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CPCU 520 Exam (3 Latest Versions) /Chartered
Property Casualty Underwriter Exam/ featuring
accurate and verified questions covering
insurance operations, underwriting, claims
handling, marketing, risk management, and the
regulatory environment. Design
Chapter 1 - ....ANSWER ....✔✔
Proprietary insurers - ....ANSWER ....✔✔ Insurer
formed for the purpose of earning a profit for its
owners.
Mutual insurer - ....ANSWER ....✔✔ An insurer owned
by its policyholders and incorporated to provide
insurance for them.
Reciprocal Insurance Exchange (interinsurance exchange)
- ....ANSWER ....✔✔ Insurer owned by policyholders,
formed as unincorporated association to provide
insurance to members (called subscribers), and managed
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by an attorney-in-fact. Members agree to mutually
insure each other, with profits and losses shared in
proportion to amount of insurance purchased from the
exchange by that owner.
Fair Access to Insurance Requirements (FAIR) plans -
....ANSWER ....✔✔ An insurance pool through which
private insurers collectively address an unmet need for
property insurance on urban properties, especially those
susceptible to loss by riot or civil commotion.
Residual Market - ....ANSWER ....✔✔ The term
referring collectively to insurers and other organizations
that make insurance available through a shared risk
mechanism to those who cannot obtain coverage in the
admitted market.
Surplus lines broker - ....ANSWER ....✔✔ A person or
firm that places business with insurers not licensed
(nonadmitted) in the state in which the transaction occurs
but that is permitted to write insurance because
coverage is not available through standard market
insurers.
Independent agency and brokerage marketing system -
....ANSWER ....✔✔ An insurance marketing system
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under which producers (agents or brokers) who are
independent contractors, sell insurance, usually as
representatives of several unrelated insurers.
Direct writer marketing system - ....ANSWER ....✔✔
An insurance marketing system that uses sales agents (or
sales representatives) who are direct employees of the
insurer.
Exclusive marketing system - ....ANSWER ....✔✔ An
insurance marketing system under which agents contract
to sell insurance exclusively for one insurer (or for an
associated group of insurers).
Distribution channel - ....ANSWER ....✔✔ The channel
used by the producer of a product or service to transfer
that product or service to the ultimate customer.
Probable maximum loss (PML) - ....ANSWER ....✔✔
The largest loss that an insured is likely to sustain.
Underwriting - ....ANSWER ....✔✔ The process of
selecting insureds, pricing coverage, determining
insurance policy terms and conditions, and then
monitoring the underwriting decisions made.
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Book of business - ....ANSWER ....✔✔ A group of
policies with a common characteristic, such as territory or
type of coverage, or all policies written by a particular
insurer or agency.
Underwriting guidelines (Underwriting 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.
Adverse selection - ....ANSWER ....✔✔ In general, the
tendency for people with the greatest probability of
loss to be the ones most likely to purchase insurance.
Chapter 2 - ....ANSWER ....✔✔
National Association of Insurance Commissioners (NAIC) -
....ANSWER ....✔✔ An association of insurance
commissioners from the fifty U.S. states, the District of
Columbia, and the five U.S. territories and possessions,
whose purpose is to coordinate insurance regulation
activities among various state insurance departments.
CPCU 520 Exam (3 Latest Versions) /Chartered
Property Casualty Underwriter Exam/ featuring
accurate and verified questions covering
insurance operations, underwriting, claims
handling, marketing, risk management, and the
regulatory environment. Design
Chapter 1 - ....ANSWER ....✔✔
Proprietary insurers - ....ANSWER ....✔✔ Insurer
formed for the purpose of earning a profit for its
owners.
Mutual insurer - ....ANSWER ....✔✔ An insurer owned
by its policyholders and incorporated to provide
insurance for them.
Reciprocal Insurance Exchange (interinsurance exchange)
- ....ANSWER ....✔✔ Insurer owned by policyholders,
formed as unincorporated association to provide
insurance to members (called subscribers), and managed
,2|Page
by an attorney-in-fact. Members agree to mutually
insure each other, with profits and losses shared in
proportion to amount of insurance purchased from the
exchange by that owner.
Fair Access to Insurance Requirements (FAIR) plans -
....ANSWER ....✔✔ An insurance pool through which
private insurers collectively address an unmet need for
property insurance on urban properties, especially those
susceptible to loss by riot or civil commotion.
Residual Market - ....ANSWER ....✔✔ The term
referring collectively to insurers and other organizations
that make insurance available through a shared risk
mechanism to those who cannot obtain coverage in the
admitted market.
Surplus lines broker - ....ANSWER ....✔✔ A person or
firm that places business with insurers not licensed
(nonadmitted) in the state in which the transaction occurs
but that is permitted to write insurance because
coverage is not available through standard market
insurers.
Independent agency and brokerage marketing system -
....ANSWER ....✔✔ An insurance marketing system
,3|Page
under which producers (agents or brokers) who are
independent contractors, sell insurance, usually as
representatives of several unrelated insurers.
Direct writer marketing system - ....ANSWER ....✔✔
An insurance marketing system that uses sales agents (or
sales representatives) who are direct employees of the
insurer.
Exclusive marketing system - ....ANSWER ....✔✔ An
insurance marketing system under which agents contract
to sell insurance exclusively for one insurer (or for an
associated group of insurers).
Distribution channel - ....ANSWER ....✔✔ The channel
used by the producer of a product or service to transfer
that product or service to the ultimate customer.
Probable maximum loss (PML) - ....ANSWER ....✔✔
The largest loss that an insured is likely to sustain.
Underwriting - ....ANSWER ....✔✔ The process of
selecting insureds, pricing coverage, determining
insurance policy terms and conditions, and then
monitoring the underwriting decisions made.
, 4|Page
Book of business - ....ANSWER ....✔✔ A group of
policies with a common characteristic, such as territory or
type of coverage, or all policies written by a particular
insurer or agency.
Underwriting guidelines (Underwriting 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.
Adverse selection - ....ANSWER ....✔✔ In general, the
tendency for people with the greatest probability of
loss to be the ones most likely to purchase insurance.
Chapter 2 - ....ANSWER ....✔✔
National Association of Insurance Commissioners (NAIC) -
....ANSWER ....✔✔ An association of insurance
commissioners from the fifty U.S. states, the District of
Columbia, and the five U.S. territories and possessions,
whose purpose is to coordinate insurance regulation
activities among various state insurance departments.
