Question 1

Anil is a new customer service representative in a busy insurance company sales department. In training, he is finding that his employer greatly values acting professionally at all times. Anil should learn that

Select one:

A. Ethical insurance professionals need not concern themselves with laws and regulations.

B. Ethical behavior requires sacrificing one's own values for the good of the consuming public and society as a whole.

C. Business ethics entail doing what is right in the context of products and services and relationships with stakeholders.

D. Governmental entities cannot encourage moral behavior or discourage immoral actions.

Question 2

Which one of the following statements concerning laws is true?

Select one:

A. Laws impose a sense of societal decency and order.

B. Laws are enough to dictate moral behavior.

C. Laws are ethical tenets.

D. Laws describe moral responses to conflict.

Question 3

Which one of the following helps to ensure that individuals uphold defined moral values?

Select one:

A. Rule of reason

B. Justifiable reliance

C. Societal pressure

D. Property rights

Question 4

As a customer service representative for an insurance agency, Carlos considers himself an insurance practitioner who wants to do well at his job. A successful insurance practitioner must exhibit professionalism because of which one of the following public needs?

Select one:

A. A high level of insurance product knowledge

B. A high level of trust

C. A high level of need for insurance

D. A high level of regulation of the business

Question 5

Which one of the following statements is correct?

Select one:

A. The perception of professionalism is important for insurance practitioners only in terms of the public view.

B. Awards based exclusively on monetary accomplishments recognize an insurance practitioner's professionalism.

C. Insurance practitioners who are perceived as professionals will gain an advantage over other practitioners.

D. When an insurance practitioner aspires to develop the traits of a professional, clients are unlikely to recognize the effort.

Question 6

Public recognition as an insurance professional is most likely a result of

Select one:

A. Exhibiting the traits of a professional.

B. Hard work and active public relations.

C. Earning a very high income.

D. Acknowledgement by employers and competitors.

Question 7

Which one of the following statements is correct?

Select one:

A. There is little insurance companies can do to fuel the country's economic engines or enable the growth of commerce.

B. Insurance professionals who search for correlations between activities and reductions in losses, and who then develop preferred rates, are meeting their social responsibilities.

C. Because insurers' investments are heavily regulated, they cannot be used to support social responsibility or improve the lives of others.

D. The opportunity for preferred rates generally does not motivate individuals and organizations to become more responsible in their actions.

Question 8

The activity that best reflects the social responsibility aspect of ethical behavior is

Select one:

A. Contacting claimants within three months of a notice of claim.

B. Establishing rate structures that encourage loss prevention.

C. Supporting legislation that would increase insurer profitability.

D. Offering insurance to a client because it is required by law.

Question 9

Which one of the following statements is correct?

Select one:

A. An ethical insurance professional need not maintain knowledge of current regulatory issues.

B. A pursuit of continuing education in laws and regulations helps insurance professionals avoid allegations of impropriety.

C. Adherence to ethical standards does not build consumers' trust in the insurance industry.

D. Laws have no ability to help keep competition fair.

Question 10

Mitsuki visited a local insurance agent to obtain coverage for her yacht. She requested liability coverage in the amount of $100,000 and hull coverage in the amount of $150,000. She asked the agent to submit her request to Watercraft Insurers. The higher the coverage limits, the more money the agent makes in commissions. Which one of the following is the most appropriate action for the agent?

Select one:

A. The agent should review the situation with Mitsuki to determine what would be reasonable amounts of coverages.

B. The agent should refuse to submit a request to Watercraft Insurers until it is determined whether lower coverage limits are advisable.

C. The agent should submit a request to Watercraft Insurers with the coverage requested just as Mitsuki asked.

D. The agent should refuse to submit a request to Watercraft Insurers until it is determined whether greater coverage limits are advisable.

Question 11

Jessica is a loss control specialist with an insurer. She often inspects the property and operations of insureds and makes loss control recommendations to the underwriter. Jessica's duties in these situations are best described by which one of the following?

