AU 60 Chpt 2 Key Items complete with
Questions and correct Answers
frequent misclassification could contribute to - correct answer- ✅insurer insolvency
unfair discrimination can result from - correct answer- ✅unfair application of standards & UW
decisions that are not supported by statistical evidence
types of UW regulation to help prevent unfair discrimination - correct answer- ✅regulations that
constrain insurers' ability to accept/modify/decline loss exposures, regulations that limit
allowable classifications, & regulations that restrict the timing & conditions of coverage
cancellations & non-renewals
All UW regulations are meant to - correct answer- ✅prevent insurer insolvency & unfair
discrimination
Which one of the following describes underwriting regulations that limit allowable
classifications? - correct answer- ✅Regulations requiring unisex rating in personal auto
insurance
Underwriting regulations seek to ensure correct classification of insureds because - correct
answer- ✅Misclassification can result in inadequate premiums and drain an insurer's surplus.
An insurer receives two automobile insurance applications. The first applicant is age 35, male,
and has a clean driving record. The second applicant is age 35, female, has had three speeding
violations and a prior accident. The insurer accepts both risks, but charges the second applicant
a higher premium. Which one of the following statements about this scenario is correct? -
correct answer- ✅Regulations allow the insurer to charge more for insureds with poor driving
experience
ABC Insurance is considering entering new states as part of its growth plan. The executives of
ABC decide not to pursue new business in low-income areas of states and provide underwriters
with a map indicating the areas from which they are not to accept applications. This position
likely violates regulations that - correct answer- ✅Constrain insurers' ability to accept, modify,
or decline loss exposures.
Insurance underwriter Luis refuses to insure any teenage driver who appears to be discourteous
or unkempt. Luis believes those behaviors will lead to greater losses under the policies he
underwrites. Which one of the following practices, which underwriting regulations aim to
prevent, is Luis using? - correct answer- ✅Unfair discrimination
the patriot act restricts U.S. firms from - correct answer- ✅engaging in business w/persons &
organizations on OFAC's specifically designated nationals lists
Unlicensed teenage driver Bill applied for insurance on his automobile. Upon learning that Bill
was not only unlicensed but that he intentionally misstated his age on the application, the
insurer decided not to issue an auto policy for Bill. The action on the part of the insurer is known
as - correct answer- ✅Declination.
Questions and correct Answers
frequent misclassification could contribute to - correct answer- ✅insurer insolvency
unfair discrimination can result from - correct answer- ✅unfair application of standards & UW
decisions that are not supported by statistical evidence
types of UW regulation to help prevent unfair discrimination - correct answer- ✅regulations that
constrain insurers' ability to accept/modify/decline loss exposures, regulations that limit
allowable classifications, & regulations that restrict the timing & conditions of coverage
cancellations & non-renewals
All UW regulations are meant to - correct answer- ✅prevent insurer insolvency & unfair
discrimination
Which one of the following describes underwriting regulations that limit allowable
classifications? - correct answer- ✅Regulations requiring unisex rating in personal auto
insurance
Underwriting regulations seek to ensure correct classification of insureds because - correct
answer- ✅Misclassification can result in inadequate premiums and drain an insurer's surplus.
An insurer receives two automobile insurance applications. The first applicant is age 35, male,
and has a clean driving record. The second applicant is age 35, female, has had three speeding
violations and a prior accident. The insurer accepts both risks, but charges the second applicant
a higher premium. Which one of the following statements about this scenario is correct? -
correct answer- ✅Regulations allow the insurer to charge more for insureds with poor driving
experience
ABC Insurance is considering entering new states as part of its growth plan. The executives of
ABC decide not to pursue new business in low-income areas of states and provide underwriters
with a map indicating the areas from which they are not to accept applications. This position
likely violates regulations that - correct answer- ✅Constrain insurers' ability to accept, modify,
or decline loss exposures.
Insurance underwriter Luis refuses to insure any teenage driver who appears to be discourteous
or unkempt. Luis believes those behaviors will lead to greater losses under the policies he
underwrites. Which one of the following practices, which underwriting regulations aim to
prevent, is Luis using? - correct answer- ✅Unfair discrimination
the patriot act restricts U.S. firms from - correct answer- ✅engaging in business w/persons &
organizations on OFAC's specifically designated nationals lists
Unlicensed teenage driver Bill applied for insurance on his automobile. Upon learning that Bill
was not only unlicensed but that he intentionally misstated his age on the application, the
insurer decided not to issue an auto policy for Bill. The action on the part of the insurer is known
as - correct answer- ✅Declination.
