Question 1

Morgan is taking an ethics course offered by her local claims society in which ethics and morality are discussed at length, and she has learned that morality is

Select one:

A. The system that protects property and people.

B. The application of ethics to the needs of stakeholders.

C. Established by the common law.

D. Universal and basic to human relationships.

Questions 2

As an actuary for a major insurance company, Matilda is concerned that her professional behavior is ethical and moral. Which one of the following statements regarding these topics of concern to her is correct?

Select one:

A. Societal peer pressure cannot encourage individuals to uphold defined moral values.

B. Corporate cheating and corruption are ethical issues rather than moral issues.

C. Morals come primarily from organized religion or religious beliefs.

D. Morals are the principles that dictate the behavior of an insurance professional.

Question 3

Which one of the following best describes business ethics?

Select one:

A. Business ethics are rooted in the profit motive.

B. Business ethics primarily concern decisions of right versus wrong.

C. Business ethics are, in reality, applied ethics.

D. Business ethics are applied legal obligations.

Question 4

Professional associations and societies are

Select one:

A. Most helpful when the groups include many different job types.

B. Most effective when organized at the national level.

C. Effective in setting ethical standards within their specialties.

D. Relatively expensive at the local level.

Question 5

Insurance Company has as one of its guiding principles for its employees a commitment to continuing education (CE). The trait of professionalism known as commitment to CE

Select one:

A. Is satisfied by "on-the-job" training.

B. Is satisfied with a college education.

C. Requires a formal approach to education.

D. Requires a mandate from an insurance regulator.

Question 6

Aidan is anew claims representative and he is pondering the importance of professionalism. He should know that

Select one:

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

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

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

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

Question 7

The panel at an insurance industry trade conference is discussing whether insurance can truly meet social needs. Of the following statements, which one would make the best argument in response to the topic?

Select one:

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

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

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

D. Insurance professionals who search for correlations between activities and reductions in losses, and

who then develop preferred rates, are meeting their social responsibilities.

Question 8

Actuary Josh is reflecting on the realities of the insurance industry. Which one of the following statements reflect such a reality?

Select one:

A. Many insurance products have evolved from the identification of a social need and the industry's societal responsibility to meet that need.

B. In the modern world, attention to social responsibility has become a relatively low priority for most commercial businesses.

C. Social responsibility expectations are in conflict with an insurer's goals of long-term survival and sustained growth.

D. The primary purpose of insurance continues to be to generate profits for owners and shareholders.

Question 9

Which one of the following statements is correct?

Select one:

A. Insurers must serve the public trust and maintain careful stewardship of monies designated for the benefits of policyholders and claimants.

B. The financial failure of an insurance carrier has consequences only for that carrier's policyholders and its employees.

C. There is little that insurance professionals can do to support "green" building, reduced energy consumption, or conservation methods.

D. Meeting their social responsibility cannot also serve other needs of insurance professionals.

Question 10

Oliver is a reinsurance intermediary placing reinsurance for a variety of insurers with a variety of reinsurers. He has no contact with the public or policyholders of the insurers for which he places reinsurance. In this position, Oliver's duties are best characterized by which one of the following?

Select one:

A. Oliver only owes his duties to the insurers for which he places business and the reinsurers.

B. Oliver owes his primary duties to the insurance regulators overseeing reinsurance.

C. Oliver only owes his duties to the insurers for which he places business.

D. Oliver still has significant duties to the public and primary insurer policyholders.

Question 11

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 greater 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 lower coverage limits are advisable.

Question 12

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 policyholder, the public, and the insurer.

