CPCU 520 Practice Exam 1 Questions and

CPCU 520 Practice Exam 1 Questions and Answers (Solved Papers) The expenses associated with adjusting claims are referred to as

Select one:

• Prospective loss costs.
• Loss adjustment expenses.
• Claims costs.
• Operating expenses. - Correct Answers ✅B. Loss

adjustment expenses.Insurer Y is small but has a specialty insurance market for high-value vehicles. In competing with a larger insurer with a broader market, Insurer Y is likely to have which one of the following advantages?

Select one:

• Insurer Y would have more capital surplus available than a

larger insurer would have.

• Insurer Y can be more nimble, allowing it to respond

quickly to an emerging trend or change.

• Because Insurer Y has a niche market, a larger insurer

would not be able to compete on price due to state rate regulation.

• Insurer Y is better able to invest in research and product

development due to a more narrow market focus. - Correct 1 / 4

CPCU 520 Practice Exam 1 Questions and Answers (Solved Papers) Answers ✅B. Insurer Y can be more nimble, allowing it to respond quickly to an emerging trend or change.Which one of the following statements is correct?

Select one:

• Some of the five ideal characteristics of rates conflict with

others, and compromises are often necessary.

• Rates are based on what consumers would be willing to

pay for insurance coverage, which can be difficult to determine.

• A rate can be adequate or it can be competitive, but it

cannot be both adequate and competitive at the same time.

• From the insurer's perspective, the primary goal of

ratemaking is to implement the highest rates that regulators will allow so as to maximize insurer profits. - Correct Answers ✅A. Some of the five ideal characteristics of rates conflict with others, and compromises are often necessary.To be successful, the differentiation business-level strategy must

Select one:

• Produce short-term profits while phasing out a product line

or existing market. 2 / 4

CPCU 520 Practice Exam 1 Questions and Answers (Solved Papers)

• Seek efficiency in all areas of operation to build a

competitive advantage.

• Accurately determine customers' preferences to develop

products perceived as distinctive.

• Focus on one group of customers and offer a low-price

product or service. - Correct Answers ✅C. Accurately determine customers' preferences to develop products perceived as distinctive.Which one of the following statements is correct with respect to SWOT analysis?

Select one:

• Identifying internal strengths and weaknesses involves

considering financial, physical, human, and organizational assets.

• Managers use SWOT analysis to predict the future state of

their companies.

• SWOT analysis considers a company's internal

environment rather than the external environment.

• Customers are generally not considered in a SWOT

analysis because the focus is on the assets an organization owns. - Correct Answers ✅A. Identifying internal strengths and weaknesses involves considering financial, physical, human, and organizational assets. 3 / 4

CPCU 520 Practice Exam 1 Questions and Answers (Solved Papers) Samuelson Insurance has developed special programs to market personal insurance to members of college alumni and professional associations. This is an example of which one of the following types of market segmentation?

Select one:

• Psychographic
• Behavioristic
• Geographic
• Demographic - Correct Answers ✅D. Demographic

All of the following are challenges that an insurer may face that can hinder a complete alignment of information

technology (IT) and business strategies, EXCEPT:

Select one:

• Changing IT or business metrics
• An overly complex IT infrastructure
• IT professionals assured of their job security
• IT operating as a separate unit - Correct Answers ✅C. IT

professionals assured of their job security An applicant for commercial property insurance is found unacceptable by an underwriter due to the nature of its operations and the construction of the building it occupies. If

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