AU 60 CHAPTER 1 PRACTICE
QUESTIONS & ANSWERS (RATED
A+)
The purpose of underwriting is to - ANSWERDevelop and maintain a profitable book
of business
Underwriting guidelines reflect the levels of - ANSWERUnderwriting authority
Tania receives an application for homeowner's insurance for a home valued at
$500,000 from Patrick, the producer for Keithly Insurance Company. Since Tania's
underwriting authority is $350,000 on property risks, she must refer it to Lachlan, her
underwriting supervisor. What additional functions for underwriting profitability does
this case illustrate? - ANSWEREnforcing underwriting guidelines
Paying close attention to hazards is an important consideration when reviewing an
underwriting submission. An underwriter should recognize a moral hazard, which is a
condition ___________? - ANSWERThat increases the likelihood that a person will
intentionally cause or exaggerate a loss.
An applicant for commercial property insurance is found unacceptable by an
underwriter due to the nature of its operations and the construction of the building it
occupies. If the applicant installs an automatic fire-extinguishing sprinkler system,
the underwriter will approve the application. This type of underwriting modification is
known as _____________? - ANSWERRequiring loss control measures.
What does compliance with underwriting guidelines ensure? - ANSWERSelection of
loss exposures commensurate with planned rate levels.
How do insurer's quality control check for uniform application of the underwriting
guidelines and for continuous improvement? - ANSWERUnderwriting audits.
Underwriting guidelines include acceptable approaches to evaluating applicants and
the overall desirability of a particular type of risk or class of business. What purposes
of underwriting guidelines is best served by inclusion of these acceptable
approaches? - ANSWEREnsure uniformity and consistency in risk selection.
During which step in the underwriting process would an underwriter request a loss
control visit to a prospective policyholder's location? - ANSWEREvaluating the
submission
QUESTIONS & ANSWERS (RATED
A+)
The purpose of underwriting is to - ANSWERDevelop and maintain a profitable book
of business
Underwriting guidelines reflect the levels of - ANSWERUnderwriting authority
Tania receives an application for homeowner's insurance for a home valued at
$500,000 from Patrick, the producer for Keithly Insurance Company. Since Tania's
underwriting authority is $350,000 on property risks, she must refer it to Lachlan, her
underwriting supervisor. What additional functions for underwriting profitability does
this case illustrate? - ANSWEREnforcing underwriting guidelines
Paying close attention to hazards is an important consideration when reviewing an
underwriting submission. An underwriter should recognize a moral hazard, which is a
condition ___________? - ANSWERThat increases the likelihood that a person will
intentionally cause or exaggerate a loss.
An applicant for commercial property insurance is found unacceptable by an
underwriter due to the nature of its operations and the construction of the building it
occupies. If the applicant installs an automatic fire-extinguishing sprinkler system,
the underwriter will approve the application. This type of underwriting modification is
known as _____________? - ANSWERRequiring loss control measures.
What does compliance with underwriting guidelines ensure? - ANSWERSelection of
loss exposures commensurate with planned rate levels.
How do insurer's quality control check for uniform application of the underwriting
guidelines and for continuous improvement? - ANSWERUnderwriting audits.
Underwriting guidelines include acceptable approaches to evaluating applicants and
the overall desirability of a particular type of risk or class of business. What purposes
of underwriting guidelines is best served by inclusion of these acceptable
approaches? - ANSWEREnsure uniformity and consistency in risk selection.
During which step in the underwriting process would an underwriter request a loss
control visit to a prospective policyholder's location? - ANSWEREvaluating the
submission