B. Her duties involve the insurer and the public.

C. Her duties involve the insurer and the policyholder.

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

Question 13

Daniel is in the process of resolving an ethical dilemma. He believes he has identified all stakeholders in the situation. Daniel's next step in the process is best characterized by

Select one:

A. Gathering accurate information on the stakeholders.

B. Determining who is responsible for resolving the dilemma.

C. Identifying the stakeholder most affected by the dilemma.

D. Notifying the stakeholders of the situation.

Question 14

Ida has an ethical issue she is trying to solve. To be sure she is in a position to make a decision, she has identified stakeholders and their motivation. She believes she has all of the relevant and objective facts. To consider subjective issues, Ida should

Select one:

A. Not be concerned with the reaction of the stakeholders to the decision.

B. Ignore feelings because they are irrelevant to the situation.

C. Counsel the final decision maker to ignore his or her feelings.

D. Consider how those affected by the decision view the issue.

Question 15

Alicia is a high school graduate who works as an underwriting assistant at ABC Insurance Company. Alicia enjoys her job and hopes to be promoted to underwriter within the next few years. She discussed the possibility with her supervisor during her performance review and her supervisor was supportive. However, the supervisor explained that ABC's requirement is that underwriters have either a college education or a professional designation in underwriting. Alicia feels that obtaining either one will be challenging and time-consuming, but she is not prepared to give up her hopes of promotion. Which one of the following types of ethical conflicts does this situation most clearly represent?

Select one:

A. Individual versus community

B. Long-term versus short-term

C. Truth versus loyalty

D. Justice versus mercy

Question 16

Newman is a claim representative who is investigating coverage for a new claim. He quickly realizes that the policy sold to the insured was not the one the insured believes he purchased. There would be coverage if the right policy was provided, but as it is, there is no coverage. Newman could honor the claim as if it were brought under the policy the insured expected. Otherwise, the agent could face an error and omissions claim. If Newman considers all the possible decisions and outcomes for each and bases his final decision on who will be helped and who will be hurt, and to what degree, he is practicing

Select one:

A. Rules-based decision making.

B. People-based decision making.

C. Situation-based decision making.

D. Checklist-based decision making.

Question 17

Rhonda and her sister Karen both work for Insurance Company in a production-oriented environment. Rhonda is quite capable of issuing 20 or more auto applications a day while Karen struggles to complete fewer than a dozen most days. Twice a year, employees must prove competency, and underwriting reviews are conducted to ensure compliance to standards of at least 15 applications per day. Therefore, twice a year, Rhonda goes to Karen's desk on her lunch hour for two weeks during the review period and issues applications for Karen to ensure that she meets the company standards. Rhonda recently took an ethics course and has begun to wonder whether this arrangement is ethical. Which one of the following statements is true?

Select one:

A. If Rhonda cannot find an ethical canon that specifically addresses her issue, then she can be assured that her conduct is ethical.

B. If Rhonda applies rule-based decision making, then she will consider the situation from Karen's perspective.

C. If Rhonda applies situation-based decision making, then she may realize that in the long-run her employer suffers because its review process is being compromised.

D. If Rhonda applies people-based decision making, then she will have to determine whether any of her supervisors created a rule prohibiting her conduct.

Question 18

Life insurance producer Mack is aware that his company has replaced an inferior life insurance product with a superior policy. The sales commission on the new product is lower than the commission on the policy it is replacing. He is therefore eager to sell more of the inferior products while they are available due to the higher commission. He is aware the new product is better for the insured and is faced with an ethical dilemma. Mack convinces himself that he should market the old product as being unique and one that is the customer's last chance to have the opportunity to purchase the product. Although his resolution may be wrong, Mack's decision, from an ethical decision-making standpoint, is

Select one:

A. Rules-based.

B. Function-based.

C. People-based.

D. Situation-based.

Question 19

Oliver is an underwriting manager.During a recent staff meeting, two of his underwriters expressed concerns about what they considered unethical behavior by one of the producers.After gathering more facts, and reviewing company practices and professional codes, Oliver determines that there is an ethical concern.Which one of the following is Oliver's next step in resolving this dilemma?