Select one:

A. Her duties involve the insurer and the policyholder.

B. Her duties involve the policyholder, the public, and the insurer.

C. Her duties involve the policyholder and the public with which the policyholder deals.

D. Her duties involve the insurer and the public.

Question 12

Emily is a producer on a difficult risk. She has gathered extensive information regarding an insurance applicant. In order for Emily to meet her professional responsibilities to the insurer, Emily should

Select one:

A. Submit to the insurer only the information that favors lower premiums.

B. Recognize a mutual interest and do what is best for the insurer and herself.

C. Recommend coverage that is the most profitable for the insurer.

D. Review the applicant's risk exposure carefully to place appropriate coverage.

Question 13

Marilyn is the personal lines manager at a medium-sized brokerage in a regional center. The staff members are experienced and well-trained and have all been with the brokerage for a number of years. Marilyn knows that one of the customer service representatives (CSRs) was recently widowed and has been suffering financially as a result. She begins to notice small things missing from the office: several boxes of paper towels, two large cans of coffee, dishwashing detergent, paper, pens, and envelopes. Marilyn is faced with an ethical dilemma. She feels a responsibility to her employer, but she feels sympathy toward the CSR that she suspects of taking the items. Which one of the following best identifies one of the principle stakeholders or groups of stakeholders in this dilemma?

Select one:

A. The employees of neighboring businesses

B. The insurers the brokerage represents

C. The suppliers of the missing items

D. The other employees in the office

Question 14

Kendra is an insurance producer at Wayside Insurance Brokerage. ABC Insurance Company, one of the insurers that Wayside represents, has announced an incentive bonus. Any brokerage that exceeds its sales goals with ABC will be entered in a drawing. The employees at the winning brokerage will enjoy an all-expenses paid trip for themselves and their spouses to Paris for a week. This presents an ethical dilemma for Kendra. While she knows that ABC provides quality products and services, she is concerned that the company's premiums are typically ten to fifteen percent higher than those of other insurers of similar quality and underwriting stance as ABC. Which one of the following best identifies one of the principal stakeholders or groups of stakeholders in this dilemma?

Select one:

A. ABC's underwriting staff

B. Kendra's friends and family

C. Wayside's personnel manager

D. New insurance applicants at Wayside Insurance

Question 15

Elmer is a commercial underwriter at ABC Insurance Company. Elmer and one of his co-workers, Jeff, play golf together regularly at the local public course. One weekend, Jeff suggests that instead they play at an expensive private club. He explains to Elmer that the owner of a new commercial account Jeff recently wrote gave Jeff a membership to the club. The situation makes Elmer uncomfortable because he knows that ABC has a strict policy about not accepting gifts from policyholders. Elmer has an ethical dilemma and is torn about whether to inform his employer about the gift or not. Which one of the following types of ethical conflicts does this situation most clearly represent?

Select one:

A. Justice versus mercy

B. Truth versus loyalty

C. Long-term versus short-term

D. Individual versus community

Question 16

Joshua is insured with InsureCo through its agent, Olivia. He has an automobile and a commercial property policy with InsureCo. Joshua's son Harry, who lives at home, is driving the insured vehicle. He loses control and hits a guardrail causing $4,500 damage to the vehicle. Joshua asks Olivia for advice. Olivia knows that InsureCo's guidelines state that one at-fault accident, whether a claim is paid or not, results in an automatic premium increase of twenty-five percent. If Joshua pays for the damage himself the insurer may never know about the accident.

Olivia's decision is to advise InsureCo of the accident. Which one of the following decision-making tools is Olivia most likely using when she makes her decision?

