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An underwriting manager sets a target combined ratio of 95% for the commercial property book. Expense ratio is running at 32%. What target loss ratio supports the goal?

67%

63%

60%

58%

to track

2026 Statistics

Key Facts: AU-M Exam

4 courses

AU 60 + 61 + 62 + 67

The Institutes AU-M page

70%

Passing Score

Per course exam

$415

Per Course Tuition

The Institutes 2026

~$2,000

Total Path Cost

Four-course AU-M path

AU 67

Adds Management Track

Managing Underwriting Success

Virtual

Proctored Course Exams

Institutes testing windows

AU-M targets commercial underwriters moving into management roles. The path is the AU core plus AU 67 Managing Underwriting Success. Each course uses a 70% passing standard on a virtual proctored exam, course tuition runs about $415 per course, and the full path totals roughly $2,000. Practice here weights AU 67 management content most heavily because that is what differentiates AU-M from AU.

Sample AU-M Practice Questions

Try these sample questions to test your AU-M exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1An underwriting manager sets a target combined ratio of 95% for the commercial property book. Expense ratio is running at 32%. What target loss ratio supports the goal?

A.67%

B.63%

C.60%

D.58%

Explanation: Combined ratio = loss ratio + expense ratio. To hit a 95% combined ratio with a 32% expense ratio, the loss ratio must be 95% - 32% = 63%. This is consistent with the AU-M norm of a target loss ratio in the low-60s when the book runs an expense load near one third.

2Which AU-M course is dedicated to underwriting management, strategy, and portfolio leadership?

A.AU 60

B.AU 61

C.AU 62

D.AU 67

Explanation: AU 67: Managing Underwriting Success is the management course in the AU-M path. AU 60 covers commercial underwriting foundations, AU 61 covers commercial property, and AU 62 covers commercial liability — all technical, not management-focused.

3The standard ISO occurrence-based commercial general liability coverage form is identified as:

A.CG 00 01

B.CG 00 02

C.CP 00 10

D.CA 00 01

Explanation: CG 00 01 is the ISO occurrence form for commercial general liability. CG 00 02 is the claims-made variant. CP 00 10 is the building and personal property coverage form, and CA 00 01 is a business auto form designation, not the BAP CA 99 03 endorsement.

4An underwriting manager wants to limit exposure to large unpredictable single claims while keeping participation in attritional losses. Which reinsurance structure best fits?

A.Quota share treaty

B.Per-risk excess-of-loss treaty

C.Surplus share treaty

D.Pro rata facultative

Explanation: Per-risk excess-of-loss reinsurance responds only when a single risk loss exceeds the retention, capping severity while leaving frequency in the cedent's net account. Quota share and surplus share are pro rata structures that share attritional losses proportionally, which is the opposite of what the manager wants.

5An underwriter approves a $25 million property limit but the assigned authority letter caps personal authority at $10 million. The proper next step is to:

A.Bind the account because the underwriter has filled this role for years

B.Refer the submission to the underwriting manager or higher authority for approval

C.Split the account into two policies to stay under the cap

D.Issue a binder subject to a later authority review

Explanation: Authority letters define the maximum limit, line, and exposure an underwriter can approve. Anything above that must be referred. Splitting the policy or issuing a binder subject to later review circumvents the authority structure and creates compliance and E&O exposure.

6The Institutes Code of Ethics requires AU-M holders to act with integrity. An underwriting manager is asked by a major producer to renew an account that has clearly underperformed for three years. The most ethical first response is to:

A.Renew at the same terms because the producer is important

B.Decline the account immediately without explanation

C.Document the loss history, propose corrective terms, and discuss the producer relationship transparently

D.Bury the renewal in a portfolio review so the producer does not push back

Explanation: AU 67 emphasizes that ethical underwriting management balances producer relationships against portfolio results. Documenting the loss history, proposing corrective terms (price, deductible, sublimits, exclusions, or non-renewal) and being transparent satisfies both the Institutes Code of Ethics and sound underwriting discipline.

7An underwriting manager evaluates a renewal portfolio and sees the loss ratio has drifted from 58% to 71% over two years. What is the most appropriate management action?

A.Cut quoting volume across the entire book by 25% immediately

B.Investigate which segments and producers are driving the deterioration before adjusting authority and pricing

C.Wait one more year for additional credibility

D.Replace the underwriting team

Explanation: AU 67 portfolio management starts with diagnosing the source of deterioration: which segments, producers, classes, or geographies. Authority and pricing actions follow the diagnosis. Blunt across-the-board cuts and team replacement are not measured responses.

