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Review of the CPCU 520 Exam Format

Discussion in 'Insurance Continuing Education Forum' started by AssociatePI.com, Jan 4, 2016.

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    CPCU 520 Exam Format
    The CPCU 520 exam consists of 75 multiple choice questions split up into two sections:

    Part A: 49 concept questions

    • These questions will test your understanding of the topic or definition. The multiple choice answers will generally provide 2 or 3 partially correct answers and one “best” answer.

    Part B: 29 case questions
    • These questions will test your application of the information. You will be given a real life scenario; your job will be to select the best recommendation to solve the scenario.
    For more practice, download our free CPCU 520 practice exam

    CPCU 520 Exam Question Format
    The CPCU 520 questions will be formatted in a similar manner to the CPCU 500 exam questions. These questions require you to fully understand every aspect of the main topics and require you to actually apply the knowledge, rather than just repeating a definition. You will NOT be simply repeating a definition.



    Part A question format

    There are two primary question formats that you will see over and over again in part A of the CPCU 520 exam:

    • “All of the following are true, except”: Example - Reinsurers provide insurance for primary insurers. All of the following statements are true in regards to reinsurers except?
    • “Which of the following is true in regards to…..”: Example - Reinsurers provide insurance for primary insurers. Which of the following statements are true in regards to reinsurers?


    Part B question format

    Two primary formats for part B questions:

    • Calculation questions: Example - Calculate the loss ratio if written premium is $100,000, earned premium is $90,000 and incurred loss is $50,000.
    • Analysis question: Example - ABC Insurance’s current year combined ratio is 90% and loss ratio is 70%. Last years combined ratio was 95% and loss ratio was 70%. Which is true in regards to ABC’s expense ratio?

    For more insight, see our blog about the CPCU 520 Exam Questions

    Ten Topics of the CPCU 520 Exam
    The CPCU 520 exam can be broken down into ten sections covering all aspects of insurance operations

    • Insurance Operations
    • Insurance Regulation
    • Marketing and Distribution
    • Underwriting
    • Risk Control and Premium Auditing
    • Claims
    • Actuarial Operations
    • Reinsurance
    • Information Technology
    • Strategic Management

    Most Important Topics of the CPCU 520

    Please remember each exam is different, this is not an exact measure it is just our estimate. You should still fully study every chapter

    • Insurance Operations – 10%
    • Insurance Regulation – 11%
    • Marketing and Distribution – 16%
    • Underwriting – 7%
    • Risk Control and Premium Auditing – 13%
    • Claims – 9%
    • Actuarial Operations – 9%
    • Reinsurance – 17%
    • Information Technology – 4%
    • Strategic Management – 4%

    In our experience, the CPCU 520 questions were fairly evenly distributed throughout the ten main topics with a little skew towards three sections that account for 46% of the exam:

    • Reinsurance (17%)
    • Marketing and Distribution (16%)
    • Risk Control and Premium Auditing (13%)


    Reinsurance (17%)

    We found the most heavily weighted section of the CPCU 520 exam questions to focus on reinsurance. In our experience this was especially relevant in the Part B section where you will be required to calculate how much the reinsurer will pay for a loss or be required to determine the best reinsurance contract for an insurer given a specific scenario

    What you need to know:

    • Facultative vs. treaty reinsurance transactions
    • Each type of pro rata and excess loss reinsurance
    • Determine the best reinsurance for the specific needs of the insurer
    • Calculate how much the reinsurer will pay

    Marketing and Distribution (16%)

    The second most important topic of the CPCU 520 exam will be the section on insurance marketing and distribution. Most of these questions will give you a scenario in which you will need to choose the best distribution system given the characteristics of the customer and insurer

    What you need to know:

    • Benefits and differences of each distribution system
    • Customer characteristics of individuals, small business, middle markets and national accounts
    • Differences between broker and independent agent

    Risk Control and Premium Auditing (13%)
    The third most important topic of the CPCU 520 exam will be the section on risk control and premium auditing. Most of the questions will be in regards to premium auditing.

    What you need to know:

    • Reasons for premium auditing
    • Premium audit process
    • Types of premium audit


    For more insight, see our blog about the CPCU 520 Exam Difficulty

    Two Final Tips:

    1. Read the entire online course and focus on the details: A number of questions on this exam will ask you “which of the following is true” or “all of the following is true, except”. These questions require that you know all of the minor details and differences between each CPCU 520 topic so be sure to fully read through the course and memorize all minor details because these questions will try to trick you by changing one little detail!
    2. Practice, practice, practice: Practice makes perfect. The only way to prepare for the type of questions you will see on the CPCU 520 is to take as many practice exams as you possibly can. This will help you familiarize yourself with the CPCU 520 question format and help you determine which topics you need to re-study.

    Here’s a free practice exam to get you started!


    Checkout the full CPCU 520 exam format blog post here!
     
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