AU 60 FINAL EXAM ACTUAL EXAM

AU 60 FINAL EXAM ACTUAL EXAM

QUESTIONS WITH DETAILED VERIFIED

ANSWERS (100% CORRECT ANSWERS) |

ALREADY GRADED A+ -

If an insured recently implemented risk control measures they believe will have immediate benefits and favorable impact their loss experience, what type of plan would they most likely want to use for the upcoming policy period?Correct Answer retrospective rating plans - insured might assert that the experience modification factor is not responsive because it does not include data from the most recent year

An underwriter analyzing historical loss data for loss frequency trends must also evaluate historical _______ Correct Answer exposures

The underwriter's primary source of dependable information about an account is the

• Claims adjuster.
• Applicant.
• Current insurer
• Producer. Correct Answer D. producer

Which one of the following insurer employees would be best qualified to answer an underwriter's technical questions about an applicant's operations?

Select one: 1 / 4

• Claim representative
• Premium auditor
• Producer
• Risk control representative Correct Answer D. Risk

control representative

Which one of the following is the primary benefit of using the services of an independent contractor who specializes in risk control work to inspect properties, rather than the insurer's risk control representative?

• Independent opinion of risk
• Customized reports
• Customer contact
• Quicker response Correct Answer D. Quicker response

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:

• Dun & Bradstreet Report
• Best's Underwriting Guide
• Scopes Manual
• Fire Protection Handbook Correct Answer B. Best's

Underwriting Guide

Which one of the following Dun & Bradstreet report scores shows how promptly the company pays its bills relative to terms?

Select one:

• Hazard index 2 / 4

• Financial stress class
• Credit score class
• Paydex Correct Answer D. Paydex

Which one of the following external sources of underwriting information is more likely to be used by an underwriter in the pricing phase, than in risk-selection decisions?

Select one:

• Government reports
• Applicant's Web site
• Financial reporting services
• Insurance advisory organizations Correct Answer D.

Insurance advisory organizations

Which one of the following types of government records do underwriters use as a source to predict future losses?

Select one:

• Motor vehicle reports
• Securities and Exchange Commission 10-K
• Court records
• Real estate records Correct Answer A. Motor vehicle

reports

John is a risk management specialist for XYZ Company.John examines XYZ's financial statements on a quarterly basis. Which one of the following best describes a reason for this analysis?

Select one: 3 / 4

• A review of the financial statements helps John to

determine XYZ's ability to pay upcoming insurance premiums

• A review of the financial statements helps John to

assess XYZ's compliance with loan covenants

• A review of the financial statements helps John to

evaluate XYZ's ability to finance premiums

• A review of the financial statements helps John to

determine XYZ's insurance needs Correct Answer D. A review of the financial statements helps John to determine XYZ's insurance needs.

How is gross profit calculated? Correct Answer Gross profit = sales - cost of goods sold

Which one of the following types of analysis helps an underwriter identify abnormal values reported by an organization?

Select one:

• Vertical analysis
• Historical analysis
• Ratio analysis
• Trend analysis Correct Answer A. Vertical analysis

Which one of the following ratios can be used to analyze how the assets of a company are being financed?

Select one:

• Debt-to-equity ratio
• Debt-to-assets ratio
• Asset turnover ratio
• / 4