AU 60 EXAM NEWEST 2024 ACTUAL EXAM TEST BANK COMPLETE QUESTIONS AND CORRECT ANSWERS (VERIFIED ANSWERS) ALREADY GRADED A+
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AU 60
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AU 60
AU 60 EXAM NEWEST 2024 ACTUAL EXAM TEST BANK COMPLETE QUESTIONS AND CORRECT ANSWERS (VERIFIED ANSWERS) ALREADY GRADED A+
While developing goals for its book of business, an insurer's corporate underwriter decides to increase its market share of workers compensation insurance in the construction in...
AU 60 EXAM NEWEST 2024 ACTUAL EXAM
TEST BANK COMPLETE QUESTIONS AND
CORRECT ANSWERS (VERIFIED ANSWERS)
ALREADY GRADED A+
While developing goals for its book of business, an insurer's corporate underwriter
decides to increase its market share of workers compensation insurance in the
construction industry. This type of underwriting activity is known as
Select one:
A. Providing assistance to policyholders.
B. Developing underwriting guides.
C. Formulating underwriting policy.
D. Reviewing and revising rating plans. - Answer ✅ C. Formulating underwriting policy.
Which one of the following will draft a manuscript policy or endorsement that is worded
to address the specific needs of the insured?
Select one:
A. Underwriting supervisor
B. Field underwriter
C. Corporate underwriter
D. Producer - Answer ✅ C. Corporate underwriter
The most important thing a field underwriter does is - Answer ✅ Evaluating new
submissions and renewal underwriting.
Corporate underwriters share research of the market responsibilities with actuarial and
marketing departments. Research includes an ongoing evaluation of which one of the
following?
Select one:
A. The hit ratios by underwriter
B. Average loss ratio for a book of business
C. Optimal product mix in the book of business.
D. Revision to coverage forms - Answer ✅ C. Optimal product mix in the book of
business
Sofie, a property underwriter for Cintriell Insurance Company is reviewing a new
homeowners application. Sofie has changed the protection class to unprotected, as the
fire protection class listed by the producer is an eight and is incorrect. Which one of the
following line underwriter activities is Sofie performing?
Select one:
,A. Coordinating with producer efforts
B. Classifying and pricing accounts
C. Selecting insureds
D. Recommending correct coverage - Answer ✅ B. Classifying and pricing account
Which one of the following is the most common use of predictive modeling in the
underwriting of small commercial accounts?
Select one:
A. Risk analysis
B. Risk selection
C. Rating
D. Coverage proposal - Answer ✅ C. Rating i.e. predicting prospective loss costs
Determining common characteristics among the accounts that are renewing, those that
are not renewing, and those that are most profitable in order to determine if there is a
common reason why accounts are not renewing is an example of what? - Answer ✅
data mining
During a general market conduct examination of underwriting, examiners would look for
evidence of all of the following, EXCEPT:
Select one:
A. Improper cancellations
B. Inaccurate filing of rates and forms
C. Misclassification of risk
D. Inconsistent claim practices - Answer ✅ D. Inconsistent claim practices
Underwriters, in conjunction with ratemakers, help achieve actuarial equity by
Select one:
A. Ensuring that all consumers have equal access to insurance at affordable rates.
B. Ensuring that rates are consistent and vary little among insurers.
C. Assigning insureds with similar characteristics to the same rating class.
D. Charging similar premiums for all risks that they agree to insure. - Answer ✅ C.
Assigning insureds with similar characteristics to the same rating class
Which one of the following statements is correct with regard to regulation and insurers'
operations?
Select one:
A. Solvency regulation indirectly influences underwriting by limiting new business for
insurers.
B. Financial responsibility laws generally have no effect on the underwriting function.
C. Misclassification of current risks will not affect the accuracy of future rates.
D. Regulation of underwriting practices helps insurers remain solvent but is not
expected to minimize claims. - Answer ✅ A. Solvency regulation indirectly influences
underwriting by limiting new business for insurers.
Rate regulation:
,A. Directly affects underwriting
B. Indirectly affects underwriting - Answer ✅ A. Directly
Solvency Regulation
A. Directly affects underwriting
B. Indirectly affects underwriting - Answer ✅ B. Indirectly influences underwriting by
limiting the amount of new business an insurer and write
Samuel is a commercial accounts underwriter working on a new application with five
buildings located within the same territory. Samuel would like a photo of each building,
and some nontechnical information about the condition of the parking lots and the
neighboring buildings. Which one of the following would be the most cost effective
source of this information?
Select one:
A. Marketing representative
B. Claims representative
C. Risk control representative
D. Another underwriter - Answer ✅ A. Marketing representative
Which one of the following types of government records do underwriters use as a
source to predict future losses?
Select one:
A. Securities and Exchange Commission 10-K
B. Court records
C. Real estate records
D. Motor vehicle reports - Answer ✅ D. Motor vehicle reports
An insurer's comprehensive income includes
Select one:
A. Listings of salaries of key employees.
B. Unrealized gains and losses on securities.
C. Any dividends paid to stockholders.
D. The insurer's completed balance sheet. - Answer ✅ B. Unrealized gains and losses
on securities.
Underwriters must be careful when comparing financial statements using trend analysis
because false impressions about a company can be created. Which one of the following
might cause an underwriter to have a false impression about a company's health
because of an inventories increase on the financial statement?
Select one:
A. The inventory increase was caused by robust sales and growth.
B. The inventory increase was caused by a change in the inventory valuation method.
C. The inventory increase was caused by obsolete or damaged inventory.
D. The inventory increase was caused by a decline in seasonal sales. - Answer ✅ B.
The inventory increase was caused by a change in the inventory valuation method.
, TRUE/FALSE: Building or premises is one example of an ISO's Commercial Lines
Manual (CLM) classification - Answer ✅ TRUE
A book of business is a group of policies with common characteristics such as:
-_______
- type of ______
- policies written by a particular ______ or ______ - Answer ✅ -territory
-type of coverage
-insurer or agency
Policyholders surplus =
total ______ _____ - total ______ - Answer ✅ admitted assets - liabilities
Predictive modeling blends ______ ____ based on _______ and ______ to construct
models of anticipated future outcomes - Answer ✅ historical data based on behaviors
and events
A catastrophe model estimates losses from _____ ______ catastrophic events. -
Answer ✅ future potential
The capacity an insurer is able to write is based on a comparison of the insurer's _____
_______ to its ________ ________ - Answer ✅ written premiums to policyholders'
surplus
Underwriters ensure the adequacy of policyholders' surplus by:
- Identifying ____ ______
- Charging ______ ______
-Adhering to _______ ______ - Answer ✅ - Identifying loss exposures
- Charging adequate premiums
- Adhering to underwriting guidelines
The commercial underwriting process determines which submissions will be accepted,
and the ______, _____ , and _______ under which they are accepted - Answer ✅
amount (of insurance), price, conditions
What is the first step of the commercial underwriting process? - Answer ✅ 1. Evaluating
the application
During which step of the commercial underwriting process would an underwriter look to
understand the activities, operations and character of each applicant? - Answer ✅ 1.
Evaluating the application
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