Select one:

A. Evaluate the dilemma from a people-based prospective

B. Analyze the positive and negative impact on the stakeholders

C. Decide on a course of action

D. Determine who is responsible for resolving the conflict

Question 20

When faced with an ethical dilemma, an insurance professional can often look to the organization's code of ethics as a guide.Which one of the following features of the code of ethics can be particularly helpful in the decision-making process?

Select one:

A. The shared responsibility of all stakeholders

B. The use of examples of situations and possible resolutions

C. The published documentation of the organization's principles

D. The incorporation of people-based decision making

Question 21

Underwriting supervisor Kristine has learned that one of her employees is not only breaking the rules by looking at her own insurance policies but she is reviewing the policies of her co-workers and telling them how to "get around the system" to reduce their premiums. Kristine has reviewed the situation and considered the ethical issues and is at the stage she must make a decision. Her decision is almost immediate but now she must monitor the effects of her decision and evaluate the effectiveness of anticipated outcomes. By analyzing the positive and negative results of her decision, Kristine can

Select one:

A. Improve the decision-making process for future ethical dilemmas.

B. Change the company policy to remove any ambiguity.

C. Completely eliminate future unethical behavior on the part of the employees involved in these activities.

D. Enhance the reputation of the organization and protect its stakeholders.

Question 22

The types of tangible constraints that prevent insurance professionals from uncovering, investigating, or taking action regarding ethical lapses are

Select one:

A. Physical barriers.

B. Administrative barriers.

C. Procedural barriers.

D. Moral barriers.

Question 23

As the compliance officer for a reinsurer, Taylor knows that administrative barriers may prevent an insurance professional from making ethical decisions. She wants to conduct training for her company's employees on recognizing administrative barriers. She should know that administrative barriers occur under which one of the following conditions?

A. When key documents have been destroyed.

B. When insufficient guidance is available regarding ethical behavior

C. When the processes are complicated and procedures are cumbersome

D. When witnesses are unavailable

Question 24

The primary reason for the creation of federal whistle-blower statutes was to

Select one:

A. Create a fail-safe mechanism for reporting unethical behavior.

B. Provide anonymity for individuals wishing to report unethical behavior.

C. Protect individuals who report unethical activities.

D. Facilitate and reward the reporting of unethical behavior.

Question 25

Which one of the following best describes the purpose of the Code of Professional Conduct of the American Institute for CPCU?

A. To outline a specific process that CPCUs can use to ensure that all of the decisions that they make are ethical

B. To clarify the effect of all laws and regulations to which insurance professionals are subject in the course of their employment

C. To enforce ethics among insurance professionals through the use of sanctions and penalties for unethical behavior

D. To clearly communicate the minimum standard of conduct expected for CPCUs and CPCU candidates

Question 26

The American Institute for CPCU (American Institute) confers the CPCU designation. The CPCU designation can be revoked by the

Select one:

A. Ethics Policy Committee of the American Institute.

B. Board of Ethical Inquiry of the American Institute.

C. Ethics Counsel of the American Institute.

D. Board of Trustees of the American Institute.

Question 27

Matt, a CPCU, is an automobile claims adjuster with ABC Insurance. He is assigned a claim involving Ted, an ABC insured, and Marina, a third-party claimant. Ted had not seen a stop sign and hit Marina's car broad-side in the middle of the intersection. There was damage to both vehicles and although Ted was not injured, Marina suffered soft tissue injuries to her neck and back and will be off work for an estimated twelve weeks. Which one of the following should Matt do to comply with the CPCU Code of Professional Conduct?

