CPCU Ethics Test Exam Questions And Solutions. |latest updates|
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Course
CPCU Ethics
Institution
CPCU Ethics
CPCU Ethics Test Exam Questions And
Solutions. |latest updates|
Lloyd is a commercial property underwriter at Insurance Company (IC). Two years ago,
he completed his studies and obtained the CPCU designation. Due to recent changes in
workers compensation legislation in o...
CPCU Ethics Test Exam Questions And
Solutions. |latest updates|
Lloyd is a commercial property underwriter at Insurance Company (IC). Two years ago,
he completed his studies and obtained the CPCU designation. Due to recent changes in
workers compensation legislation in one of the states in which IC operates, the insurer
has arranged for a one-day seminar to explain the changes and the impact they will
have on underwriting and claim settlement. Considering Lloyd's obligations under the
Code of Professional Conduct (the Code), which one of the following statements is
correct?
Choose one answer.
A. Lloyd is required to complete any training made available by his employer.
B. Because Lloyd has his CPCU, further training is considered unnecessary.
C. The Code requires Lloyd to remain current on all changes in insurance legislation.
D. Because the seminar is not directly related to Lloyd's job, he is not obliged to attend.
- answers D. Because the seminar is not directly related to Lloyd's job, he is not
obliged to attend.
Ming is the chief actuary at ABC Insurance and a CPCU. Ming has developed a new
method for calculating incurred but not reported losses (IBNR). He has tested the
method over a number of years and has found it to be much more accurate than the
traditional method used by most actuaries. Because the new method gives Ming more
confidence in the accuracy of his rate-making data, it allows ABC to charge lower rates
than its competitors. This in turn gives ABC a marketing advantage. Which one of the
following best describes Ming's obligations under Canon 5 of the Code of Professional
Ethics regarding raising the professional standards of the insurance profession?
Choose one answer.
A. The new IBNR calculation method constitutes a trade secret and Ming is under no
,obligation to divulge it.
B. Because the new method could benefit consumers in terms of lower rates, Ming is
required to share it with other insurers. - answers A. The new IBNR calculation method
constitutes a trade secret and Ming is under no obligation to divulge it.
Elin is a surety producer and a CPCU. She regularly deals with legal and accounting
information. She notices that certain financial information provided by a contractor
shows a deteriorating financial position. To best comply with Rule 6.1 of the Code of
Professional Conduct as it concerns confidential information needed by a professional,
Elin should
Choose one answer.
A. Suggest that a competing contractor consider merging with the client.
B. Report the newest financial information to the surety.
C. Counsel the client as to methods to improve the financial position.
D. Do nothing as the information is proprietary. - answers B. Report the newest
financial information to the surety.
Hugo is a CPCU and resident vice president and regional manager of an insurance
company. The state legislature is considering a bill that would alter auto coverages and
require insurers to reduce rates by 25 percent. Hugo is invited to be part of a roundtable
discussion on the legislation by the state public broadcasting affiliate. To best comply
with Canon 7 of the Code of Professional Conduct as it relates to helping to improve the
public understanding of insurance, Hugo should
Choose one answer.
A. Seek permission from his employer to present the position of his company.
, B. Obtain and present the position of the insurance trade association to which his
employer belongs.
C. Present objective information on the pros and cons of the legislation without taking a
position.
D. Present his opinion on the legislation clearly noting it is his opinion and may or may
not be the position of his company. - answers C. Present objective information on the
pros and cons of the legislation without taking a position.
Daiki, a CPCU, has been underwriting a difficult account and has been working with the
proposed insured's risk manager. On two occasions, Daiki has received letters from the
risk manager with this typed below the risk manager's signature, "Almost a CPCU."
Daiki learns that the risk manager has only one more course to pass to become a
CPCU. Daiki's most appropriate action would be to
Choose one answer.
A. Ignore the verbiage as the risk manager has only one CPCU part to pass.
B. Ask the risk manager to stop adding the verbiage.
C. Report the risk manager to the American Institute.
D. Notify the employer of the risk manager of the practice. - answers C. Report the risk
manager to the American Institute.
An insurance customer has alleged that Jake, who is a producer and a CPCU, has
violated the Code of Professional Conduct. As a CPCU who is subject to a formal
disciplinary proceeding before a Hearing Panel of the Board of Ethical Inquiry, Jake is
entitled
Choose one answer.
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