CPCU 520- Meeting Challenges Across Insurance
Operations Exam | Questions with 100% Correct
Answers | Verified | Latest Update 2026/2027
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Terms in this set (202)
Cost leadership A business-level strategy through which a company
seeks cost efficiencies in all operational areas.
Underwriting The process of selecting insureds, pricing
coverage, determining insurance policy terms and
conditions, and then monitoring the underwriting
decisions made.
For underwriting to achieve its purpose, Insurers
must minimize the effects of adverse selection on
the book of business
Loss ratio A ratio that measures losses and loss adjustment
expenses against earned premiums and that
reflects the percentage of premiums being
consumed by losses.
,supply chain a network of connections between each of the
entities (namely organizations) that are used
throughout the process of bringing a product or
service to market—from suppliers to end users. A
supply chain model is used for identifying how
reliant a business is on any point in the supply chain
and any potential weak links that could disrupt
business.
value chain model is used for analyzing the input activities a single
company performs to create marketable outputs
for customers and for identifying ways to maximize
its competitive advantage.
Primary activities- Inbound Logistics, Operations,
Outbound Logistics, Marketing and Sales, and
Service
Support activities- Infrastructure, Human
Resources, Technology, and Procurement
,three primary functions exist within marketing and distribution- Marketing and
the structure of a typical insurer distribution involves determining what products
customers want and need, advertising those
products (communicating their value to customers),
and delivering them to customers.
underwriting- The goal of the underwriting function
is to help the insurer write and maintain profitable
business. This requires selecting insureds whose
covered losses are not likely to exceed the amount
of losses the insurer anticipated when it priced the
insureds' coverage.
claims- An insurance policy is a promise by the
insurer to make a payment to, or on behalf of, the
insured if an event covered under the policy
occurs. The purpose of the claims function is to
fulfill this promise.
, Support Activities 1) Risk control- can help marketing and sales by
proving to applicants and insureds that the insurer
understands their business operations and
associated hazards and is prepared to help them
protect their interests
2) Premium auditing
3) Actuarial
4) Reinsurance- Factors affecting a primary
insurer's reinsurance limit selection are most
accurately listed as Maximum policy limit,
extracontractual obligations, and loss adjustment
expenses
5) IT- a rapidly growing value chain support
function that provides the backbone that supports
an insurer's communications, operations, marketing,
underwriting, investing, and claims handling
6) Investments- Insurers' operations frequently
depend on investment earnings because premiums
are held competitively low to attract customers. As
a result, investment earnings are frequently relied
on to off set high losses and rising costs.
7) Accounting and finance
8) Customer service
9) Legal and compliance
10) Human resources (HR)
11) SIU
Operations Exam | Questions with 100% Correct
Answers | Verified | Latest Update 2026/2027
Save
Terms in this set (202)
Cost leadership A business-level strategy through which a company
seeks cost efficiencies in all operational areas.
Underwriting The process of selecting insureds, pricing
coverage, determining insurance policy terms and
conditions, and then monitoring the underwriting
decisions made.
For underwriting to achieve its purpose, Insurers
must minimize the effects of adverse selection on
the book of business
Loss ratio A ratio that measures losses and loss adjustment
expenses against earned premiums and that
reflects the percentage of premiums being
consumed by losses.
,supply chain a network of connections between each of the
entities (namely organizations) that are used
throughout the process of bringing a product or
service to market—from suppliers to end users. A
supply chain model is used for identifying how
reliant a business is on any point in the supply chain
and any potential weak links that could disrupt
business.
value chain model is used for analyzing the input activities a single
company performs to create marketable outputs
for customers and for identifying ways to maximize
its competitive advantage.
Primary activities- Inbound Logistics, Operations,
Outbound Logistics, Marketing and Sales, and
Service
Support activities- Infrastructure, Human
Resources, Technology, and Procurement
,three primary functions exist within marketing and distribution- Marketing and
the structure of a typical insurer distribution involves determining what products
customers want and need, advertising those
products (communicating their value to customers),
and delivering them to customers.
underwriting- The goal of the underwriting function
is to help the insurer write and maintain profitable
business. This requires selecting insureds whose
covered losses are not likely to exceed the amount
of losses the insurer anticipated when it priced the
insureds' coverage.
claims- An insurance policy is a promise by the
insurer to make a payment to, or on behalf of, the
insured if an event covered under the policy
occurs. The purpose of the claims function is to
fulfill this promise.
, Support Activities 1) Risk control- can help marketing and sales by
proving to applicants and insureds that the insurer
understands their business operations and
associated hazards and is prepared to help them
protect their interests
2) Premium auditing
3) Actuarial
4) Reinsurance- Factors affecting a primary
insurer's reinsurance limit selection are most
accurately listed as Maximum policy limit,
extracontractual obligations, and loss adjustment
expenses
5) IT- a rapidly growing value chain support
function that provides the backbone that supports
an insurer's communications, operations, marketing,
underwriting, investing, and claims handling
6) Investments- Insurers' operations frequently
depend on investment earnings because premiums
are held competitively low to attract customers. As
a result, investment earnings are frequently relied
on to off set high losses and rising costs.
7) Accounting and finance
8) Customer service
9) Legal and compliance
10) Human resources (HR)
11) SIU
