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AU 60 FINAL EXAM ACTUAL EXAM 2 VERSIONS AND PRACTICE QUESTIONS EXAM COMPLETE 300 QUESTIONS WITH DETAILED VERIFIED ANSWERS (100% CORRECT ANSWERS) /ALREADY GRADED A+$17.99
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AU 60 FINAL EXAM ACTUAL EXAM 2 VERSIONS AND PRACTICE QUESTIONS EXAM COMPLETE 300 QUESTIONS WITH DETAILED VERIFIED ANSWERS (100% CORRECT ANSWERS) /ALREADY GRADED A+
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Course
AU 60
Institution
AU 60
AU 60 FINAL EXAM ACTUAL EXAM 2 VERSIONS
AND PRACTICE QUESTIONS EXAM COMPLETE 300
QUESTIONS WITH DETAILED VERIFIED ANSWERS
(100% CORRECT ANSWERS) /ALREADY GRADED A+
AU 60 FINAL EXAM ACTUAL EXAM 2 VERSIONS
AND PRACTICE QUESTIONS EXAM COMPLETE 300
QUESTIONS WITH DETAILED VERIFIED ANSWERS
(100% CORRECT ANSWERS) /ALREADY GRADED A+
A building owner has hired a roofing contractor to replace the roof of a building located
on a busy urban street. The building owner wants to be protected for any claims
resulting from the roofing contractor's work on his property. Which one of the following
methods would be most beneficial to the building owner?
Select one:
A. Adding the Building Owner Loss Payable provision to the building owner's property
policy
B. Adding the roofing contractor as an additional insured to the building owner's liability
policy
C. A separate owners and contractors protective liability policy in the name of the
roofing contractor
D. A separate owners and contractors protective liability policy in the name of the
building owner - ANSWERD. A separate owners and contractors protective liability
policy in the name of the building owner
A company's common-size statement lists two years, 20X3 and 20X4. In 20X3, the
inventories line was five percent, and in 20X4 the inventories line was seven percent.
Which one of the following could an underwriter infer from this information?
Select one:
A. Inventories increased by two percent
B. The percentage of inventories to total assets increased
C. Percent of inventories changed with inflation
D. Inventories fell by two percent - ANSWERB. The percentage of inventories to total
assets increased
A deteriorating loss ratio led the Vice President of Underwriting at RST Insurance
Company to order reunderwriting of RST property insurance policies. As part of the
process, she ordered a report to analyze results of smaller segments of the business.
This report is a snapshot at a given point in time that provides data on specific
characteristics of the policies in the book of business. This report is called a(n)
Select one:
A. Special event review.
B. Underwriting audit.
C. New business review.
D. Risk profile. - ANSWERD. Risk profile.
,A group of policies with common characteristic, such as a territory or type of coverage,
or all policies written by a particular insurer, producer, or agency is referred to as
A. a policy group
B. a line of business
C. a coverage pool
D. a book of business - ANSWERD. a book of business
A proprietor of a small-scale operation proprietorship is
Select one:
A. Entitled to all the profits and responsible for a portion of liabilities.
B. Entitled to all the profits and is not responsible for any liability.
C. Entitled to all the profits and responsible for all liabilities.
D. Entitled to a portion of the profits and responsible for all liabilities - ANSWERC.
Entitled to all the profits and responsible for all liabilities.
A rating plan that adjusts the insured premium for savings in insurance company
commissions is called
Select one:
A. Rebating.
B. Experience.
C. Participating.
D. Expense modification - ANSWERD. Expense modification
ABC Insurance Company sells property insurance. The company is reunderwriting its
book of business at midyear. The company hoped to retain 80 percent of policyowners.
The retention rate is 82 percent and the loss ratio on the retained business is 62
percent. The company had hoped to write $2.5 million in premiums for the year, and the
midyear value was $1.3 million in premiums written. The new policy goal for the year
was 6,000 and 3,500 new policies had been written at midyear. The loss ratio goal for
the year was 65 percent, and the loss ratio at midyear was 68 percent. Assuming
premium writings and losses are distributed uniformly over the year, what should ABC
Insurance Company conclude about its performance at midyear?
