AU 60 - Complete Set Questions And Answers

AU 60 - Complete Set Questions And
Answers

**pFinancialpRatiosponppg.p3.17p**p-pCORRECTppANSWER-

10pthreatsptopoperationspandpsupplypchains
5.19p-pCORRECTppANSWER-1.pInfrastructureplocation
2.pProductionpbottlenecks
3.pInfoptech
4.pEmploymentpissuesporpstrikes
5.pThird-partypsuppliers
6.pFinancialprisks
7.pGeopoliticalpenvironment
8.pNaturalporpman-madepcatastrophes
9.pPandemics
10.pMergers

2plegalptestsptopdeterminepemploymentpstatus
5.11-5.12p-pCORRECTppANSWER-1.pCommon-
lawptestptopdeterminepwhetherpthepallegedpemployersphasptheprightptopdirectpandpcontrolpwo
rk

2.pTestptopdetermineptheprelativepnaturepofpthepwork
-
panalyzesptheplevelpofpskillpandpcredentialsprequiredptopperformpthepwork,ptheprelationshippof

pthepworkptopthepemployer'spcorepbiz,pandpthepeconomicspofptheprelationship




2pmostpimportantpfinancialpstatements
3.3p-pCORRECTppANSWER-1.pBalancepsheet
2.pIncomepstatement

2pmostpusefulpitemsponpanpapplicationpforpanpunderwriter:
2.4p-pCORRECTppANSWER-1.pLossphistory
2.pInfopregardingpthepapplicant'sppriorpinsurance

2porganization-levelpreunderwritingpactivities
7.4p-pCORRECTppANSWER-1.pChangepinpunderwritingpguidelinespforpexistingpbusiness
2.pChangepinpunderwritingpguidelinespforpnewlypacquiredpbusiness

,2psourcespofpinfopthepunderwriterphaspwithpapsubmission
2.3p-pCORRECTppANSWER-1.pProducer
2.pApplication

3paspectspofpanporganization'spoperationspthatpunderwriterspshouldpevaluate
5.17-5.20p-pCORRECTppANSWER-1.pLocation
2.pScopepofpOperations
3.pCommerce

3pcomponentspofpanpinsuranceprate
6.3p-pCORRECTppANSWER-1.pProspectiveplosspcosts
2.pExpenses
3.pProfitp&pcontingencies

3pmainpobjectivespofpratepregulation
6.18p-pCORRECTppANSWER-1.pEnsurepratesparepadequate
2.pEnsurepratesparen'tpexcessive
3.pEnsurepratesparen'tpunfairlypdiscriminatory

3preasonspforpusingpindependentpcontractors
5.10-5.11p-pCORRECTppANSWER-1.pSpecialization
-
pindependentpcontractorspoftenpprovidepapservicepinvolvingpsomepmeasurepofpspecializatio

n,pperhapspevenpprofessionalptrainingpandplicensing

2.pRiskptransfer
-ptoptransferpapriskpexposureptopsomeonepelse

3.pcostpavoidance
-
plesspexpensiveptopemployerspthanpemployees;pindependentpcontractorsprequirepnoppayroll

ptaxesporpbenefits.




4ppolicy-levelpreunderwritingpactivities
7.4p-pCORRECTppANSWER-1.pPolicypnonrenewals
2.pClassificationpcorrections
3.pCoveragepchanges
4.pChangesptoppolicypterms

4psocialpcriteriapthatpimpactpdecisionspofpinsurancepdepartments
6.19-6.20p-pCORRECTppANSWER-1.pAvailabilityp
2.pAffordability
3.pSimplicityp
4.pControllability

4pstepspofpthepPurepPremiumpRatemakingpMethod

,6.6-6.8p-pCORRECTppANSWER-
1.pCalculateptheppureppremiumpbypdividingpthepdollarpamountpofpincurredplossespbypthep#pofp
earnedpexposurepunits
2.pEstimatepexpensespperpexposurepunitpbasedponpthepinsurer'sppastpexpenses.
-pInvestmentpexpensespandpLOSSpADJUSTMENTpEXPENSESparepexcluded
3.pDeterminepthepprofitpandpcontingenciespfactor
4.pCalculatepthepratepperpexposurepunit
-
pSomepinsurerspseparateptheirpexpensespintoptwopcomponents:pfixedpexpensespandpvariabl

epexpenses.pFixedpexpensesparepstatedpaspdollarpamountspperpexposurepunit.pVariablepex
pensesparepstatedpasppercentagespofptheprate.