Select one:

A. Rules-based decision making

B. People-based decision making

C. Ethics-based decision making

D. Situation-based decision making

Question 17

Burt's young son belongs to a scouting organization. A father of a fellow scout has volunteered to be the group's treasurer. Burt, as a bond underwriter, knows from an application he had rejected that the other father had been in trouble for embezzlement, but Burt's employer has a policy against disclosing publicly that which is learned in the course of underwriting. Burt is contemplating whether he should reveal to the scouts that which he knows. His dilemma could probably be resolved by

Select one:

A. Realizing that the scouts are a not-for-profit organization to which no ethical duty is owed.

B. Analyzing whether any laws, regulations, or standards apply to the situation.

C. Considering that his employer may someday want the rejected account.

D. Recognizing that the issue is one of practicality and not ethics.

Question 18

Insurance Company (IC) provides company cars to claim managers who have metropolitan territories. The company's written policy is to use these vehicles only for business and there is a strict prohibition against having passengers for any reason whatsoever.

Claim manager Barb recently gave birth to a son. She would like to stop by her son's daycare center to pick him up daily. This would take her only five miles a day out of her way and this helps Barb save time and use of her own car. Barb rationalizes that the side trip actually benefits IC because it allows her to spend less time switching vehicles and more time at work and it allows Barb to be more focused on her claim files. Which one of the following statements is correct?

Select one:

A. Rules-based decision making always places people and situations first and it would justify a decision by Barb to use her company car to pick up her son from the daycare center.

B. Rules-based decision making recognizes that one rule does not fit all circumstances and would justify Barb's plans to use her company car to pick up her son from the daycare center.

C. From a rules-based decision analysis, it would be unethical for Barb to use her company car to pick up her son from daycare.

D. From a rules-based decision analysis, the equities rule in favor of Barb using her company car to pick up her son from daycare.

Question 19

Ariel is facing an ethical dilemma at work and is using a checklist for ethical decision making to help resolve it. At the end of his experience, he should

Select one:

A. Avoid making a hard decision.

B. Find that there is a rule for everything.

C. Internalize everything learned.

D. Find that some problems cannot be solved.

Question 20

Westfork Mutual has suffered from a publication regarding allegations of unethical claims settlement practices.An internal review indicated that there was no unlawful or illegal behavior involved, but there was a lack of consistency in claims practices among the cases.Westfork Mutual also found that employee morale was low and turnover was higher than other companies in the industry.The executives are looking for a tool to improve the company's reputation, provide employees with guidelines for clarity and consistency, and offer some protection against lawsuits.Which one of the following tools would help the organization meet these goals?

Select one:

A. A policy requiring annual internal audits of the claims department

B. A code of ethics that clearly states the principles and values of the organization

C. A publication disputing the original allegations

D. An employees survey of all employees throughout the organization

Question 21

Clarence is a claims representative for a commercial liability insurer that has a code of conduct governing all employees. Its first rule is that employees shall "do the right thing" at all times.

Clarence is handling several claims that have been reported to the reinsurer. The reinsurer informed him that its auditor planned to visit to review those claim files and asked that the entire file for each be made available. Clarence knows he did a poor job writing the summaries in the files. He is embarrassed to have the representative see them, so he is contemplating hiding them during the audit. He does not think that they are relevant to the ultimate outcome of the claims anyway.

Which one of the following statements is true?

Select one:

A. Realizing that the outcomes of the claims are not affected by the summaries in any way, Clarence is justified in withholding them.

B. Clarence is a stakeholder as to the claims he handles and avoiding embarrassment could be the right thing to do.

C. Clarence should look to the code of conduct for guidance and decide to provide the summaries even if they are not done well.

D. Because he would not be breaking any law by hiding the summaries, Clarence is free to hide them from the auditor.

Question 22

A restraint or a restriction to access is an example of which one of the following types of barriers to ethical decision making?

Select one:

A. A physical barrier

B. A moral barrier

C. An administrative barrier

D. A procedural barrier

Question 23

Administrative barriers may prevent an insurance professional from making ethical decisions. Administrative barriers occur under which one of the following conditions?

