Earning your CPCU® designation can help you advance your insurance career, but you must first complete a number of courses that can be quite challenging. In this post, we’ll go over everything you need to know about the CPCU 556 course and give you tips on how to pass this exam.
What’s in this post
- About CPCU 556
- What is the CPCU program?
- What is CPCU 556?
- How difficult is CPCU 556?
- About the CPCU 556 exam
- Topics covered in CPCU 556
- Topics you are most likely to see on the CPCU 556 exam
- Tips for passing CPCU 556 exam
- Buy our CPCU 556 study guide bundle
CPCU 556 Study Guide e-Bundle – $29.99
What is the CPCU program?
The Chartered Property Casualty Underwriter (CPCU®) is a professional designation offered by an organization called The Institutes. After completing the program, you will have a solid understanding of how insurance industry works and can display the CPCU designation on your business cards, resume, etc.
Having this designation shows that you have done extra education, which can make you a stronger candidate for hire or promotion. Also, this might give customers, colleagues, and business partners more confidence in working with you because they know you have this foundational knowledge.
What is CPCU 556?
CPCU 556 is one of four concentration courses you may choose from earn your CPCU designation. Whether you are pursuing the traditional CPCU path or the ARM to CPCU path, all students must choose between completing the commercial lines concentration courses or the personal lines concentration courses. CPCU 556 is one of the two personal lines concentration courses.
More specifically, this course is about how personal lines insurers manage their portfolios to maximize long-term profitability. The knowledge you gain from this course will help you understand the key considerations that insurers have to take into account when doing their strategic planning and what specific strategies they can use to capitalize on opportunities or mitigate threats.
How difficult is CPCU 556?
The content in CPCU 556 is relatively straight-forward and easy to understand. However, the course content is written almost as if it assumes you already have an understanding of how an insurance company operates. If you do not have that background information, you will probably encounter terms or broader concepts that are unfamiliar to you (example: loss ratio, expense ratio). That may require you to do additional research to learn what those terms are referring to.
About the CPCU 556 exam
In order to demonstrate that you have understood the material from this course, you will need to pass an online exam administered by The Institutes.
You must go through The Institutes' website to purchase and formally register for your exam. When registering, you must indicate which test window you plan to take the exam during. The four test windows that are available every year are:
- January 15 to March 15
- April 15 to June 15
- July 15 to September 15
- October 15 to December 15
You may pay for your exam fee at any time, and those who register before the test window opens will usually receive a discount. However, you can only launch the exam and complete it during the test window you chose at the time of purchase. If you need to reschedule your exam, a new fee will apply.
The exam consists of 50 multiple-choice questions that cover all the chapters from the course, with a time limit of 65 minutes. The exam is done online, and you must get a score of 70% or better to pass. You may retake the exam (and pay a new fee) if you do not pass, but please check The Institutes' policies regarding how often and how soon you can retake the exam, as that may change from time to time.
CPCU 556 Study Guide e-Bundle – $29.99
- Based on CPCU 556: Building a Competitive Edge in Personal Lines [1st edition]
- Delivered by email after purchase as downloadable PDF
- For buyer's personal use only (non-transferrable and not for resale)
- (NOTE: this will be the only IEG product available for CPCU 556 as we will not be developing a full study program for CPCU 556)
Topics covered in CPCU 556
- Insurance marketing strategies
- Analyzing risk exposures for:
- Personal auto
- Residential property
- Liability risks
- Personal inland marine insurance
- Personal watercraft
- Personal umbrella policies
- Establishing underwriting goals
- Business strategies for:
- Growing premiums
- Decreasing loss costs
- Controlling expenses
- Tiered-rating underwriting
- Product life cycle management
- Key insurance business indicators
- Making corrective changes to an insurance business portfolios
- Cost-benefit analyses
How IEG can help: We have a comprehensive study guide bundle that covers every chapter from CPCU 556. We use plain language and helpful examples to help you truly understand the content.
Topics you are most likely to see on the CPCU 556 exam
The following list is based on student feedback regard what topics they felt were most heavily-featured on their exam.
Please remember that this is not a comprehensive list of all the topics that will be tested, and each person’s exam may different. Any of the material covered in the course may potentially appear on your exam, so you should prepare accordingly.
- Types of market segmentation (national, retail, group, niche)
- Customer retention strategies
- Info used for underwriting personal auto exposures
- Factors that increase risk for autos & miscellaneous vehicles
- Fire losses for residential risks
- Factors that increase risk for personal liability exposures
- Factors that affect insurability for watercrafts
- Negative effects of various underwriting strategies
- Goals/features of tiered-rating underwriting
- Key indicators of underwriting strength (policies in force, new policy count / business count, policy retention)
How IEG can help: Our comprehensive study guide summarizes all the key details related to all of these topics.
CPCU 556 Study Guide e-Bundle – $29.99
Tips for passing CPCU 556
1) Take CPCU 520 before taking CPCU 556
CPCU 556 is all about the strategic decisions that personal lines insurers have to make. As part of that discussion, the course will cover how an insurer’s different departments contribute to different types of initiatives, and also how different strategic decisions can impact the insurer’s various metrics.
