CPCU 520 Terminology Exam Latest Update 2026

CPCU 520 Terminology Exam Latest Update 2026
Accident-year method - Answer A method of collecting ratemaking statistics that uses
incurred losses for an accident year, which consist of all losses related to claims arising
from accidents that occur during the year, and that estimates earned premiums by
formulas from accounting records
Actual cash value (ACV) - Answer The replacement cost of property minus depreciation
Actuary - One who uses sophisticated mathematical techniques and technology to
analyze loss and other data insurance companies use in setting rates
Admitted assets - Assets meeting minimum standards of liquidity that an insurer is
allowed to report on its balance sheet in accordance with statutory accounting
principles
Adverse selection - The tendency for those with the greatest probability of loss to be the
ones most likely to buy insurance
Advisory organization - Independent corporations that work with and on behalf of
insurers that purchase or subscribe to their services. Services include prospective loss
costs and standard contract forms
Affinity marketing - Answer A form of group marketing that targets different groups
based on profession, association, interests, hobbies and attitudes
Agency bill - Answer A method of payment whereby a producer issues premium bills to
the insured, collects the premium and remits the premium to the insurer, less any
applicable commission
Aggregate excess of loss reinsurance - A type of excess of loss reinsurance that covers,
during a stated period, aggregated losses that exceed the attachment point that is
stated as either a dollar amount of loss or as a loss ratio.
Agreed amount - A method of valuing property in which the insurer and the insured
agree on the property's value at the time the policy is written and that states the amount
in the policy declarations as the amount the insured will pay in the event of a total loss to
the property
Alien insurer - An insurer domiciled outside the US
Allocated Loss Adjustment Expenses - Answer LAE that are associated with a specific
claim
Alternative distribution channels - Answer Distribution channels used by insurers that
elect not to use an agency force to obtain and service customers; frequently the
channels are technology driving internet, interactive voice response and are combined
with traditional distribution channels

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