Select one:

A. When key documents have been destroyed.

B. When witnesses are unavailable

C. When the processes are complicated and procedures are cumbersome

D. When insufficient guidance is available regarding ethical behavior

Question 24

Federal law requires that publicly traded companies identify principal ethics officers, create anonymous hotlines for reporting unethical behavior, and

Select one:

A. Encourage and reward individuals for reporting unethical behavior.

B. Establish codes of ethics.

C. Publicly admonish those who are involved in unethical behavior.

D. Reward whistle blowers.

Question 25

Which one of the following statements is correct regarding the CPCU Code of Professional Conduct (the Code)?

Select one:

A. The American Institute for CPCU's Ethics Ombudsman is responsible for developing and publishing all Advisory Opinions.

B. Formal published Advisory Opinions are intended to be used by all persons subject to the Code.

C. Individual CPCUs and candidates cannot request Advisory Opinions to resolve questions regarding interpretation of the Code.

D. The sole purpose of the Board of Ethical Inquiry is to investigate alleged breaches of the Code.

Question 26

Rules of the CPCU Code of Professional Conduct

Select one:

A. Are established by the Ethics Policy Committee.

B. Express general concepts of ethical standards of behavior.

C. Include advisory opinions on ethical conduct.

D. Are enforceable standards of behavior for CPCUs.

Question 27

Neil is a claim adjuster and a CPCU. He is also an avid amateur soccer player. One evening after a game, he and his team members go to a pub for drinks and dinner. Neil stays late at the pub and consumes too much alcohol, then leaves to drive home. Unfortunately, he misses a stop light several blocks away and runs into another vehicle. The driver and passenger in the other car are killed. Neil is subsequently charged and convicted of driving under the influence and criminal negligence causing death, which are felonies in his state. Which one of the following statements best describes how Canon 3 of the Code of Professional Conduct concerning laws and regulations applies to this situation?

Select one:

A. The Ethics Committee would review the facts of the case and interview Neil to determine what would be the best course of action.

B. Canon 3 does not apply because Neil was not engaged in professional activities at the time of the accident.

C. Neil would be subject to automatic and immediate suspension of his CPCU designation under these circumstances.

D. Neil is not in violation of Canon 3 because it applies only to those laws and regulations that govern the conduct of the business of insurance.

Question 28

Julieta has been asked to serve on a legislative committee for her state to examine and suggest changes to the portions of state law relative to compensation for victims of auto accidents. As a CPCU, Julieta is considering the implication of Rule 4.2 of the Code of Professional Conduct concerning improvement of insurance mechanisms if she accepts the invitation. Which one of the following statements would indicate the best reason to accept the invitation without violating Rule 4.2?

Select one:

A. She can suggest changes so that the injured victim would be able to claim and retain more damages from an accident.

B. She can suggest changes that improve the profitability of her employer.

C. She can suggest changes that improve efficiency in payment at a lower cost to the public.

D. She can suggest changes so that a party with greater financial resources bears the cost of auto

Question 29

Insurance consumer Lachlan thinks he has a legitimate complaint relative to a CPCU's actions that he believes fell well below professional competency. Lachlan files a complaint with the Board of Ethical Inquiry. Which one of the following statements best describes when the Board of Ethical Inquiry would take action on Lachlan's complaint?

Select one:

A. When a proven violation caused unjust harm and discredited the CPCU designation

B. During the investigation of the same complaint by the insurance regulator to assist in that investigation

C. During the investigation into the CPCU's actions by his employer

D. When notified by legal counsel for Lachlan that actions of the CPCU allegedly violated civil law

Question 30

Casey is a veteran boiler and machinery claim representative for an insurer. While inspecting various claims of insureds, he notices many boiler and machinery exposures of the insureds for which no coverage is provided. Casey suspects that many producers are missing these exposures. As a CPCU, Casey's best action in the spirit of Canon 5 of the Code of Professional Conduct related to raising professional standards would be to

Select one:

A. Inform insureds as to the uncovered exposures.

B. Offer a seminar to local businesses relative to the exposures and available coverages.

C. Offer seminars to producers on boiler and machinery exposures and coverages.

D. Inform the individual producers about the uncovered exposures.

Question 31

CPCU Joshua is an underwriter in a branch office. He learns that a tort reform bill has been introduced into his state legislature that would assist insureds by lowering their premiums and, therefore, hurt his agents' commission income. To best comply with Rule 5.2 of the Code of Professional Conduct related to promoting benefits to the public, Joshua should