CPCU 520 covers how each department within an insurance company functions, and also goes over the key performance metrics for insurance companies. In that way, CPCU 556 builds upon the concepts you learn about in CPCU 520.
For example, CPCU 556 might say that a certain strategy will hurt the insurer’s loss ratio, but the course never defines what a loss ratio is. Instead, CPCU 520 covers the loss ratio in great detail. Although you are not necessarily being tested on the loss ratio in CPCU 556, it is always possible that you might encounter a question where knowing what the loss ratio is would have helped you infer the correct answer.
How IEG can help: We have study materials for CPCU 520, including a full online study program that comes complete with video lessons, a streaming audio-only option, tons of practice questions, and our comprehensive study guide.
2) Take CPCU 555 before CPCU 556
CPCU 555 discusses various types of personal lines insurance products, explaining what those products cover and the benefits they provide to insureds. CPCU 556 looks at the same products but from a different angle, that of the insurer’s business side.
In CPCU 556, the course will explain what an insurer’s underwriters have to consider given the risks that the insurer is covering with that kind of policy or product. If you understand the policy/product beforehand, it makes a lot of sense why underwriters consider the things they do; this can help you more easily infer the right answer when you are taking your actual exam.
How IEG can help: We have comprehensive study guides for CPCU 555 that will not only help you prepare for your CPCU 555 exam, but will also serve as great reference material that you can turn back to as you are going through CPCU 556.
CPCU 556 Study Guide e-Bundle – $29.99
- Based on CPCU 556: Building a Competitive Edge in Personal Lines [1st edition]
- Delivered by email after purchase as downloadable PDF
- For buyer's personal use only (non-transferrable and not for resale)
- (NOTE: this will be the only IEG product available for CPCU 556 as we will not be developing a full study program for CPCU 556)
3) Don’t waste too much time on long questions or questions that you are stuck on
Every test question is worth only one point, no matter how simple or complex it is. If you find that you are spending a lot of time on one particular problem, you are better off guessing for now and using the option to flag the question so you can return to it later. You don’t want to spend so much time that you run out of time before you can get to all the other questions that might have been easier for you to score points on.
4) Put an answer for every question
You do not get minus points for getting a question wrong, so don’t leave any questions blank.
CPCU 556 Study Guide e-Bundle – $29.99
5) Get as much practice as possible
The best way to ensure that you know how to apply the concepts you learning is to practice doing so, and practice quizzes are the perfect way to do this. On top of that, doing practice questions gets you comfortable with seeing the concepts in the same question-answer format you will see on your exam.
The Institutes’ online course includes tons of practice questions and you should do them all. The Institutes’ also offers a separate Smart QuizMe app that includes an entire bank of practice questions for every course. The app is free to download but you need to pay a small fee (about $10 per course at the time of this writing) to access the full bank of questions for any particular course.
NOTE: As of this writing (January 18, 2024), the Smart QuizMe app has not been updated yet to reflect the updated content in the latest version of CPCU 556. To the best of our knowledge, The Institutes has not confirmed when the app will be updated, but we do recommend utilizing it once the updated practice questions are available.
6) Aim to understand the practice questions and not just memorize them
The questions on the actual exam are not made up of the practice questions, so you cannot just rely on memorizing those answers for any practice quizzes and simulated exams you take. Read each explanation and re-review the material until you understand why you got a question wrong.
7) Don’t rely solely on The Institutes’ study materials
The Institutes’ way of explaining things is not necessarily the best way, so take advantage of other resources available to you. Some students don’t use The Institutes’ study materials at all and prefer to go with another study option, such as our comprehensive study materials. We use plain English to explain all of the concepts, include helpful examples so you can see how they apply in real life, and show you how different elements of something relate to one another.
You can also turn to Google and YouTube to look for explanations and examples from other sources too.
8) Join the CPCU Candidates Facebook group
One of the best things you can do during your CPCU journey is to join the CPCU Candidates Facebook group, which is a wonderful community of current and former CPCU students. Here, you can get help with test questions that might be stumping you, ask for advice on propelling your insurance career, and find a healthy dose of moral support and motivation.
1) FOCUS ON THE RIGHT THINGS
We condense every chapter to a few pages each, so you can focus on what you need to know.
2) UNDERSTAND THE KEY CONCEPTS
We provide extra examples & bonus materials to help you understand the trickier concepts.
3) SEE HOW IT ALL RELATES
Our outlines are super organized and make it easy to see how the concepts relate to each other.
Disclaimers: The Institutes, CPCU®, and AINS® are trademarks of the American Institute For Chartered Property Casualty Underwriters, d/b/a The Institutes. InsuranceExamGuides.com is not affiliated or associated with The Institutes in any way, and The Institutes do not endorse, approve, support, or otherwise recognize InsuranceExamGuides.com or its products or services. CPCU® and AINS® are registered trademarks of The Institutes. All rights reserved.