Select one:

A. Ensure that both Ted's and Marina's claims are settled promptly, equitably, and fairly.

B. Settle both parties' claims, but give Ted preferential treatment as he is ABC's customer.

C. Attempt to settle both parties' claims for as little as possible in order to save ABC money.

D. Settle both parties' claims but give preferential treatment to Marina because she is the victim in this case.

Question 28

Rodrigo is the chief investment officer for an insurer. He has four investment firms vying for company business. Each has offered various inducements ranging from use of a skybox at sporting events to negotiated buy/sell transactions costs. To best comply with the CPCU Code of Professional Conduct, Rodrigo should pick the investment firm that offers the

Select one:

A. Quickest buy/sell confirmations.

B. Skybox at sporting events.

C. Lowest transactions costs.

D. Best combination of price and services needed by the insurer.

Question 29

Merve is a reinsurance professional who just received her CPCU designation. Merve is thrilled with what she learned and is grateful that the years of study and testing are over. She just received a notice of a local reinsurance seminar sponsored by the Reinsurance Section of the CPCU Society. To best comply with the CPCU Code of Professional Conduct concerning professional knowledge, Merve should

A. Attend the local CPCU Chapter meetings.

B. Relax and enjoy the status the CPCU indicates.

C. Determine if her state requires continuing education.

D. Attend the reinsurance seminar.

Question 30

Janice is a CPCU employed by an insurance company. She began her career as an underwriter and underwriting manager, but for the past ten years she has worked in human resources. She was recently promoted to Vice President of Human Resources. Janice has decided to take a university course in the coming semester. Which one of the following courses would help Janice best comply with her obligations under the Code of Professional Conduct?

Select one:

A. History of insurance

B. Risk management

C. Employee development

D. Statistics

Question 31

Felicia is a commercial lines underwriter and a CPCU. One of the brokers that she underwrites comes into the office one day to discuss a potential account submission. The account is a golf course that includes a hotel and conference center. The account appears to be a good one - well managed and maintained. Unfortunately, the loss frequency on the account has been much higher than average over the past several years. The broker badly wants to write the account and is asking Felicia to provide a competitive quote despite the loss frequency, which the broker assures her will not continue. The broker offers to buy a membership to the golf course for Felicia so that she can visit the course regularly and "keep an eye on" the account. Which one of the following statements best describes how Felicia should handle the situation in order to comply with Canon 3 of the Code of Professional Conduct concerning laws, regulations, and unjust harm?

Select one:

A. Felicia should decline the golf course membership and underwrite and price the account based on its own merits.

B. Felicia could accept the golf course membership provided she ask another underwriter to review the account.

C. Felicia should decline to accept the golf course membership and refuse to write the account.

D. Felicia should accept the golf course membership if she elects to write the coverage so that she can "keep an eye on" the account.

Question 32

Janice and Tony each own one of the two insurance brokerages in a small town. Both of them have the CPCU designation. Both Janice and Tony are approached by ABC Insurance, a discount insurer that is looking for brokers to represent it in the area. Janice and Tony both realize that if one of them decides to represent ABC, the other will also need to do so in order to remain competitive. They are also concerned that ABC's lower rates for their clients will ultimately result in lower commissions for their brokerages. After discussing the situation, Janice and Tony agree that neither brokerage will sign an agency agreement with ABC. Which one of the following statements best describes how Canon 3 of the Code of Professional Conduct as it relates to unfair competition applies to this situation?

Select one:

A. Janice and Tony are probably not in violation of Canon 3 because they are not acting in violation of any law or regulation.

B. Janice and Tony are not in violation of Canon 3 because they have not materially misrepresented any information to anyone.

C. Janice and Tony are clearly in violation of Canon 3 because they are concerned with the financial well-being of their brokerages.

D. Janice and Tony may be in violation of Canon 3 because they have engaged in activity intended to limit price competition in their area.

Question 33

Katarina, a CPCU, is considering running for city council. Her platform would include a promise to improve the insurance and risk management programs of the city. Katarina is concerned that her choice to run for public office may violate the CPCU Code of Professional Conduct. Which one of the following statements most correctly identifies a situation where Katarina would not violate the Rules of Canon 4 concerning diligence in occupational duties?

