CPCU 520 Practice Exam 1 Questions with 100% Verified Correct Answers

CPCU 520 Practice Exam 1 Questions with 100% Verified Correct Answers The expenses associated with adjusting claims are referred to as Select one: A. Prospective loss costs. B. Loss adjustment expenses. C. Claims costs. D. Operating expenses. - Correct Answer B. Loss adjustment expenses. Insurer Y is small but has a specialty insurance market for high-value vehicles. In competing with a larger insurer with a broader market, Insurer Y is likely to have which one of the following advantages? Select one: A. Insurer Y would have more capital surplus available than a larger insurer would have. B. Insurer Y can be more nimble, allowing it to respond quickly to an emerging trend or change. C. Because Insurer Y has a niche market, a larger insurer would not be able to compete on price due to state rate regulation. D. Insurer Y is better able to invest in research and product development due to a more narrow market focus. - Correct Answer B. Insurer Y can be more nimble, allowing it to respond quickly to an emerging trend or change. Which one of the following statements is correct? Select one: A. Some of the five ideal characteristics of rates conflict with others, and compromises are often necessary. B. Rates are based on what consumers would be willing to pay for insurance coverage, which can be difficult to determine. C. A rate can be adequate or it can be competitive, but it cannot be both adequate and competitive at the same time. D. From the insurer's perspective, the primary goal of ratemaking is to implement the highest rates that regulators will allow so as to maximize insurer profits. - Correct Answer A. Some of the five ideal characteristics of rates conflict with others, and compromises are often necessary. To be successful, the differentiation business-level strategy must Select one: A. Produce short-ter