Chartered Property Casualty Underwriter (CPCU) 540 Practice Exam

Direct premiums written per underwriter measures what?

The underwriting expense ratio The return on equity The underwriter's productivity The accounts payable turnover

Correct Answer:

The underwriter's productivity

Explanation:

Direct premiums written per underwriter focuses on how much business an underwriter handles in a given period. Direct premiums written are the gross premiums from policies the insurer buys or writes, and when you divide that by the number of underwriters (or full-time equivalents), you get the average production per underwriter. This metric is a direct reflection of productivity, showing the volume of work an underwriter manages. It’s not about costs relative to premiums, profitability, or liquidity metrics, which is why it best measures underwriter productivity.

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