AU 60 Sample Questions with All Correct Answers (Already Graded A+)
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Course
AU 60
Institution
AU 60
AU 60 Sample Questions with All Correct Answers (Already Graded A+)
Which one of the following statements is correct with respect to market conduct examinations? - Answer- the Department of Insurance (DOI) may suspend or revoke the insurer's certificate of authority if it finds that an insurer h...
AU 60 Sample Questions with All Correct
Answers (Already Graded A+)
Which one of the following statements is correct with respect to market conduct
examinations? - Answer- the Department of Insurance (DOI) may suspend or revoke
the insurer's certificate of authority if it finds that an insurer has violated a law.
Unlicensed teenage driver Bill applied for insurance on his automobile. Upon learning
that Bill was not only unlicensed but that he intentionally misstated his age on the
application, the insurer decided not to issue an auto policy for Bill. The action on the
part of the insurer is known as - Answer- Declination.
Underwriters, in conjunction with ratemakers, help achieve actuarial equity by - Answer-
Assigning insureds with similar characteristics to the same rating class.
An insurer receives two automobile insurance applications. The first applicant is age 35,
male, and has a clean driving record. The second applicant is age 35, female, has had
three speeding violations and a prior accident. The insurer accepts both risks, but
charges the second applicant a higher premium. Which one of the following statements
about this scenario is correct? - Answer- Regulations allow the insurer to charge more
for insureds with poor driving experience.
Underwriting regulations seek to ensure correct classification of insureds because -
Answer- Misclassification can result in inadequate premiums and drain an insurer's
surplus.
An insurance company must have adequate policyholders' surplus if it wishes to -
Answer- Increase its written premium volume.
A group of policies with a 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 - Answer- A book of business.
In deciding which applicants they are willing to insure, insurance underwriters need to
recognize the effects of adverse selection. Which one of the following is the best
example of adverse selection? - Answer- After learning that a particularly active
hurricane season is expected, several homeowners in a coastal community increase the
limits on their windstorm coverage.
Victor, sales manager for Hallbinger's Insurance Company wants the company to grow
in written premium. He wants his agents to write more auto and homeowner business.
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