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CPCU 530 LATEST QUESTIONS AND VERIFIED ANSWERS 2024/2025
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CPCU 530 LATEST QUESTIONS AND VERIFIED ANSWERS 2024/2025
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CPCU 530 LATEST QUESTIONS ANDANSWERS
1. What is the primary objective of insurance company management?
A) Maximizing shareholder value
B) Increasing market share
C) Reducing underwriting risk
D) Ensuring compliance with regulatory standards
Answer: A) Maximizing shareholder value
2. In insurance operations, what is the primary function of the underwriting
department?
A) Handling claims and payouts
B) Developing marketing strategies
C) Evaluating and selecting risks to insure
D) Investing insurance premiums
Answer: C) Evaluating and selecting risks to insure
3. Which of the following best describes the concept of "loss ratio" in insurance?
A) The ratio of premiums earned to claims paid
,B) The ratio of claims paid to premiums earned
C) The ratio of administrative expenses to claims paid
D) The ratio of investment income to premiums earned
Answer: B) The ratio of claims paid to premiums earned
4. What is the purpose of reinsurance for an insurance company?
A) To increase its customer base
B) To diversify its investment portfolio
C) To spread risk and reduce the potential for large losses
D) To enhance its marketing efforts
Answer: C) To spread risk and reduce the potential for large losses
5. Which of the following is a common method used by insurance companies to
assess the performance of their underwriting operations?
A) Investment yield analysis
B) Expense ratio analysis
C) Combined ratio analysis
D) Return on equity analysis
,Answer: C) Combined ratio analysis
6. What is the primary function of the actuarial department within an insurance
company?
A) Handling customer service inquiries
B) Developing marketing campaigns
C) Analyzing and predicting risk and financial outcomes
D) Managing claims settlements
Answer: C) Analyzing and predicting risk and financial outcomes
7. Which financial statement is used to assess an insurance company’s profitability
over a specific period?
A) Balance Sheet
B) Income Statement
C) Cash Flow Statement
D) Statement of Retained Earnings
Answer: B) Income Statement8. What is the purpose of the "reserve" in insurance
accounting?
A) To cover future claim payments
B) To increase investment returns
, C) To pay for administrative expenses
D) To finance new product development
Answer: A) To cover future claim payments
9. What is the term for the practice of combining similar risks into one portfolio to
diversify risk and reduce volatility?
A) Risk pooling
B) Risk selection
C) Risk retention
D) Risk transfer
Answer: A) Risk pooling
10. Which of the following is NOT a typical function of an insurance company's
claims department?
A) Investigating claims
B) Settling claims
C) Pricing insurance products
D) Reviewing claim documentation
Answer: C) Pricing insurance products
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