FREE INSURANCE AND STUDY GAMES ABOUT

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FREE INSURANCE AND STUDY GAMES ABOUT

COMMERCIAL UW AU60 EXAM QUESTIONS

Actual Qs and Ans Expert-Verified Explanation

This Exam contains:

-Guarantee passing score -46 Questions and Answers -format set of multiple-choice -Expert-Verified Explanation

Question 1: Treaty reinsurance

Answer:

A reinsurance agreement that covers an entire class or portfolio or loss exposures and provides that the primary insurer's individual loss exposures that fall within the treaty are automatically reinsured.

Question 2: Facultative reinsurance

Answer:

Reinsurance of individual loss exposures in which the primary insurer chooses which loss exposures to submit to the reinsurer, and the reinsurer can accept or reject any loss exposures submitted.

Question 3: Return on equity (ROE)

Answer:

A profitability ratio expressed as a percentage by dividing a company's net income by its net worth (book value). Depending on the context, net worth is sometimes called shareholders' equity, owners' equity, or policyholders' surplus.

Question 4: Staff underwriter

Answer:

Underwriter who is usually located in the home office and who assists underwriting management with making and implementing underwriting policy.

Question 5: Trending

Answer:

A statistical technique for analyzing environmental changes and projecting such changes into the future.

Question 6: Underwriting audit

Answer:

A review of underwriting files to ensure that individual underwriters are adhering to underwriting guidelines.

Question 7: Underwriter

Answer:

An insurer employee who evaluates applicants for insurance, selects those that are acceptable to the insurer, prices coverage, and determines policy terms and conditions.

Question 8: Information efficiency

Answer:

The balance that underwriters must maintain between the hazards presented by the account and the information needed to underwrite it.

Question 9: Predictive modeling

Answer:

A process in which historical data based on behaviors and events are blended with multiple variables and used to construct models of anticipated future outcomes.

Question 10: Line underwriter

Answer:

Underwriter who is primarily responsible for implementing the steps in the underwriting process.

Question 11: Hazard

Answer:

A condition that increases the frequency or severity of a loss.

Question 12: Expert systems, or knowledge-based systems

Answer:

Computer software programs that supplement the underwriting decision-making process. These systems ask for the information necessary to make an underwriting decision, ensuring that no information is overlooked.

Question 13: Underwriting authority

Answer:

The scope of decisions that an underwriter can make without receiving approval from someone at a higher level.

Question 14: Production underwriting

Answer:

Performing underwriting functions in an insurer's office as well as traveling to visit and maintain rapport with agents and sometimes clients.

Question 15: Market conduct examination

Answer:

An analysis of an insurer's practices in four operational areas: sales and advertising, underwriting, ratemaking, and claim handling.

Question 16: Underwriting

Answer:

The process of selecting insured, pricing coverage, determining insurance policy terms and conditions, and then monitoring the underwriting decisions made.

Question 17: Unfair trade practices

Answer:

Methods of competition or advertising or procedures that end to deprive the public of information necessary to make informed insurance decisions.

Question 18: Policyholders' surplus

Answer:

Under statutory accounting principles (SAP), an insurer's total admitted assets minus its total liabilities.

Question 19: Advisory organization

Answer:

An independent organization that works with and on behalf of insurers that purchase or subscribe to its services.

Question 20: Estimated loss potentials (ELP)

Answer:

Rate development factors used for operations with unique characteristics or for which inadequate statistical experience exits. ELPs are multiplied by loss cost multipliers to develop rates.

Question 21: Counteroffer

Answer:

A proposal an offeree makes to an offeror that varies in some material way from the original offer, resulting in rejection of the original offer and constituting a new offer.

Question 22: Premium-to-surplus ratio or capacity ratio

Answer:

A capacity ratio that indicates an insurer's financial strength by relating net written premiums to policyholders' surplus.

Question 23: Hit ratio

Answer:

The ratio of insurance policies written to those that have been quoted to applicants for insurance.

Question 24: Certificate of insurance

Answer:

A brief description of insurance coverage prepared by an insurer or its agent commonly used by policyholders to provide evidence of insurance.