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CPCU-500 Becoming a Leader in Risk Management and Insurance is now Stable and With Pass Result | Test Your Knowledge for Free

CPCU-500 Practice Questions

Becoming a Leader in Risk Management and Insurance

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Total Questions : 58

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Question # 1

A proper meeting includes effectively spurring action, triggering accountability, and driving results. These include listing what was decided, upcoming deadlines, action steps, and copies of reports/slides. Which one of the key phases of running an effective meeting would these be found in?

Options:

A.  

Preparation

B.  

Participant management

C.  

Ground rules

D.  

Follow up

Discussion 0
Question # 2

The direct effects from labor union strikes fall under which one of the following general categories of risk sources?

Options:

A.  

Economic risk sources

B.  

Catastrophic risk sources

C.  

Human risk sources

D.  

Natural risk sources

Discussion 0
Question # 3

No-Flame Company installs fire suppressant systems in newly constructed buildings. No-Flame has an occurrence version of the Commercial General Liability Coverage Form. The first day the owners occupied a new building, the fire suppressant system installed by No-Flame malfunctioned. The building owner sustained personal property damage, and the chemicals released by the system caused minor injuries to three of the building owner’s employees. No-Flame publicly accused the building owner of setting the suppressant system off in order to collect the insurance proceeds, although No-Flame knew that its systems had defects. The owner sued No-Flame for damages. Which one of the following statements best describes how No-Flame’s CGL insurer will respond to the lawsuit?

Options:

A.  

The insurer will cite the exclusion under Coverage B Personal and Advertising Injury Liability related to injury arising out of oral or written publication of material done by the insured with knowledge of its falsity.

B.  

The insurer will cite the exclusion under Coverage A Bodily Injury and Property Damage Liability that is titled Damage to Impaired Property or Property Not Physically Injured.

C.  

The insurer will cite the exclusion under Coverage A Bodily Injury and Property Damage Liability that is titled Expected or Intended Injury.

D.  

The insurer will deny the entire lawsuit because the allegations involve both bodily injury and personal and advertising injury.

Discussion 0
Question # 4

Which one of the following quadrants of risk deals with uncertainties associated with the organization's procedures, systems, and policies?

Options:

A.  

Hazard risk

B.  

Financial risk

C.  

Strategic risk

D.  

Operational risk

Discussion 0
Question # 5

Blithe Insurance is a large commercial lines insurer that has been in business for over thirty years. Blithe’s corporate goals are simply stated and have remained fairly constant over the years:

Maintain a superior financial rating

Respond to customer needs

Operate with a high degree of integrity

Blithe’s senior management team develops business strategies on an annual basis to direct the organization toward meeting these goals. Which one of the following strategies would help the organization accomplish its goal of maintaining a superior financial rating?

Options:

A.  

Acknowledge every claim within twenty-four hours of receiving notification

B.  

Achieve an all lines combined ratio of 95% or less

C.  

Achieve an “exceeded expectations” rating on at least 90% of customer service surveys

D.  

Conduct internal market audits twice a year

Discussion 0
Question # 6

Gulford’s is a large retail store chain with locations throughout the U.S. The operations are divided into three different profit centers. Each center has a separate executive-level position and management team. The profit centers are based on type of product and include apparel, electronics, and grocery. Which one of the following types of organizational structure has Gulford selected?

Options:

A.  

Cost leadership structure

B.  

Functional structure

C.  

Multidivisional structure

D.  

Flat structure

Discussion 0
Question # 7

Which one of the following best summarizes the forces that drive competition in the insurance industry, as analyzed under the Five Forces Model?

Options:

A.  

Customer buying power, customer loyalty, and changes in customer preferences

B.  

Bargaining power of customers and reinsurers, threat of new entrants, and rivalry among existing firms

C.  

Threat of new entrants, economic downturns, and rivalry among the insurer’s management team

D.  

Financial institution involvement, insurance regulation, and economic downturns

Discussion 0
Question # 8

Best Builders is considering acquiring another contractor in order to expand its operations into another state. The uncertainties involved with this decision should be analyzed under which one of the following quadrants of risk?

Options:

A.  

Operational risk

B.  

Strategic risk

C.  

Hazard risk

D.  

Financial risk

Discussion 0
Question # 9

The Growers Insurance Company has begun a SWOT analysis because it has failed to meet its loss ratio goals for three consecutive years. Growers has various strategies in place that have proven successful in the past. Which of the following would be considered a strength that Growers might be able to capitalize on to address its problem?

Options:

A.  

Competition is continuing to drive insurance rates down.

B.  

Growers’ underwriting staff is very experienced.

C.  

Growers’ surplus is adequate for the present.

D.  

Various markets have been identified for growth.

Discussion 0
Question # 10

When Aaron and Ella were purchasing their first home, they were alarmed by the premium for the homeowners insurance policy that they were required to purchase. Their agent educated them of the many benefits of homeowners insurance. All of the following are benefits of homeowners insurance, EXCEPT:

Options:

A.  

It will help them secure a mortgage by providing assets for the lender to collect as collateral in the event of a loss.

B.  

It will give them the opportunity for a financial gain if they experience a loss covered by their policy.

C.  

It will help return them to their pre-loss condition if they experience a loss covered by their policy.

D.  

It will protect them from potentially large lawsuits if someone is injured on their property.

Discussion 0
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