Page 1 of 38
CPCU 520 2026 PRACTICE EXAM COMPLETE
(133) CURRENT TESTING QUESTIONS AND
DETAILED CORRECT
ANSWERS|GUARANTEED PASS.
CPCU
Maximize your success with this CPCU 520 practice Exam,
designed to assess foundational knowledge of risk management
and insurance principles. It focuses on risk identification,
insurance operations, legal principles, and industry standards.
The exam strengthens analytical thinking and professional
understanding of the insurance field. Suitable for insurance and
risk management certification candidates.
Work on a new claim begins for the claim representative
upon receipt of the notice of loss. The representative obtains
initial information and verifies coverage. Next, the
representative should ✓ ✓ ...... ANSWER ....... Set a
loss reserve.
Which one of the following statements is correct? ✓ ✓ ......
ANSWER ....... An actuary is a person who puts a price
on risk.
, Page 2 of 38
Insurance Company (IC) reports the information below for its
automobile insurance line. Using the pure premium
ratemaking method, which one of the following is the rate
per exposure unit, rounded to the nearest dollar, for IC's
automobile line of business?
Incurred losses:$5 million Earned car-years:100,000
Expenses:$1.3 million Profit and contingencies factor:5%
Earned premiums:$6.2 million ✓ ✓ ...... ANSWER .......
The rate per exposure unit for IC's automobile line of
business is $66, calculated as ($5MM/100,000) plus
(1,300,000/100,000) =$63; $63/(1-.05) = $66.
The future development of losses can be estimated by
several actuarial methods. The most common method used
applies loss development factors to the ✓ ✓ ...... ANSWER
....... Current experience.
Some organizations face the threat of espionage. Which one
of the following statements is correct with respect to that
threat? ✓ ✓ ...... ANSWER ....... Managers can acquire
a competitor's financial, production, or employee records,
by gaining access to computerized data.
, Page 3 of 38
Which one of the following core functions of an insurer can
be transformed through the Internet of Things' ability to
facilitate instantaneous communication? ✓ ✓ ......
ANSWER ....... Claims
Unfair Claims Practices require an insurer to approve or
deny coverage of a claim within a reasonable period after the
completion of ✓ ✓ ...... ANSWER ....... A proof-of-loss
statement.
A marketing plan for a typical insurance product includes ✓
✓ ...... ANSWER ....... A situational (SWOT) analysis of
the current marketplace.
After investing significant resources to develop a Web-based
system, a personal lines insurer has decided to expand its
territory by assuming the role of a direct writer and using the
Internet as a distribution channel. What is the insurer's
greatest concern with the existing book which used
independent agents as the distribution system? ✓ ✓ ......
ANSWER ....... The agents own the expirations for the
existing book
, Page 4 of 38
At year end, Omicron Insurance Company (OIC) posted
these results:
Premiums written$10,000,000 Premiums earned 9,500,000
Underwriting expenses incurred4,000,000 Loss and loss
adjustment expenses incurred 5,700,000
Based on this information, which one of the following
represents OIC's trade basis combined rat ✓ ✓ ......
ANSWER ....... OIC's trade basis combined ratio is 100
percent, calculated by (5,700,000/9,500,000) +
(4,000,000/10,000,000) = 100%
After auditing a large commercial shipping operation,
premium auditor Carl realized that the insured exposure had
been grossly underestimated. The most likely result of this
error is ✓ ✓ ...... ANSWER ....... An inadequate deposit
premium for a renewal.
If a claim is complex or if settlement negotiations are not
progressing with the insurer, the insured may hire ✓ ✓ ......
ANSWER ....... A public adjuster.
CPCU 520 2026 PRACTICE EXAM COMPLETE
(133) CURRENT TESTING QUESTIONS AND
DETAILED CORRECT
ANSWERS|GUARANTEED PASS.
CPCU
Maximize your success with this CPCU 520 practice Exam,
designed to assess foundational knowledge of risk management
and insurance principles. It focuses on risk identification,
insurance operations, legal principles, and industry standards.
The exam strengthens analytical thinking and professional
understanding of the insurance field. Suitable for insurance and
risk management certification candidates.
Work on a new claim begins for the claim representative
upon receipt of the notice of loss. The representative obtains
initial information and verifies coverage. Next, the
representative should ✓ ✓ ...... ANSWER ....... Set a
loss reserve.
Which one of the following statements is correct? ✓ ✓ ......
ANSWER ....... An actuary is a person who puts a price
on risk.
, Page 2 of 38
Insurance Company (IC) reports the information below for its
automobile insurance line. Using the pure premium
ratemaking method, which one of the following is the rate
per exposure unit, rounded to the nearest dollar, for IC's
automobile line of business?
Incurred losses:$5 million Earned car-years:100,000
Expenses:$1.3 million Profit and contingencies factor:5%
Earned premiums:$6.2 million ✓ ✓ ...... ANSWER .......
The rate per exposure unit for IC's automobile line of
business is $66, calculated as ($5MM/100,000) plus
(1,300,000/100,000) =$63; $63/(1-.05) = $66.
The future development of losses can be estimated by
several actuarial methods. The most common method used
applies loss development factors to the ✓ ✓ ...... ANSWER
....... Current experience.
Some organizations face the threat of espionage. Which one
of the following statements is correct with respect to that
threat? ✓ ✓ ...... ANSWER ....... Managers can acquire
a competitor's financial, production, or employee records,
by gaining access to computerized data.
, Page 3 of 38
Which one of the following core functions of an insurer can
be transformed through the Internet of Things' ability to
facilitate instantaneous communication? ✓ ✓ ......
ANSWER ....... Claims
Unfair Claims Practices require an insurer to approve or
deny coverage of a claim within a reasonable period after the
completion of ✓ ✓ ...... ANSWER ....... A proof-of-loss
statement.
A marketing plan for a typical insurance product includes ✓
✓ ...... ANSWER ....... A situational (SWOT) analysis of
the current marketplace.
After investing significant resources to develop a Web-based
system, a personal lines insurer has decided to expand its
territory by assuming the role of a direct writer and using the
Internet as a distribution channel. What is the insurer's
greatest concern with the existing book which used
independent agents as the distribution system? ✓ ✓ ......
ANSWER ....... The agents own the expirations for the
existing book
, Page 4 of 38
At year end, Omicron Insurance Company (OIC) posted
these results:
Premiums written$10,000,000 Premiums earned 9,500,000
Underwriting expenses incurred4,000,000 Loss and loss
adjustment expenses incurred 5,700,000
Based on this information, which one of the following
represents OIC's trade basis combined rat ✓ ✓ ......
ANSWER ....... OIC's trade basis combined ratio is 100
percent, calculated by (5,700,000/9,500,000) +
(4,000,000/10,000,000) = 100%
After auditing a large commercial shipping operation,
premium auditor Carl realized that the insured exposure had
been grossly underestimated. The most likely result of this
error is ✓ ✓ ...... ANSWER ....... An inadequate deposit
premium for a renewal.
If a claim is complex or if settlement negotiations are not
progressing with the insurer, the insured may hire ✓ ✓ ......
ANSWER ....... A public adjuster.