Select one:
A. It would have been better to have a lower percentage of business retained.
B. New business is contributing negatively to the loss ratio.
C. The new policies sold goal was overly opt - ANSWERB. New business is contributing
negatively to the loss ratio. As the overall loss ratio is 68 percent and the loss ratio on
retained business is 62 percent, the new business must be contributing negatively to the
loss ratio.
ABC Insurance is considering entering new states as part of its growth plan. The
executives of ABC decide not to pursue new business in low-income areas of states
and provide underwriters with a map indicating the areas from which they are not to
accept applications. This position likely violates regulations that
A. specify policy terms and conditions
B. constrain insurers' ability to accept, modify, or decline loss exposures
,C. restrict the timing and conditions of coverage cancellations and nonrenewals
D. limit allowable classifications - ANSWERB. constrain insurers' ability to accept,
modify, or decline loss exposures
Actual Cash Value - ANSWERA method in valuing property that is calculated as the
cost to replace or repair property minus depreciation, the fair market value, or a
valuation determined by the broad evidence rule.
Actuaries and underwriters both have roles in pricing insurance products. Which one of
the following is actuaries' primary pricing role?
Select one:
A. Account classification
B. Ratemaking.
C. Individual account pricing
D. Application of premium modification plans - ANSWERB. Ratemaking.
Adam is an analyst conducting a market conduct examination at DEF Insurance in
response to a consumer complaint. During the course of his review, he discovers that
DEF has failed to apply newly implemented underwriting and rating factors to renewals,
failed to use mutually exclusive underwriting guidelines for the company's different
programs, failed to use correct forms and rates, and failed to apply underwriting
guidelines consistently by occasionally allowing producers exceptions. Which one of
these practices will Adam most likely allow the insurer to continue?
Select one:
A. Allowing producers exceptions in some cases
B. Not applying new rates and rules to renewals
C. Using guidelines for different programs that are not mutually exclusive
D. Not using correct forms and rates - ANSWERA. Allowing producers exceptions in
some cases
adverse selection - ANSWERIn general, the tendency for people with the greatest
probability of loss to be the ones most likely to purchase insurance.
affordability - ANSWERA social goal of insurance that states that a ceiling placed on
rates keeps coverage available so people can purchase it, that rates are determined so
that they transfer a portion of the costs of coverage from high-risk insureds to the
remaining insureds, or that a subsidy from outside the insurance mechanism offsets
premiums that are deemed unaffordable.
Alex has been a commercial underwriter for two years. He has received a multi-lines
submission for a company in an industry that he is not very familiar with. Which one of
the following external resources would give Alex a general description of the industry's
operations and the level of hazard by line of insurance?
Select one:
A. Dun & Bradstreet Report
B. Fire Protection Handbook
, C. Best's Underwriting Guide
D. Scopes Manual - ANSWERC. Best's Underwriting Guide
All of the following are characteristics of independent contractors, EXCEPT:
Select one:
A. An independent contractor works under a contract in which one party promises a
certain sum of money in return for the other party's performance of work.
B. Independent contractors are not subject to direction and control regarding the details
of the work.
C. When an independent contractor's work is unsatisfactory, the usual recourse is to
discharge the contractor.
D. Independent contractors often provide a service involving some measure of
specialization. - ANSWERC. When an independent contractor's work is unsatisfactory,
the usual recourse is to discharge the contractor.
All of the following are common profitability measures used in ratio analysis, EXCEPT:
Select one:
A. Net profit margin
B. Return on assets
C. Return on equity
D. Turnover of assets - ANSWERD. Turnover of assets
All of the following are guidelines for effective communication, EXCEPT:
Select one:
A. Understand the purpose of the message
B. Avoid using jargon
C. Stick to the point and be concise
D. Avoid setting timelines and deadlines - ANSWERD. Avoid setting timelines and
deadlines
All of the following are objectives of rate regulation, EXCEPT:
Select one:
A. Rates equitably reflect expected losses and expenses of the particular insured.
B. Rates promote availability and affordability of insurance.
C. Rates generate no more than a reasonable profit for the insurer.
D. Rates are adequate to pay for incurred losses and expenses. - ANSWERB. Rates
promote availability and affordability of insurance.
All of the following are reasons that an underwriter might want to obtain information in
addition to the application, EXCEPT:
Select one:
A. To collect missing information
B. To verify information
C. To postpone a decision
D. To investigate conflicting information - ANSWERC. To postpone a decision
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