CPCU 500 EXAM 2026 CERTIFICATION
PREPARATION WORKBOOK INSURANCE
PRINCIPLES MOCK TEST ITEMS COMPLETE
SOLUTIONS
◉ Which one of the following uses infrared light to detect nearby
objects? Answer: Lidar
◉ AMRM Insurance Company sells insurance in Virginia, North
Carolina, South Carolina, and Georgia. The company has compiled a
policyowner data base that can be used to send text messages when
hurricanes approach. The company provides early warnings, storm
updates from the National Weather Service, and hurricane safety
measures. The company credits the system with reduced hurricane
claims. The use of the texting system is an example of Answer:
Preventive analytics
◉ Clear-Rite Company specializes in the clean-up of hazardous
chemical spills. Workers performing clean-up operations must use
safety suits to prevent exposure to the chemicals. The suits include
pulse and respiration monitors, body temperature sensors, and
chemical sensors. The monitors and sensors report data to a mobile
operations center which is deployed to each clean-up site. The pulse
and respiration monitors and the sensors that are part of the
protective gear are called Answer: Wearable technologies
,◉ The traditional definition of risk management reflects the
traditional concept of risk as Answer: Negative
◉ WOTF is true regarding the evolution of risk and risk
management? Answer: The definition of risk has evolved to included
+/- attributes
◉ Many auto manufacturers have automated a portion of their
assembly lines by introducing a smart product. The smart product
performs repetitive tasks, such as making the same weld on each
vehicle frame as it passes the smart product. These smart products,
which can be fixed or mobile, reduce repetitive motion injuries that
humans might suffer. They can also be used to perform dangerous
tasks and in heavy-lifting jobs. These smart products are called
Answer: Robots
◉ Which one of the following is described as a distributed database
that serves as a collectively shared ledger? Answer: Blockchain
◉ Autonomous Vehicle Applications (AVA) is a start-up company
that develops safety technologies that can be sold to companies that
are producing autonomous vehicles. One technology AVA is
developing allows an autonomous vehicle to detect, extract, and
analyze images; and then to respond to the images. For example, the
technology would detect a presence in a crosswalk, extract the
,image, and a computer would analyze the image. When the image
was determined to be a human being, the vehicle would slow down
or stop until the crosswalk was clear. This technology, which is
designed to capture and analyze images, and to act on the
recognition of the image; is called Answer: Computer vision
◉ Catastrophes such as recent earthquakes and the 2011 tsunami in
Japan pointed out a need for many organizations to evaluate and
manage their Answer: Supply-chain risk
◉ Which one of the following best explains how most smart
products potentially improve risk management? Answer: They
generate big data to which advanced analytics can be applied
◉ Take Your Order (TYO) is a company that specializes in taking
product orders for vendors. The manufacturer of a product can run a
television or internet ad for a product with a toll-free number.
Customer calls for the products are routed to TYO, where one
hundred operators are available to receive the calls. Each operator is
assigned a cubicle with a computer terminal, video display monitor,
and a telephone. TYO experienced high workers compensation
claims from its operators, claiming neck strain, eye strain, and wrist
pain. In an effort to reduce such injuries, TYO evaluated each
operator's work area. The height of chairs and video monitors were
adjusted, curved computer keyboards and wrist-rests were
provided, and the telephones were replaced with audio headsets.
Workers compensation costs dropped significantly. The science of
, designing work spaces based on interaction between people and the
equipment in the work s Answer: Ergonomics
◉ Don is the Risk Manager for Rafferty Corporation. One of his
peers, Sally, asks him one day, "How do you define risk?" When Don
replies, which one of the following statements is accurate? Answer:
Risk has different meanings within the risk management and
insurance communities.
