CPCU 520 Exam Questions and Answers (Solved Papers) Which one of the following insurer goals creates a conflict between the profit goal and customer needs goal? - Correct Answers ✅Comply with legal requirements Which one of the following statements is true with regard to the various forms of ownership of property-casualty insurers?
- Correct Answers ✅State and federal governments
provide insurance for exposures that are significant but not commercially insurable.Insurer A is a proprietary insurer that acts as an insurance marketplace. Its members underwrite any insurance or reinsurance purchased, and members are primarily partnerships or corporations with limited liability. Insurer A members belong to syndicates and delegate day-to-day operations to the syndicate manager. Insurer A is which one of the following? - Correct Answers ✅An insurance exchange Juan has a poor driving record and has been unable to obtain auto liability coverage from private insurers. Auto liability coverage is mandatory in his state. Since affordability is a concern, Juan wants auto liability coverage only. Which one of the following is an option for Juan to obtain coverage? - Correct Answers ✅Obtain coverage through his state's residual market 1 / 3
CPCU 520 Exam Questions and Answers (Solved Papers) Insurance pools operate either as a syndicate or through - Correct Answers ✅Reinsurance.Due to the possibility of an environmental pollution exposure resulting in extensive losses, several insurers in a particular state have joined together to insure the exposure. No single insurer was willing to insure the entire risk. This insurance arrangement is typical of - Correct Answers ✅An insurance pool.Specific measures of an insurer's operational performance are the investment income ratio, overall operating ratio, and the - Correct Answers ✅Return on equity ratio.Consider the following information reported by an insurance
company:
Incurred losses $8 million Incurred Underwriting Expenses $2 million Incurred Loss Adjustment Expenses $4 million Net Written Premiums $24 million Earned Premiums $16 million Which one of the following is the company's trade basis- combined ratio? - Correct Answers ✅.833 (The company's trade basis-combined ratio is .833, which is the loss ratio plus
the expense ratio. This is calculated by: (($8m + $4m) /
$16m) + ($2m / $24m). 2 / 3
CPCU 520 Exam Questions and Answers (Solved Papers) Which one of the following statements is correct? - Correct Answers ✅If insurers become insolvent, future claims might not be paid and the insurance protection already paid for might become worthless.The National Association of Insurance Commissioners (NAIC), has - Correct Answers ✅No regulatory authority.Which one of the following precedes nearly all major insurer insolvencies? - Correct Answers ✅Rapid premium growth Which one of the following statements is correct regarding discrimination and insurance rating? - Correct Answers ✅Discrimination is essential to insurance rating.Which one of the following statements is correct regarding rate regulation? - Correct Answers ✅An insurer does not know what its actual expenses will be when a policy is sold.Which one of the following statements is correct regarding rate regulation? - Correct Answers ✅The degree of rate variation among competing insurers can affect whether or not rates are considered excessive.
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