CPCU 520 (The Institutes) Exam Questions and Answers (Solved Papers) A business-level strategy through which a company seeks cost efficiencies in all operational areas. - Correct Answers ✅Cost Leadership T he process of selecting insureds, pricing coverage, determining insurance policy terms and conditions, and then monitoring the underwriting decisions made. - Correct Answers ✅Underwriting A ratio that measures losses and loss adjustment expenses against earned premiums and that reflects the percentage of premiums being consumed by losses. - Correct Answers ✅Loss ratio Methodical examination of a policyholder's operations, records, and books of account to determine the actual exposure units and premium for insurance coverages already provided. - Correct Answers ✅Premium Audit An association of insurance commissioners from the 50 U.S.states, the District of Columbia, and the five U.S. territories and possessions, whose purpose is to coordinate insurance regulation activities among the various state insurance departments. - Correct Answers ✅National Association of Insurance Commissioners (NAIC) 1 / 3
CPCU 520 (The Institutes) Exam Questions and Answers (Solved Papers) A document drafted by the NAIC, in a style similar to a state statute, that reflects the NAIC's proposed solution to a given problem or issue and provides a common basis to the states for drafting laws that affect the insurance industry. Any state may choose to adopt the model bill or adopt it with modifications. - Correct Answers ✅Model law A draft regulation that may be implemented by a state insurance department if the model law is passed. - Correct Answers ✅Model regulation A situation in which an entity's current liabilities (as opposed to its total liabilities) exceed its current assets. - Correct Answers ✅Insolvency An organization that provides administrative services associated with risk financing and insurance. - Correct Answers ✅Third-party administrator (TPA) A person responsible for investigating, evaluating, and settling claims. - Correct Answers ✅Claims representative An outside organization or person hired by an insured to represent the insured in a claim in exchange for a fee. - Correct Answers ✅Public adjuster 2 / 3
CPCU 520 (The Institutes) Exam Questions and Answers (Solved Papers) The expense that an insurer incurs to investigate, defend, and settle claims according to the terms specified in the insurance policy. - Correct Answers ✅Loss adjustment expense (LAE) The use of technological devices to transmit data via wireless communication and GPS tracking. - Correct Answers ✅Telematics A sensor attached to or embedded in clothing and accessories. - Correct Answers ✅Wearable sensor tag An insurer's letter that specifies coverage issues and informs the insured that the insurer is handling a claim with the understanding that the insurer may later deny coverage should the facts warrant it. - Correct Answers ✅Reservation of rights letter A signed agreement indicating that during the course of investigation, neither the insurer nor the insured waives rights under the policy. - Correct Answers ✅Nonwaiver agreement A system to remind claims personnel to perform a particular task on a claim. - Correct Answers ✅Diary, or suspense
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