Select one:

A. When she takes a position and assures the public the American Institute supports her position

B. When she correctly publicly criticizes the insurance brokers who currently obtain insurance for the city

C. When the reason for her running for office is to obtain a substantial portion of the insurance business of the city for her employer

D. When she believes that a few changes in safety procedures would improve the workers compensation experience of the city

Question 34

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 that improve efficiency in payment at a lower cost to the public.

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

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

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

Question 35

Andrew is an automobile claims manager with ABC Insurance and a CPCU. ABC has a policy of paying for CPCU courses for company employees. Morris, one of the property damage adjusters that Andrew supervises, has attempted three CPCU courses, but he finds them challenging and has not been successful in completing them. He has approached Andrew to ask whether ABC would pay for him to take a practical course in auto body repair estimating. Which one of the following would best illustrate Andrew's compliance with his obligations under Canon 5 of the Code of Professional Ethics regarding raising professional standards of the insurance profession?

Select one:

A. Andrew should refuse because CPCUs are only obligated to encourage other qualified individuals to pursue the CPCU designation.

B. Andrew should refuse because Morris has already demonstrated that he is unsuccessful in completing courses.

C. Andrew should agree because Canon 5 obliges employers to pay for all job-related training for their employees.

D. Andrew should agree because the auto body repair estimating course is directly related to Morris' professional responsibilities.

Question 36

Gary is the CEO of an insurance brokerage and a CPCU. State regulators are proposing changes to significantly increase the continuing education requirements for licensed insurance professionals including brokers, customer service representatives, and claims adjusters. With which one of the following possible responses would Gary best fulfill his obligations under Canon 5 of the Code of Professional Ethics regarding raising the professional standards of the insurance profession?

Select one:

A. Support the proposed changes because Canon 5 obliges CPCUs to support all laws, regulations, and codes.

B. Support the proposed changes because they would foster competence and benefit the public.

C. Fight the proposed changes because the expense involved would indirectly raise insurance costs.

D. Fight the proposed changes because they would make it more difficult for individuals to maintain their licenses.

Question 37

Jose, a CPCU and producer, is an expert in insuring major contractors and developers. One of his clients is negotiating a complex development involving a general contractor and a local governmental unit in a neighboring state. The client asks Jose about a hold harmless agreement provision and the effects of the provision on the liability of the client. To best comply with Rule 6.2 of the Code of Professional Conduct concerning knowing the legal limitations of one's profession, Jose should

Select one:

A. Explain the potential liability to the best of his ability.

B. Call the underwriter on the account for his or her opinion on the liability.

C. Recommend the client ask an attorney licensed in the neighboring state.

D. Call an adjuster in the neighboring state for his or her opinion on the liability.

Question 38

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 39

Furkan, a CPCU and reinsurance employee, learns that a large branch office of a primary insurer is considering offering insurance education courses for local insurance personnel. Furkan would have the time to teach a course if one was offered within his competence. Which one of the following would most accurately reflect Furkan's obligation under the Code of Professional Conduct?

Select one:

A. He should be ready to teach any course offered if asked.

B. He has no obligation as his company has no reinsurance agreements with the insurer offering the courses.

C. He should volunteer to teach any appropriate course.

D. He has no obligation as the courses are not offered by his CPCU Society chapter.

Question 40

A CPCU Society chapter is looking for a project for Ethics Awareness Month. One member suggested a community project that addresses at least one Canon of the CPCU Code of Professional Conduct (the Code). A program on a local cable television channel is contemplated. Which one of the following would be a community project that best addresses Canon 7 of the Code as it relates to improving public understanding of insurance?

