Comprehensive CPCU 520 Q&A Bundle

What is the primary goal of the claims function complying with the contractual promise to pay losses that are covered by the policy and supporting the insurer's financial goals What is the difference between a 1st party claim and a 3rd party claim? 1st party claims are made by the insured direct...

One of the functions of reinsurance is to increase large-line capacity. Which one of the following best describes this function from the perspective of a primary insurer? Select one: A. To withdraw from a market segment in a geographic area B. To assume a loss exposure with potential financial ...

Business Intelligence The skills, technologies, applications, and practices used to improve decision-making insights and reinforce information integrity Retention The percentage of policies in force that are renewed at the policy anniversary Internet of things A network of objects that transmi...

Sherman Anti Trust Act prohibits collusion to gain a monopoly. prevents insurers from banning together to control insurance rates Paul vs. Virginia legal decision that determined insurance was not interstate commerce and became the legal precedent for the exemption of insurance from federal regul...

Reinsurance The transfer of insurance risk from one insurer to another through a contractual agreement under which one insurer (the reinsurer) agrees, in return for a reinsurance premium to indemnify another insurer (the primary insurer) for some or all of the financial consequences of certain loss ...

Policyholders' surplus Under statutory accounting principles an insurer's total admitted assets minus its total liabilities Capacity The amount of business an insurer is able to write, usually based on a comparison of the insurer's written premium to its policyholders' surplus Underwriting...

Proprietary insurer Insurer formed for the purpose of earning a profit for its owners Mutual Insurer An insurer that is owned by its policyholders and formed as a corporation for the purpose of providing insurance to them Reciprocal insurance exchange (interinsurance exchange) Insurer owned by...

Goals of risk control activities Earn a profit Meet customer needs Comply with legal requirements Fulfill duty to society Primary goal of risk control evaluate loss exposures to assist with underwriting decisions and to help the insured prevent losses or reduce their effect Risk control act...

Strategic management process The process an organization uses to formulate and implement its business strategies Mission statement A broad expression of an entity's goals Three steps of a strategic management process Strategy formulation Strategy implementation Strategy evaluation SWOT a...

Claims has two primary goals Complying with the contractual promise Supporting the insurer's financial goals 3 primary internal department users of claims information Marketing - claims satisfaction Underwriting - loss lessons learned Actuarial - loss reported and IBNR External interfaces ...

Which one of the following statements is correct with regard to the various users of claim information? Individual underwriters are interested in claim information for the specific accounts they have underwritten. Which one of the following statements is true concerning claim information users? P...

Line Underwriter An underwriter who is primarily responsible for implementing the steps in the underwriting process. Staff Underwriter An underwriter who assists underwriting management with making an implementing underwriting policy. Underwriting Guidelines A written manual that communicates ...

Insurer Marketing Diffentiations Customer focus, products and services, size, geographic area, distribution systems Customer Focus Through market intelligence, often augmented by analysis of the massive amount of data available about individual consumers, the insurer understands how to reach exis...

Insurer Y is involved in recycling and reusing materials used in policy production and claims handling and reporting. The insurer has also been keenly interested in salvage programs having learned that these programs are better for the environment and more cost-effective for insureds. By participati...