Certified Underwriter (CU) Exam

Question 1

An underwriter is evaluating a submission for a large chemical manufacturing plant with a total insurable value (TIV) of $150 million. The underwriter's company has a per-risk treaty reinsurance limit of $50 million. The risk meets all internal guidelines for safety and loss control. What is the most appropriate next step for the underwriter to provide full coverage?

Issue a policy for $50 million and advise the insured to seek coverage elsewhere for the remainder. Decline the risk as it exceeds the company's net retention and treaty limits. Bind coverage for the full amount and notify the reinsurance department afterward. Seek facultative reinsurance for the amount exceeding the treaty limit.

Correct Answer:

Seek facultative reinsurance for the amount exceeding the treaty limit.

Question 2

In the context of workers' compensation underwriting, what does an Experience Modification Rate (Mod) of 1.15 indicate about the applicant?

The applicant's historical losses are 15% better than the industry average. The applicant's historical losses are 15% worse than the industry average. The applicant is a new business with no prior loss experience. The applicant will receive a 15% credit on their standard premium.

Correct Answer:

The applicant's historical losses are 15% worse than the industry average.

Question 3

An underwriter receives a loss control report for a large woodworking facility. Which of the following recommendations in the report would be of the highest priority for the underwriter to see implemented before binding coverage?

Implementing a formal lockout/tagout program for machinery maintenance. Upgrading the landscaping around the main entrance. Repainting parking lot lines to improve traffic flow. Installing ergonomic workstations for office staff.

Correct Answer:

Implementing a formal lockout/tagout program for machinery maintenance.

Question 4

A commercial underwriter is assessing a Business Income (Business Interruption) application for a high-end restaurant that relies on a single, exclusive supplier for its imported specialty ingredients. This reliance on one supplier represents a significant:

Completed operations exposure. Premises liability exposure. Contingent business income exposure. Commercial auto exposure.

Correct Answer:

Contingent business income exposure.

Question 5

A commercial insurer's management is emphasizing the need to improve underwriting profitability. An underwriter's risk selection and pricing decisions directly impact which two primary components of the company's combined ratio?

Investment income and incurred losses. Incurred losses and underwriting expenses. Earned premium and investment income. Earned premium and underwriting expenses.

Correct Answer:

Incurred losses and underwriting expenses.

Question 1

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About this Exam

Prepare with the Certified Underwriter (CU) Exam practice quiz. This question bank includes 100 questions covering underwriter, application, insurance, applicant, and policy. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.

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Certified Underwriter (CU) Exam

This practice set contains 100 questions from the matching question bank and focuses on underwriter, application, insurance, applicant, and policy. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.

This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.

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Certified Underwriter (CU) Exam

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