Select one:

A. Explain the benefits of the bill to the agents with whom he deals and encourage passage of the bill.

B. Take no action as he is not a registered lobbyist.

C. Request permission from management to write a letter to the editor in support of the bill.

D. Encourage agents to support the bill despite the negative effect to agents.

Question 32

Valentina is a personal lines insurance agent and a CPCU. A long-time client, Margaret, wants to make some changes to her homeowners policy. She has recently received an inheritance that includes several high value pieces of jewelry. She has had the items appraised and wants them scheduled on her policy. The total value of the items is $250,000. Valentina completes the paperwork and submits it to the insurer. She follows up to make sure that the endorsement is processed promptly and accurately and sent to the client. Later, Valentina tells several co-workers, friends, and neighbors about Margaret's newly acquired jewelry. Which one of the following best describes the application of Canon 6 of the Code of Professional Conduct as it pertains to information entrusted to a CPCU?

Select one:

A. Valentina is in contravention of Canon 6 because she did not keep information entrusted to her confidential.

B. Valentina is in compliance with Canon 6 because she fulfilled her responsibility to Margaret in a professional manner.

C. Valentina is probably in compliance with Canon 6 because the information she has shared with others is not of a highly personal nature.

D. Valentina is probably in contravention of Canon 6 because she did not advise Margaret how best to protect her newly acquired jewelry.

question 33

Juhani, a producer and CPCU, has learned from an insurance client that the client is in secret negotiations for a merger. If the merger is successful, the client would control a new business with significant new products liability exposures. A renewal for the client is pending and Juhani is preparing a renewal submission. To best comply with Rule 6.1 of the Code of Professional Conduct as it relates to confidential information, Juhani should

Select one:

A. Keep the merger information confidential until it occurs.

B. Disclose the potential merger.

C. Ask the client for permission to disclose the potential merger.

D. Pose the merger as a hypothetical to the underwriter.

Question 34

Brigitte is a commercial lines producer and a CPCU. She works at the second largest insurance brokerage in the area. The largest brokerage has an agency agreement with ABC Insurance, a carrier that Brigitte's employer does not represent. Brigitte has heard unconfirmed rumors that ABC Insurance is slow to pay claims and provides poor service in terms of loss control. When Brigitte visits one of her larger accounts to discuss the client's upcoming renewal, the client advises Brigitte that he has received a quote from her competitor, ABC, and that it is significantly lower than what the client is currently paying. Brigitte quickly tells the client that ABC has a poor reputation within the industry for bad service and slow payment of claims. The client thanks Brigitte, and renews the policy. Which one of the following best describes the application of Canon 7 of the Code of Professional Conduct as it relates to improving the public understanding of insurance?

Select one:

A. Brigitte is in compliance with Canon 7 because she is informing her client about another insurer in the marketplace.

B. Brigitte is in compliance with Canon 7 because she did not fabricate information to intentionally mislead the client.

C. Brigitte is probably not in compliance with Canon 7 because she has made negative statements about an insurance carrier.

D. Brigitte is probably not in compliance with Canon 7 because the information she provided the client was not objectively verified.

Question 35

Jake is a personal lines insurance producer who recently obtained the CPCU designation. It was a struggle for Jake to complete the CPCU courses, and he feels that he has done enough studying in his career. Jake's supervisor regularly circulates trade journal articles about proposed insurance legislation, new regulations, changing market conditions, and new products and services. Jake feels that, as a CPCU, he is fully qualified to meet his clients' needs without all that extra reading, which he feels takes away from the time he should be spending with customers. Which one of the following best describes the application of Canon 7 of the Code of Professional Conduct as it relates to keeping abreast of insurance developments?