◉ In an effort to reduce expenses, increase profitability, and reduce
human errors; ABC Insurance Company decided to automate most of
its personal lines underwriting function. The company now uses
standardized application forms that are submitted electronically to
one of the company's regional offices. At each regional office, a
computer with a scanner reads the applications. The computer has
been programmed with acceptable answers to the questions. If the
answers on the application are all acceptable, the policy is
automatically issued. Rejected applications are automatically
forwarded to a human underwriter who reviews them. The use of
this technology has reduced the company's expense ratio by two and
a half percent, and reduced the time it takes to issue a policy. ABC
Insurance Company's use of computers to evaluate applications
electronically is an application of Answer: Artificial intelligence
◉ A municipal water plant installed water flow sensors and water
pressure sensors on the water pipes leaving the plant. The sensors
make sure water is flowing properly and that there are no leaks or
PREPARATION WORKBOOK INSURANCE
PRINCIPLES MOCK TEST ITEMS COMPLETE
SOLUTIONS
◉ Which one of the following uses infrared light to detect nearby
objects? Answer: Lidar
◉ AMRM Insurance Company sells insurance in Virginia, North
Carolina, South Carolina, and Georgia. The company has compiled a
policyowner data base that can be used to send text messages when
hurricanes approach. The company provides early warnings, storm
updates from the National Weather Service, and hurricane safety
measures. The company credits the system with reduced hurricane
claims. The use of the texting system is an example of Answer:
Preventive analytics
◉ Clear-Rite Company specializes in the clean-up of hazardous
chemical spills. Workers performing clean-up operations must use
safety suits to prevent exposure to the chemicals. The suits include
pulse and respiration monitors, body temperature sensors, and
chemical sensors. The monitors and sensors report data to a mobile
operations center which is deployed to each clean-up site. The pulse
and respiration monitors and the sensors that are part of the
protective gear are called Answer: Wearable technologies
,◉ The traditional definition of risk management reflects the
traditional concept of risk as Answer: Negative
◉ WOTF is true regarding the evolution of risk and risk
management? Answer: The definition of risk has evolved to included
+/- attributes
◉ Many auto manufacturers have automated a portion of their
assembly lines by introducing a smart product. The smart product
performs repetitive tasks, such as making the same weld on each
vehicle frame as it passes the smart product. These smart products,
which can be fixed or mobile, reduce repetitive motion injuries that
humans might suffer. They can also be used to perform dangerous
tasks and in heavy-lifting jobs. These smart products are called
Answer: Robots
◉ Which one of the following is described as a distributed database
that serves as a collectively shared ledger? Answer: Blockchain
◉ Autonomous Vehicle Applications (AVA) is a start-up company
that develops safety technologies that can be sold to companies that
are producing autonomous vehicles. One technology AVA is
developing allows an autonomous vehicle to detect, extract, and
analyze images; and then to respond to the images. For example, the
technology would detect a presence in a crosswalk, extract the
,image, and a computer would analyze the image. When the image
was determined to be a human being, the vehicle would slow down
or stop until the crosswalk was clear. This technology, which is
designed to capture and analyze images, and to act on the
recognition of the image; is called Answer: Computer vision
◉ Catastrophes such as recent earthquakes and the 2011 tsunami in
Japan pointed out a need for many organizations to evaluate and
manage their Answer: Supply-chain risk
◉ Which one of the following best explains how most smart
products potentially improve risk management? Answer: They
generate big data to which advanced analytics can be applied
◉ Take Your Order (TYO) is a company that specializes in taking
product orders for vendors. The manufacturer of a product can run a
television or internet ad for a product with a toll-free number.
Customer calls for the products are routed to TYO, where one
hundred operators are available to receive the calls. Each operator is
assigned a cubicle with a computer terminal, video display monitor,
and a telephone. TYO experienced high workers compensation
claims from its operators, claiming neck strain, eye strain, and wrist
pain. In an effort to reduce such injuries, TYO evaluated each
operator's work area. The height of chairs and video monitors were
adjusted, curved computer keyboards and wrist-rests were
provided, and the telephones were replaced with audio headsets.
Workers compensation costs dropped significantly. The science of
, designing work spaces based on interaction between people and the
equipment in the work s Answer: Ergonomics
◉ Don is the Risk Manager for Rafferty Corporation. One of his
peers, Sally, asks him one day, "How do you define risk?" When Don
replies, which one of the following statements is accurate? Answer:
Risk has different meanings within the risk management and
insurance communities.
◉ In an effort to reduce expenses, increase profitability, and reduce
human errors; ABC Insurance Company decided to automate most of
its personal lines underwriting function. The company now uses
standardized application forms that are submitted electronically to
one of the company's regional offices. At each regional office, a
computer with a scanner reads the applications. The computer has
been programmed with acceptable answers to the questions. If the
answers on the application are all acceptable, the policy is
automatically issued. Rejected applications are automatically
forwarded to a human underwriter who reviews them. The use of
this technology has reduced the company's expense ratio by two and
a half percent, and reduced the time it takes to issue a policy. ABC
Insurance Company's use of computers to evaluate applications
electronically is an application of Answer: Artificial intelligence
◉ A municipal water plant installed water flow sensors and water
pressure sensors on the water pipes leaving the plant. The sensors
make sure water is flowing properly and that there are no leaks or
