CPCU 520 FINAL PRACTICE EXAM 2024|BRAND NEW EXAM QUESTIONS AND CORRECT ANSWERS ALL GRADED A+|LATEST UPDATE |GUARANTEED SUCCESS.
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Course
CPCU 520
Institution
CPCU 520
CPCU 520 FINAL PRACTICE EXAM 2024|BRAND NEW EXAM QUESTIONS AND CORRECT ANSWERS ALL GRADED A+|LATEST UPDATE |GUARANTEED SUCCESS.
Proprietary insurers - ANSWER-Insurer formed for the purpose of earning a profit for its owners.
Mutual insurer - ANSWER-An insurer owned by its po...
CPCU 520 FINAL PRACTICE EXAM
2024|BRAND NEW EXAM
QUESTIONS AND CORRECT
ANSWERS ALL GRADED A+|LATEST
UPDATE 2024-2025 |GUARANTEED
SUCCESS.
Proprietary insurers - ANSWER-✅Insurer formed for the purpose of earning a profit
for its owners.
Mutual insurer - ANSWER-✅An insurer owned by its policyholders and incorporated
to provide insurance for them.
Reciprocal Insurance Exchange (interinsurance exchange) - ANSWER-✅Insurer
owned by policyholders, formed as unincorporated association to provide insurance
to members (called subscribers), and managed by an attorney-in-fact. Members
agree to mutually insure each other, with profits and losses shared in proportion to
amount of insurance purchased from the exchange by that owner.
Fair Access to Insurance Requirements (FAIR) plans - ANSWER-✅An insurance pool
through which private insurers collectively address an unmet need for property
insurance on urban properties, especially those susceptible to loss by riot or civil
commotion.
, Residual Market - ANSWER-✅The term referring collectively to insurers and other
organizations that make insurance available through a shared risk mechanism to
those who cannot obtain coverage in the admitted market.
Surplus lines broker - ANSWER-✅A person or firm that places business with insurers
not licensed (nonadmitted) in the state in which the transaction occurs but that is
permitted to write insurance because coverage is not available through standard
market insurers.
Independent agency and brokerage marketing system - ANSWER-✅An insurance
marketing system under which producers (agents or brokers) who are independent
contractors, sell insurance, usually as representatives of several unrelated insurers.
Direct writer marketing system - ANSWER-✅An insurance marketing system that
uses sales agents (or sales representatives) who are direct employees of the insurer.
Exclusive marketing system - ANSWER-✅An insurance marketing system under
which agents contract to sell insurance exclusively for one insurer (or for an
associated group of insurers).
Distribution channel - ANSWER-✅The channel used by the producer of a product or
service to transfer that product or service to the ultimate customer.
Probable maximum loss (PML) - ANSWER-✅The largest loss that an insured is likely
to sustain.
Underwriting - ANSWER-✅The process of selecting insureds, pricing coverage,
determining insurance policy terms and conditions, and then monitoring the
underwriting decisions made.
Book of business - ANSWER-✅A group of policies with a common characteristic,
such as territory or type of coverage, or all policies written by a particular insurer or
agency.
Underwriting guidelines (Underwriting guide) - ANSWER-✅A written manual that
communicates an insurer's underwriting policy and that specifies the attributes of an
account that an insurer is willing to insure.
Adverse selection - ANSWER-✅In general, the tendency for people with the greatest
probability of loss to be the ones most likely to purchase insurance.
National Association of Insurance Commissioners (NAIC) - ANSWER-✅An association
of insurance commissioners from the fifty U.S. states, the District of Columbia, and
the five U.S. territories and possessions, whose purpose is to coordinate insurance
regulation activities among various state insurance departments.
, Model law - ANSWER-✅A document drafted by NAIC, in a style similar to a state
statute, that reflects the NAIC's proposed solution to a given problem or issue and
provides a common basis to the states for drafting laws that affect the insurance
industry. Any state may choose to adopt the bill or adopt it with modifications.
Model regulation - ANSWER-✅A draft regulation that may be implemented by a
state insurance department if the model law is passed.
Domestic insurer - ANSWER-✅An insurer doing business in the jurisdiction in which
it is incorporated.
Foreign insurer - ANSWER-✅An insurer licensed to operate in a state but
incorporated in another state.
Alien insurer - ANSWER-✅An insurer domiciled in a country other than the United
States.
Capital stock - ANSWER-✅A balance sheet value that represents the amount of
funds that a corporation's stockholders have contributed through the purchase of
stock.
Paid-in surplus - ANSWER-✅The amount stockholders paid in excess of the par
value of the stock.
Reciprocal insurer - ANSWER-✅An insurer owned by its policyholders, formed as an
unincorporated association for the purpose of providing insurance coverage to its
members (called subscribers), and managed by an attorney-in-fact. Members agree
to mutually insure each other, and they share profits and losses in the same
proportion as the amount of insurance purchased from the exchange by that
member.
Insolvency - ANSWER-✅A situation in which an entity's current liabilities (as
opposed to its total liabilities) exceed its current assets.
Guaranty fund - ANSWER-✅A state-established fund that provides a system for the
payment of some of the unpaid claims of insolvent insurers licensed in that state,
generally funded by assessments collected from all insurers licensed in the state.
Good-faith claim handling - ANSWER-✅The manner of handling claims that requires
an insurer to give consideration to the insured's interests that is at least equal to the
consideration it gives its own interests.
Bad faith (outrage) - ANSWER-✅A breach of the duty of good faith and fair dealing.
Mortgagor - ANSWER-✅The person or organization that borrows money from a
mortgagee to finance the purchase of real property.
, Advisory organization - ANSWER-✅An independent organization that works with
and on behalf of insurers that purchase or subscribe to its services.
Prospective loss costs - ANSWER-✅Loss data that are modified by loss development,
trending, and credibility processes, but without considerations for profit and
expenses.
Captive insurer, or captive - ANSWER-✅A subsidiary formed to insure the loss
exposures of its parent company and the parent's affiliates.
Risk retention group - ANSWER-✅A group captive formed under the requirements
of the Liability Risk Retention Act of 1986 to insure the parent organizations.
Market intelligence - ANSWER-✅Information gathered and analyzed regarding a
company's markets to improve competitive decision-making.
Underwriting cycle - ANSWER-✅A cyclical pattern of insurance pricing in which a
soft market (low rates, relaxed underwriting, and underwriting losses) is eventually
followed by a hard market (high rates, restrictive underwriting, and underwriting
gains) before the pattern again repeats itself.
Focus group - ANSWER-✅A small group of customers or potential customers
brought together to provide opinions about a specific product, service, need, or
other issue.
Predictive analytics - ANSWER-✅Statistical and analytical techniques used to
develop models that predict future events or behaviors.
Market segmentation - ANSWER-✅The process of identifying and dividing the
groups within a market that share needs and characteristics and that will respond
similarly to a marketing action.
Target marketing - ANSWER-✅Focusing marketing efforts on a specific group of
consumers.
Niche marketing - ANSWER-✅A type of marketing that focuses on specific types of
buyers who are a subset of a larger market.
Distribution system - ANSWER-✅The necessary people and physical facilities to
support the sale of insurance products and services.
Agency expiration list - ANSWER-✅The record of an insurance agency's present
policyholders and the dates their policies expire.
Countersignature laws - ANSWER-✅Laws that require all policies covering subjects
of insurance within a state to be signed by a resident producer licensed in that state.
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