Select one:

A. Jake is in compliance with Canon 7 because he has completed his CPCU designation.

B. Canon 7 does not apply to this situation.

C. Jake may be in violation of Canon 7 because he is not keeping current.

D. Jake is not in compliance because Canon 7 specifically requires CPCUs to read trade journals.

Question 36

Filip, a CPCU, is competing for an adjunct insurance instructor position at a local junior college. He must write a short essay explaining why he should be selected. Filip knows the other candidates do not hold any professional insurance designations. Filip's best approach to referring to his CPCU designation in the essay would be to

Select one:

A. Contrast the professional designation with a college undergraduate degree.

B. Explain the curriculum of the educational part of the CPCU.

C. Emphasize how much more knowledge he has compared to those without the designation.

D. Not mention his CPCU designation.

Question 37

Mathias is a personal lines underwriter and a CPCU. When he obtained the CPCU designation six months ago, his employer asked whether he would like to have his business cards reprinted with the designation included. Mathias declined at the time because he still had a box of almost 500 cards left from the last printing, and he was disinclined to dispose of them, particularly since he hands out relatively few business cards in a year. When he runs out of his current box of cards, he will have them reprinted with the designation included. Which one of the following best describes the application of Canon 8 of the Code of Professional Conduct regarding use of the CPCU designation in this situation?

Select one:

A. Mathias is in contravention of Canon 8, which specifically requires CPCUs to include the designation and key on their business cards.

B. Mathias would only be in compliance with Canon 8 if he made a point of telling those he deals with that he is a CPCU.

C. Mathias is probably in compliance with Canon 8 because it merely encourages CPCUs to display and use their designations proudly.

D. Mathias will be in compliance with Canon 8 provided that he handwrites the letters "CPCU" after his name on his business card.

Question 38

As a CPCU, Antonia has been asked to recommend an agency owner for the CPCU program. In the past, Antonia noticed that the prospective candidate financed insurance premium in a way that Antonia believes is unethical. In keeping with the Code of Professional Conduct, Antonia's best action regarding this requested recommendation would be to

Select one:

A. Discuss her dilemma with another CPCU.

B. Not support the candidate for the CPCU designation.

C. Write the recommendation in the hope the candidate will improve his or her ethics.

D. Support the candidate with reservations.

Question 39

Teresa is a commercial lines producer and a CPCU. The brokerage has a policy that all producers should work to obtain the CPCU designation. One of Teresa's co-workers, Chris, has been struggling unsuccessfully with CPCU courses for years. He has complained to Teresa several times that the material is too difficult. In addition, he has not been meeting his sales objectives for the past two years. When the brokerage fires Chris, he soon gets a job with a competing brokerage. When visiting one of the brokerage's larger accounts, Teresa sees Chris' business card from his new employer on the client's desk. The card includes the CPCU designation and key. Teresa is certain that Chris has not earned the designation. Which one of the following best describes Teresa's obligations under the Code of Professional Conduct?

Select one:

A. Teresa is obliged to inform her employer that Chris is targeting the brokerage's accounts.

B. Teresa is obliged to report to the AICPCU that Chris is using the designation.

C. Teresa is obliged to inform Chris' new employer that he does not have the CPCU designation.

D. Teresa is not obliged to take any action because Chris no longer works for her employer.

Question 40

The Institute's Board of Ethical Inquiry (BEI) has found that a complaint brought before it against Zeke, a CPCU, merits disciplinary action. The BEI may administer all of the following penalties against Zeke, EXCEPT:

Select one:

A. Revocation or suspension of the privilege to use the CPCU designation

B. Requiring payment of restitution to those harmed by Zeke's conduct

C. Reprimands in the form of informal rebukes given limited publication

D. Private admonitions, requesting that Zeke cease and desist

Question 41

Anton is a CPCU candidate. Anton violated a law relating to professional activities. The violation does not involve a felony conviction. Which one of the following statements is true?

