AU 60 MISSED PRACTICE TEST
EXAM SCRIPT 2026 COMPLETE
QUESTIONS AND ANSWERS
VERIFIED SOLUTIONS
◉ If a company's inventory turnover ratio is higher than the industry
benchmark, it indicates that
Choose one answer.
A. Its inventory is becoming obsolete compared to that of its
competitors.
B. The company is holding its inventory longer than its competitors.
C. The company is selling its inventory more quickly than its
competitors.
D. The company's inventory is generating higher costs than that of its
competitors. Answer: C. The company is selling its inventory more
quickly than its competitors.
◉ Which one of the following is determined by a company's
underwriting policy?
Choose one answer.
,A. The underwriting authority the insurer grants its producers
B. Composition of the insurer's book of business
C. The market pursued by the insurer
D. The rating organization to which the insurer will belong Answer: B.
Composition of the insurer's book of business
◉ Which one of the following statements is true regarding ratemaking in
different types of insurance?
Choose one answer.
A. Most losses from catastrophic events, such as hurricanes, are included
in ratemaking data in the affected states.
B. Trending of losses in fire insurance is generally restricted to claim
severity.
C. The experience period used for property causes of loss other than fire
is usually five years or less.
D. Applying loss development factors to data is critical when claims
settle quickly and loss reserves are relatively small. Answer: B.
,Trending of losses in fire insurance is generally restricted to claim
severity.
◉ Which one of the following types of individual rating plans can be
used by medium to large insureds in combination with risk control and
allows the insured to manage its cash flow by avoiding upfront
payments?
Choose one answer.
A. Schedule rating plan
B. Large deductible plan
C. Individual risk premium modification plan
D. Expense modification plan Answer: B. Large deductible plan
◉ An insurer must decide what provision for profit and contingencies
should be included in the rate and should consider the overall desired
rate of return, including likely returns from investment income versus
Choose one answer.
A. Policyholder surplus.
B. Underwriting profit.
, C. Loss reserve amounts.
D. Loss adjustment expenses. Answer: B. Underwriting profit.
◉ The amount included in the insurance rate to protect insurers against
the possibility that actual claims or expenses will exceed projections is
referred to as
Choose one answer.
A. The prospective loss costs.
B. The expense factor.
C. The loading for profits and contingencies.
D. The claims and eventualities factor. Answer: C. The loading for
profits and contingencies.
◉ Underwriting pricing activities usually include all of the following,
EXCEPT:
Choose one answer.
A. Account classification
EXAM SCRIPT 2026 COMPLETE
QUESTIONS AND ANSWERS
VERIFIED SOLUTIONS
◉ If a company's inventory turnover ratio is higher than the industry
benchmark, it indicates that
Choose one answer.
A. Its inventory is becoming obsolete compared to that of its
competitors.
B. The company is holding its inventory longer than its competitors.
C. The company is selling its inventory more quickly than its
competitors.
D. The company's inventory is generating higher costs than that of its
competitors. Answer: C. The company is selling its inventory more
quickly than its competitors.
◉ Which one of the following is determined by a company's
underwriting policy?
Choose one answer.
,A. The underwriting authority the insurer grants its producers
B. Composition of the insurer's book of business
C. The market pursued by the insurer
D. The rating organization to which the insurer will belong Answer: B.
Composition of the insurer's book of business
◉ Which one of the following statements is true regarding ratemaking in
different types of insurance?
Choose one answer.
A. Most losses from catastrophic events, such as hurricanes, are included
in ratemaking data in the affected states.
B. Trending of losses in fire insurance is generally restricted to claim
severity.
C. The experience period used for property causes of loss other than fire
is usually five years or less.
D. Applying loss development factors to data is critical when claims
settle quickly and loss reserves are relatively small. Answer: B.
,Trending of losses in fire insurance is generally restricted to claim
severity.
◉ Which one of the following types of individual rating plans can be
used by medium to large insureds in combination with risk control and
allows the insured to manage its cash flow by avoiding upfront
payments?
Choose one answer.
A. Schedule rating plan
B. Large deductible plan
C. Individual risk premium modification plan
D. Expense modification plan Answer: B. Large deductible plan
◉ An insurer must decide what provision for profit and contingencies
should be included in the rate and should consider the overall desired
rate of return, including likely returns from investment income versus
Choose one answer.
A. Policyholder surplus.
B. Underwriting profit.
, C. Loss reserve amounts.
D. Loss adjustment expenses. Answer: B. Underwriting profit.
◉ The amount included in the insurance rate to protect insurers against
the possibility that actual claims or expenses will exceed projections is
referred to as
Choose one answer.
A. The prospective loss costs.
B. The expense factor.
C. The loading for profits and contingencies.
D. The claims and eventualities factor. Answer: C. The loading for
profits and contingencies.
◉ Underwriting pricing activities usually include all of the following,
EXCEPT:
Choose one answer.
A. Account classification
