CPCU 500- Becoming a Leader in Risk
Management and Insurance Exam | Questions
with 100% Correct Answers | Verified | Latest
Update 2026/2027
Save
Terms in this set (185)
Risk uncertainty of outcomes
The insurance industry is evolving as the growing demand for risk management
a result of two key, overarching consulting
factors that are influencing virtually
every aspect of the insurance value new technology that's helping organizations
chain: predict and prevent losses
Examples of Technology Used to Telematics- has greatly influenced vehicle and
Predict and Prevent Losses driver safety
Wearables
IoT Sensors
Smartphones
Cloud Storage
Predictive Models
Artificial Intelligence
,Law of Large Numbers A mathematical principle stating that as the number
of similar but independent exposure units
increases, the relative accuracy of predictions
about future outcomes (losses) also increases.
Oscar's custom-built vehicle looks like a sausage
sandwich on wheels. He plans to drive it to special
events at schools around the country where it will
serve as a mobile billboard to promote his product.
Oscar is surprised to learn that insurers are
reluctant to insure his vehicle because it fails to
meet one of the ideal characteristics of an
insurable risk. Which characteristic is Oscar's
vehicle least likely to meet?
Smart Product An innovative item that uses sensors; wireless
sensor networks; and data collection, transmission,
and analysis to further enable the item to be faster,
more useful, or otherwise improved.
Sensor A device that detects and measures stimuli in its
environment.
Wireless sensor network (WSN) A wireless network consisting of individual sensors
placed at various locations to exchange data.
Big data Sets of data that are too large to be gathered and
analyzed by traditional methods.
Internet of Things (IoT) A network of objects that transmit data to
computers.
,Predictive analytics Statistical and analytical techniques used to
develop models that predict future events or
behaviors.
Data science An interdisciplinary field involving the design and
use of techniques to process very large amounts of
data from a variety of sources and to provide
knowledge based on the data.
These decisions can have far- Determining the appropriate coverage limits for an
reaching effects across the insurance individual policy
value chain:
Choosing whether to have a prospective customer
elaborate on information provided in an insurance
application
Deciding what data to include in a predictive
model and where it should come from
Determining whether a claim shows signs of fraud
and should be reported to the special investigation
unit (SIU)
Deciding the best way to respond empathetically
to a customer's claim
Determining how to describe your ideal job
candidate for an open position to a recruiter or
hiring manager
, What's the difference between Under an occurrence policy, coverage is triggered
occurrence and claims-made for losses that happen within the policy period,
coverage even if the policy has expired. Under a claims-
made policy, coverage is triggered for claims that
occur after the policy's coverage began (the
retroactive date) and are reported within the
policy's reporting period.
social inflation The increasing of insurance losses caused by
higher jury awards, increase in liberal treatment of
claims by workers compensation boards, legislated
rises in compensation benefit levels (in some cases
retroactively), and new concepts of tort and
negligence, among others.
These are some of the most common Pure and speculative risk
risk classifications
Subjective and objective risk
Diversifiable and nondiversifiable risk
Quadrants of risk (hazard, operational, financial,
and strategic)
Management and Insurance Exam | Questions
with 100% Correct Answers | Verified | Latest
Update 2026/2027
Save
Terms in this set (185)
Risk uncertainty of outcomes
The insurance industry is evolving as the growing demand for risk management
a result of two key, overarching consulting
factors that are influencing virtually
every aspect of the insurance value new technology that's helping organizations
chain: predict and prevent losses
Examples of Technology Used to Telematics- has greatly influenced vehicle and
Predict and Prevent Losses driver safety
Wearables
IoT Sensors
Smartphones
Cloud Storage
Predictive Models
Artificial Intelligence
,Law of Large Numbers A mathematical principle stating that as the number
of similar but independent exposure units
increases, the relative accuracy of predictions
about future outcomes (losses) also increases.
Oscar's custom-built vehicle looks like a sausage
sandwich on wheels. He plans to drive it to special
events at schools around the country where it will
serve as a mobile billboard to promote his product.
Oscar is surprised to learn that insurers are
reluctant to insure his vehicle because it fails to
meet one of the ideal characteristics of an
insurable risk. Which characteristic is Oscar's
vehicle least likely to meet?
Smart Product An innovative item that uses sensors; wireless
sensor networks; and data collection, transmission,
and analysis to further enable the item to be faster,
more useful, or otherwise improved.
Sensor A device that detects and measures stimuli in its
environment.
Wireless sensor network (WSN) A wireless network consisting of individual sensors
placed at various locations to exchange data.
Big data Sets of data that are too large to be gathered and
analyzed by traditional methods.
Internet of Things (IoT) A network of objects that transmit data to
computers.
,Predictive analytics Statistical and analytical techniques used to
develop models that predict future events or
behaviors.
Data science An interdisciplinary field involving the design and
use of techniques to process very large amounts of
data from a variety of sources and to provide
knowledge based on the data.
These decisions can have far- Determining the appropriate coverage limits for an
reaching effects across the insurance individual policy
value chain:
Choosing whether to have a prospective customer
elaborate on information provided in an insurance
application
Deciding what data to include in a predictive
model and where it should come from
Determining whether a claim shows signs of fraud
and should be reported to the special investigation
unit (SIU)
Deciding the best way to respond empathetically
to a customer's claim
Determining how to describe your ideal job
candidate for an open position to a recruiter or
hiring manager
, What's the difference between Under an occurrence policy, coverage is triggered
occurrence and claims-made for losses that happen within the policy period,
coverage even if the policy has expired. Under a claims-
made policy, coverage is triggered for claims that
occur after the policy's coverage began (the
retroactive date) and are reported within the
policy's reporting period.
social inflation The increasing of insurance losses caused by
higher jury awards, increase in liberal treatment of
claims by workers compensation boards, legislated
rises in compensation benefit levels (in some cases
retroactively), and new concepts of tort and
negligence, among others.
These are some of the most common Pure and speculative risk
risk classifications
Subjective and objective risk
Diversifiable and nondiversifiable risk
Quadrants of risk (hazard, operational, financial,
and strategic)