Select one:

A. Anton may seek approval to continue to pursue the CPCU designation if he or she is deemed fully rehabilitated.

B. Anton may continue to pursue the CPCU designation as long as an apology was issued to any victims.

C. Anton may petition to have any suspension waived upon completion of assigned community service.

D. Anton may continue to pursue the CPCU designation at the discretion of the American Institute's Ethics Counsel.

Question 42

George is a CPCU who owns a commercial insurance agency. George met with Horace, the owner of a growing local company that is seeking to move all of its coverages and had asked George for quotes. Horace mentioned to George that Horace was the chairperson of a charitable fund drive, and a $20,000 donation from George's agency "would go a long way toward helping me to assess my company's insurance situation." George understands this statement to mean that if he makes the donation, Horace will buy his insurance from George.

George feels Horace's remark is akin to a bribe, but he would very much like to get Horace's business and the charity is a good one. George wonders whether he has an ethical dilemma. George should consider

Select one:

A. That he offers good insurance products at good prices such that no one would be cheated.

B. That what Horace proposes might be the custom in Horace's industry and therefore ethically acceptable.

C. Whether making the donation creates the appearance of impropriety.

D. That making the donation creates a winning situation for all of the stakeholders in the scenario.

Question 43

Question text

On an application for auto insurance, Juan was asked whether he had, during the past year, driven a car while using a hand-held cellular telephone. Juan mentioned to the agent, Sally, that he had done so a couple of times, but feels that he is a safe enough driver for it to be irrelevant. Sally agrees, and is contemplating telling Juan that if he promises not to do so in the future, he should answer that he has not done so in the past. Which one of the following statements is a correct analysis of how Sally, who is a CPCU, should approach any ethical dilemma created by the contemplated course of action?

Select one:

A. Using a checklist approach, Sally would seek the source of the problem, and since it is she, Sally can take whatever course of action she chooses.

B. Sally should apply the Golden Rule and realize that if she were in Juan's shoes, she would want to take advantage of the contemplated course of action.

C. Sally's inquiry could end under the CPCU Code of Professional Conduct because of its rule that prohibits misrepresentation and concealment material to professional activities.

D. Situation-based decision making would work best for this dilemma because the consequences of its resolution are relatively unimportant.

Question 44

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Question text

Blain is a CPCU who owns a large insurance agency. He is very proud of his CPCU designation and the number of his employees who are also CPCUs. He will not hire a new employee who is not a CPCU.

At a staff meeting, one of Blain's agents suggested that the firm have lapel buttons created for its employees with "CPCU SPOKEN HERE" printed on them. Half the staff thought it was a good idea, and the other half thought there may be something improper about such use of "CPCU." Blain was not sure what to think.

Which one of the following statements is true?

Select one:

A. Blain should proceed with the button idea but the buttons should only be worn from holders of the CPCU designation.

B. Blain should seek express permission from the American Institute for the contemplated use of "CPCU."

C. Blain should satisfy himself that the buttons would appear dignified and professional and then proceed to order them.

D. Blain should take a vote among his staff members to determine whether to proceed with creating the buttons.

Question 45

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Nick, an underwriting manager, is proud to have earned his CPCU designation. For this reason, he obtained a personalized license plate for his family car that reads "CPCU." Mildred, a CPCU in Nick's department, asked him if he was aware that he was in violation of a rule associated with the CPCU Code of Professional Conduct concerning proper use of the CPCU initials. He replied that he had not violated the rule, in that he and his wife own the car together and his wife works as a nurse in the "Cardiac Progressive Care Unit" of the local hospital, which is called the "CPCU" for short. He told Mildred that if anyone challenges his use of CPCU on the plate he will say it pertains to his wife's profession. Which one of the following courses of action should Mildred take?

Select one:

A. She should accept that Nick has found a legitimate loophole to the rule.

B. She should use an ethical dilemma decision-making flow chart and recognize that the issue is Nick's to resolve, not hers.

C. She should urge Nick to seek advice from the American Institute's Ethics Counsel and tell Nick that if he does not do so, she will.

D. She should recognize that rules are aspirational only and nothing can be done.