4ptelltalepsignspthatpapworkerpispanpindependentpcontractorpratherpthanpanpemployee
5.10p-pCORRECTppANSWER-1.pWorkspunderpanpordinarypcontractp(notpapcontractpofphire)
-
pcontractpinpwhichponeppartyppromisespapsumpofpmoneypinpreturnpforpthepcontractor'spperfor

mancepofpwork

2.pWorkspindependently
-
pindependentpcontractorsparepnotpsubjectptopthepdirectionpandpcontrolpofptheporganizationpfo

rpwhichptheyparepperformingpwork
-pfreeptopuseptheirpownpjudgmentpandpmethodspinpperformingpthatptask
-pcanpemploypothersptopperformpaptask,pbutptheypremainpresponsiblepunderpthepcontract

3.pCanpbepsuedpforpbreachpofpcontract
-
panporganization'spusualpresourcepwhenpanpindependentpcontractor'spworkpispunsatisfactor

ypisptopsuepforpbreachpofpcontract

4.pOfferpservicesptoptheppublic
-
pcommercialptelephoneplisting,pprintedpinvoices,pincorporation,pcommercialpinsurancepcove

rage,pandpapseparatepplacepofpbusinesspcanpbepevidencepofpindependentpstatus

5pSupplementalpFinancialpStatements
3.8-3.11p-pCORRECTppANSWER-1.pStatementpofpChangespinpSE
2.pStatementpofpCashpFlows
-
pusedptopdeterminepanporganization'spneedpforpadditionalpfinancingpandpabilityptopgeneratep

positivepfuturepcashpflowspandpmeetpfinancialpobligations
3.pNotesptopFinancialpStatements
4.pSecuritiespandpExchangepFilings
5.pCompanypAnnualpReports

6pstepspofpthepreunderwritingpprocess

, 7.5pandp7.12-7.21p-pCORRECTppANSWER-1.pAnalyzepthepbookpofpbusiness
2.pIDpproblemsp
3.pIDppossiblepcorrectivepactions
4.pSelectpcorrectivepactions
5.pImplementpcorrectivepactions
6.pMonitorpthepbookpofpbusiness

6pthingspthatpfieldpunderwriterspdo
1.5-1.6p-pCORRECTppANSWER-1.pSelectpinsureds
2.pEnsurepaccuratepclassificationpandppricing
3.pRecommendporpprovidepcoverage
4.pManagepapbookpofpbusiness
5.pSupportpproducerspandpinsureds
6.pSupportpmarketingpobjectives

7pExamplespofpUnderwriting-RelatedpUnfairpTradepPractices
1.16p-pCORRECTppANSWER-1.pDiscriminatingpunfairlypwhenpselectingplosspexposures
2.pMisclassifyingplosspexposures
3.pCancelingporpnonrenewingppoliciespcontraryptopstatutes,prules,pandppolicypprovisions
4.pUsingpUNDprulesporpratespthatparepnotponpfilepwithporpapprovedpbypthepinspdeptspinpthepsta
tespthatpthepinsurerpdoespbiz
5.pFailingptopapplypnewlypimplementedpunderwritingpandpratingpfactorsptoprenewals
6.pFailingptopusepcorrectppolicypformspandpinsprates
7.pFailingptopusepstate-specificprules

7pfeaturespincludedpinpthepBest'spUnderwritingpGuidepreports
5.15p-pCORRECTppANSWER-1.pBest'spHazardpIndex
-pIdentifiesptheprelativepdegreepofprisk,ponpap1ptop10pscale
2.pUnderwritingpComments
-pHelpspexplainpthepexposureporplevelpofpriskpassociatedpwithpaplinepofpcoverage
3.pRelatedpClassifications
-pListspclassificationspthatpcouldpprovidepthepunderwriterpwithpadditionalpsourcespofprisk-
relatedpinformation
4.pRiskpDescription
-pExplainspwhatpbusinessespinpthispclassificationptypicallypdo
5.pLinespofpCoverage
-pDescribespthepriskpassociatedpwithpeachplinepofpinsurancepcoverage
6.pSpecialpExposure
-pIndicatespuniqueporplargephazards
7.pUnderwriter'spChecklist
-pProvidespquestionspthepunderwriterpshouldpbepableptopanswerpaboutpapbusiness

7pqualitativepcharacteristicspofpanporganization'spmanagement:
5.4-5.7p-pCORRECTppANSWER-1.pAbilityp&pexperiencep
2.pReputation
3.pQualitypofpwork