiums
◉ Line underwriter. Answer: An underwriter who is primarily
responsible for implementing the steps in the underwriting process
◉ Staff underwriter. Answer: An underwriter who assists underwriting
management with making and implementing underwriting policy
◉ Combined ratio. Answer: A profitability ratio that indicates whether
an insurer has made an underwriting loss or gain
◉ Hit ratio. Answer: The ratio of insurance policies written to those that
have been quoted to applicants for insurance
◉ Loss ratio. Answer: A ratio that measures losses and loss adjustment
expenses against earned premiums and that reflects the percentage of
premiums being consumed by losses
◉ Reserve. Answer: The amount the insurer estimates and sets aside to
pay on an existing claim
