CPCU 540: Contributing to Financial
Performance
In the claim function, how is supporting the insurer's profit goal accomplished? *** through controlling
expenses
What is an insurer's line influenced by? *** the maximum amount of insurance or limit of liability
allowed by insurance regulations
Loss Ratio Formula ***
What do line underwriters do *** · Select insureds
· Classify and price accounts
· Recommend coverage
· Manage a book of business
· Support producers and insureds
· Support marketing
What do staff underwriters do *** · Research market
· Formulate underwriting policy
· Revise underwriting guidelines
· Evaluate loss experience
· Research and develop coverage forms
· Review rates
· Arrange reinsurance
· Assist others
· Conduct audits
,· Educate and train
Am I a line or staff underwriter *** line
What are the three specific ratios use to measure an insurer's underwriting performance *** loss ratio
expense ratio
combined ratio
What are unfair underwriting practices *** o Discriminating unfairly when selecting loss exposure
o Misclassifying loss exposures
o Cancelling or nonrenewing policies contrary to statutes, rules, and policy provisions
o Using underwriting rules or rates that are not state approved
o Failing to apply newly implemented underwriting and rating factors to renewals
What are unfair claim and settlement practices *** o Knowingly misrepresenting important facts or
policy provisions
o Failing to properly investigate and settle claims
o Failing to make good-faith effort to pay claims when liability is reasonably clear
o Settling a claim for less than what a reasonable person expects, based on advertising
What is the focus of finance activities *** obtaining and managing an organization's capital
Will policyholders' surplus be over or understated if insurer loss reserves are too low? *** overstated
,What three factors does an insurer's profitability depend on *** revenue
expenditures
ability to absorb risk
What are an insurer's primary sources of revenue *** premiums
investment income
revenue from the sale of ancillary risk management services
An insurer's ability to absorb risk is largely dependent on what *** surplus
loss reserve adequacy
investment performance
To be help be a risk management partner for a customer, what must insurers do *** help customers
identify, avoid, and minimize losses rather than just provide coverage for them
What factors can gauge how well insurers are meeting customer expectations *** reviews
customer satisfaction data
retention ratio and lapse ratio
, insurer-producer relationships
What are some unfair underwriting practices *** discriminating unfairly when selecting loss exposures
misclassifying loss exposures
cancelling or nonrenewing policies contrary to statutes, rules, and policy provisions
failing to apply newly implemented underwriting and rating factors to renewals
What are some unfair claims settlement practices *** knowingly misrepresenting important facts or
policy provisions
failing to properly investigate and settle claims
failing to make a good-faith effort to pay claims when liability is reasonably clear
settling a claim for less than what a reasonable person expects, based on advertising
failing to approve or deny coverage within a reasonable period
When estimating profitability, an insurer should consider whether growth resulted from: *** a
competitive advantage
relaxed underwriting
Performance
In the claim function, how is supporting the insurer's profit goal accomplished? *** through controlling
expenses
What is an insurer's line influenced by? *** the maximum amount of insurance or limit of liability
allowed by insurance regulations
Loss Ratio Formula ***
What do line underwriters do *** · Select insureds
· Classify and price accounts
· Recommend coverage
· Manage a book of business
· Support producers and insureds
· Support marketing
What do staff underwriters do *** · Research market
· Formulate underwriting policy
· Revise underwriting guidelines
· Evaluate loss experience
· Research and develop coverage forms
· Review rates
· Arrange reinsurance
· Assist others
· Conduct audits
,· Educate and train
Am I a line or staff underwriter *** line
What are the three specific ratios use to measure an insurer's underwriting performance *** loss ratio
expense ratio
combined ratio
What are unfair underwriting practices *** o Discriminating unfairly when selecting loss exposure
o Misclassifying loss exposures
o Cancelling or nonrenewing policies contrary to statutes, rules, and policy provisions
o Using underwriting rules or rates that are not state approved
o Failing to apply newly implemented underwriting and rating factors to renewals
What are unfair claim and settlement practices *** o Knowingly misrepresenting important facts or
policy provisions
o Failing to properly investigate and settle claims
o Failing to make good-faith effort to pay claims when liability is reasonably clear
o Settling a claim for less than what a reasonable person expects, based on advertising
What is the focus of finance activities *** obtaining and managing an organization's capital
Will policyholders' surplus be over or understated if insurer loss reserves are too low? *** overstated
,What three factors does an insurer's profitability depend on *** revenue
expenditures
ability to absorb risk
What are an insurer's primary sources of revenue *** premiums
investment income
revenue from the sale of ancillary risk management services
An insurer's ability to absorb risk is largely dependent on what *** surplus
loss reserve adequacy
investment performance
To be help be a risk management partner for a customer, what must insurers do *** help customers
identify, avoid, and minimize losses rather than just provide coverage for them
What factors can gauge how well insurers are meeting customer expectations *** reviews
customer satisfaction data
retention ratio and lapse ratio
, insurer-producer relationships
What are some unfair underwriting practices *** discriminating unfairly when selecting loss exposures
misclassifying loss exposures
cancelling or nonrenewing policies contrary to statutes, rules, and policy provisions
failing to apply newly implemented underwriting and rating factors to renewals
What are some unfair claims settlement practices *** knowingly misrepresenting important facts or
policy provisions
failing to properly investigate and settle claims
failing to make a good-faith effort to pay claims when liability is reasonably clear
settling a claim for less than what a reasonable person expects, based on advertising
failing to approve or deny coverage within a reasonable period
When estimating profitability, an insurer should consider whether growth resulted from: *** a
competitive advantage
relaxed underwriting
