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AU 60 FINAL EXAM TEST QUESTIONS AND ANSWERS
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AU 60 FINAL EXAM TEST QUESTIONS AND ANSWERS
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AU 60 FINAL EXAM TEST QUESTIONS AND ANSWERSSamuel is a commercial accounts underwriter working on a new application with five
buildings located within the same territory. Samuel would like a photo of each building,
and some nontechnical information about the condition of the parking lots and the
neighboring buildings. Which one of the following would be the most reliable and cost
effective source of this information? - Answers- Marketing representative
The principal purpose of underwriting is to - Answers- Develop and maintain a
profitable book of business for the insurer.
The goal of actuaries and underwriters in designing a rating system is to make each
class - Answers- As homogeneous as possible without sacrificing the predictive
accuracy that large numbers create.
ABC Insurance Company's actuary has calculated the pure premium for the company's
homeowner's insurance line as $40. Fixed expenses for the line are $2.50 per exposure
unit and variable expenses are 12 percent. The company's loading for profits and
contingencies is 5 percent. Using the pure premium ratemaking method and rounding to
the nearest whole dollar, which one of the following is the rate per exposure unit that
ABC needs to charge? - Answers- $51
Maja, who has 29 years of experience as a professional liability underwriter, works in
the home office of Richley Insurance Company. Her primary responsibilities involve
formulating underwriting policy and revising underwriting guides for various lines of
professional liability insurance that will be used by personnel in the company's field
offices. Maja is functioning as a - Answers- Staff underwriter.
Prudence of operations indicates an organization's ability to - Answers- Conduct its
operations within the limits of its capabilities.
All of the following are reasons that an underwriter might want to obtain information in
addition to the application, EXCEPT: - Answers- To postpone a decision
Which one of the following is an example of an efficiency ratio? - Answers- Accounts
receivable turnover ratio
Sarbanes-Oxley prompted the SEC to issue interpretive guidance for improved
disclosure in the management discussion and analysis (MD&A) report of an
organization. Which one of the following is an area of guidance from Sarbanes-Oxley? -
Answers- Disclosure of certain trading activities
Which one of the following negotiation styles focuses only on short term goals and does
not support the goal of building a long term relationship? - Answers- Competing
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