Select one:

A. A program explaining how losses are adjusted using case situations

B. A program using cases to show how producers diligently search for sales prospects

C. A program showing how insurance personnel resolve ethical dilemmas

D. A program on the personal sacrifices adjusters make after a catastrophe

Question 41

Vanessa is an accountant and a CPCU. She has been working as a data analyst in the actuarial department at ABC Insurance Company; however, she feels her opportunities for advancement are limited there. She resigns her position and opens an actuarial consulting firm and offers her services to small local insurers and larger brokerages wanting to establish private-label product offerings in cooperation with major insurers. She names her new company CPCU Actuarial Consulting Services and includes the CPCU designation and key on her business cards, letterhead, and the brochures that she mails to prospective clients describing the services that she offers. Which one of the following best describes how Canon 8 of the Code of Professional Conduct regarding use of the CPCU designation would apply in this situation?

Select one:

A. Vanessa is in violation of Canon 8 because the CPCU designation cannot be used by self-employed individuals who are offering independent consulting services.

B. Vanessa is in compliance with Canon 8 because she is using the CPCU designation and key in the manner outlined in Canon 8 Guidelines.

C. Vanessa is in violation of Canon 8 because she is using her CPCU designation in a way that violates the Canon's guidelines.

D. Vanessa is in compliance with Canon 8 because she has included the CPCU designation in the name of her consulting firm.

Question 42

Diane is the owner of an insurance brokerage and a CPCU. Diane and several staff members run a booth at the annual home show in her community. They provide general insurance information, quick personal insurance quotes, and information about the CPCU designation. To attract attention to her booth, Diane arranges to have a CPCU-key costume made and hires a student to wear it while distributing balloons to children at the show. Which one of the following best describes how Canon 8 of the Code of Professional Conduct concerning use of the CPCU designation applies to this situation?

Select one:

A. Diane is in compliance with Canon 8 because it allows for the use of the CPCU key in advertising campaigns and materials.

B. Diane is in violation of Canon 8 because the use of the CPCU key in a costume would not be considered "dignified and professional."

C. Diane is in compliance with Canon 8 because she is providing information about the CPCU designation to the general public.

D. Diane is in violation of Canon 8 because the individual wearing the CPCU-key costume is not a CPCU.

Question 43

Franz is a claims adjuster who has been working hard for several years to complete the requirements for the CPCU designation. He has two exams left to go, for which he expects to sit later this year. His wife, Anita, is very proud of his efforts and for his birthday she gave him a CPCU ring. She encourages him to wear it as motivation to study extra hard. Which one of the following describes how Franz could best meet his obligations under the Code of Professional Conduct?

Select one:

A. Keep the ring but not wear it until the designation has been conferred.

B. Ask Anita to return the ring until the designation has been conferred.

C. Wear the ring proudly.

D. Tell Anita to wear the ring until the designation has been conferred.

Question 44

Miyu is proud of being a CPCU and respects the CPCU Code of Professional Conduct (the Code). She fully supports the aspirational goal of Canon 9 related to maintaining the integrity of the Code. Miyu's best long run actions to assist in maintaining the integrity of the Code would be to

Select one:

A. Adhere to the Code, assist in enforcing the Code, and investigate any perceived violations of the Code.

B. Investigate any perceived violations of the Code, adhere to the Code, and support CPCU candidacy for those she believes exercise integrity.

C. Assist in enforcing the Code, investigate any perceived violations of the Code, and support CPCU candidacy for those she believes exercise integrity.

D. Support the CPCU candidacy of those she believes exercise integrity, adhere to the Code, and assist in enforcing the Code.

Question 45

An insurance customer has alleged that Jake, who is a producer and a CPCU, has violated the Code of Professional Conduct. As a CPCU who is subject to a formal disciplinary proceeding before a Hearing Panel of the Board of Ethical Inquiry, Jake is entitled

Select one:

A. To a hearing before a jury of his or her professional peers.

B. To the same due process rights as a criminal defendant.

C. To be heard in person and be represented by counsel.

D. To a hearing before the local court of common pleas.

Question 46

Cindy is an applicant for the CPCU program. Cindy recently committed and was convicted of a felony. Which one of the following statements is true?

Select one:

A. There is a process whereby Cindy, if deemed to be fully rehabilitated, may still pursue the CPCU designation.

B. There is a two-year waiting period before Cindy's CPCU studies can be pursued again.

C. Cindy is banned for life from pursuing the CPCU designation.

D. Cindy can still pursue the CPCU designation upon recommendation by a parole officer.

Question 47

Narcissa is a CPCU working as a litigation manager for Insurance Company (IC). She has been interested in taking occasional appointments as an arbitrator in a regional claims forum to supplement her income, as she is a single mother who is trying to put two children through college.

Sam, a defense attorney used by IC, does a lot of arbitration work for other insurers. He told Narcissa that if she would increase the number of cases assigned to his firm, he would start recommending her as an arbitrator to other insurers. Narcissa welcomes Sam's invitation but wonders whether a desire to help her children has affected her judgment. Which one of the following statements is true?

Select one:

A. As long as Sam is a competent defense attorney performing good work, Narcissa has no ethical issue to worry about.

B. There are no ethical issues because a decision to appoint Narcissa as an arbitrator is that of an insurer other than IC.

C. Narcissa should review the CPCU Code of Professional Conduct for guidance.

D. Narcissa should consider that her children are stakeholders and do whatever is best for them.

Question 48

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Question text

Doreen is a CPCU and an underwriter working for Insurance Company (IC). Crystal is one of IC's most productive agents. Doreen met with Crystal and told Crystal that she has been too lax in the risks that she has been submitting and that in the future underwriting guidelines would be enforced more strictly. Crystal said she disagreed with Doreen's assessment of the risks she wrote, and that Doreen should reconsider her position.

As their meeting ended, Crystal asked Doreen what she did for fun. Doreen replied that she enjoyed going to the beach. Crystal said, "You're in luck. I'm not using my shore house this weekend. Here are the keys. Have fun!" Doreen is excited by the offer, but wonders whether it creates an ethical conflict.

If Doreen uses an ethical dilemma decision-making flowchart to resolve this issue, she will

Select one:

A. Realize that there are no ethical issues to be addressed.

B. Recognize that no principles would be compromised by accepting what looks to be merely a friendly gesture.

C. Determine whether application of the CPCU Code of Professional Conduct will resolve any conflict.

D. Decide she has a business conflict and not an ethical conflict.

Question 49

A dispute has developed between Insurance Company (IC) and another insurer, Insureco, over whether there is overlapping coverage for a claim that was reported to both insurers. IC's claim representative, who is a CPCU, believes that there is support for his position in a CPCU textbook. Insureco's representative is not a CPCU. The CPCU from IC tells the Insureco representative that because he is a CPCU he can speak for The Institutes (TI) and TI favors his position. He does this without ever contacting TI, believing that his CPCU designation allows him to speak for TI. Which one of the following statements is true?

Select one:

A. It is permissible for a CPCU such as the IC employee to represent TI if he or she agrees with AI's textbook content.

B. The CPCU designation gave the IC employee all of the rights and privileges of TI's designees, officers and staff.

C. The IC employee is wrong in his belief that he may speak for TI by virtue of his CPCU designation.

D. Since the IC employee acted in a dignified manner no ethical rules have been breached by him.

Question 50

The local CPCU Society chapter plans to sponsor a high school essay contest on "The Role of Insurance in Society." The winners will receive awards that look like football trophies, except instead of a football on top, there will be a large key imprinted with "CPCU." Which one of the following statements is true?

Select one:

A. The organizers should have no concerns over their intended use of "CPCU" since a trophy does not constitute jewelry.

B. The organizers must first obtain explicit permission from the American Institute for the contemplated use of "CPCU."

C. The organizers should make their own determination as to whether the contemplated use of "CPCU" is dignified and professional.

D. The organizers may proceed as long as the initials "CPCU" are no taller than one and one-quarter inch.