8Schedule rating allows an underwriter to modify a base rate within filed:

A.Tax brackets

B.Credit and debit ranges with documented justification

C.Reinsurance attachment points

D.Loss reserves

Explanation: Schedule rating is a filed plan that lets an underwriter apply credits or debits within stated maximums (commonly +/-25% or +/-40% depending on the line and state) based on documented account characteristics that are not already reflected in the base rate.

9A workers compensation account's NCCI experience modification factor is 1.20. This means the account's loss experience is:

A.20% better than the class average

B.20% worse than the class average

C.Exactly at the class average

D.Untestable because the mod is below 1.50

Explanation: NCCI experience mods compare an insured's actual losses to expected losses for similar businesses. A mod above 1.00 indicates worse-than-average experience, so 1.20 means losses are 20% above what is expected. A mod below 1.00 indicates better experience.

10The CP 00 10 commercial property form covers:

A.Workers compensation benefits

B.Building and business personal property of the named insured

C.Pollution liability for premises operations

D.Cyber liability and notification costs

Explanation: CP 00 10 is the ISO Building and Personal Property (BPP) coverage form. It covers the building, the named insured's business personal property, and personal property of others in the named insured's care, custody, or control, subject to the policy's causes of loss form.

About the AU-M Exam

AU-M is the management track of The Institutes' commercial underwriting designation. Candidates complete the full AU core (AU 60, AU 61, AU 62) and add AU 67: Managing Underwriting Success, which covers underwriting management, strategy, portfolio metrics, authority delegation, and reinsurance interaction. Ethics is satisfied through the AU pathway.

Assessment

AU core (AU 60, AU 61, AU 62) plus AU 67: Managing Underwriting Success; each course uses its own virtual proctored exam

Time Limit

2 hours

Passing Score

70%

Exam Fee

$415 per course (~$2,000 total) (The Institutes)

AU-M Exam Content Outline

35%

AU 67: Underwriting Management & Strategy

Underwriting strategy, portfolio metrics, loss-ratio and combined-ratio targets, underwriting cycle response, talent management, audit, and the underwriter-to-underwriting-manager transition.

30%

Commercial Underwriting Discipline

Line-by-line risk selection across CGL (CG 00 01 occurrence and CG 00 02 claims-made), CP-00-10 BPP commercial property, BAP CA 99 03 business auto, NCCI workers compensation, cyber liability, and umbrella/excess.

15%

Underwriting Authority & Risk Selection

Authority letters, escalation thresholds, referral underwriting, file documentation, account stewardship, and management of producer relationships.

10%

Pricing, Reinsurance & Portfolio Management

Schedule rating, IRPM, experience modification, treaty vs facultative reinsurance, quota share vs surplus share, excess-of-loss programs, CAT modeling, and portfolio aggregation controls.

10%

Ethics & Compliance

Institutes Code of Ethics applied to underwriting management, fair underwriting practices, regulatory compliance, AI/algorithmic underwriting governance, and conflicts of interest. Ethics requirement is satisfied via the AU pathway.

How to Pass the AU-M Exam

What You Need to Know

Passing score: 70%
Assessment: AU core (AU 60, AU 61, AU 62) plus AU 67: Managing Underwriting Success; each course uses its own virtual proctored exam
Time limit: 2 hours
Exam fee: $415 per course (~$2,000 total)

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

AU-M Study Tips from Top Performers

1Spend the most prep time on AU 67. It is what differentiates AU-M from AU and the heaviest weight in this practice bank — focus on portfolio metrics, the underwriting cycle, authority structures, audit, and reinsurance interaction.

2Memorize the headline pricing math: target loss ratio of about 60-65%, combined ratio = loss ratio + expense ratio, and how schedule rating and IRPM modify a base rate within filed bands.

3Know the ISO and bureau form numbers cold: CG 00 01 occurrence CGL, CG 00 02 claims-made CGL, CP 00 10 BPP commercial property, CA 99 03 BAP business auto symbols, and NCCI experience-mod mechanics for workers compensation.

4Practice distinguishing treaty from facultative reinsurance, quota share from surplus share, and per-risk excess-of-loss from CAT excess-of-loss. AU 67 management questions assume you can match the right structure to a portfolio problem.

5Read every scenario as a manager, not just an underwriter. AU-M questions often ask what the underwriting manager should approve, escalate, document, or decline — not just whether the technical answer is correct.

Frequently Asked Questions

What is the difference between AU and AU-M?

AU and AU-M share the same commercial underwriting core (AU 60, AU 61, AU 62). AU-M adds AU 67: Managing Underwriting Success, which is the management, strategy, and portfolio course. AU-M is intended for underwriters moving into supervisory or underwriting-manager roles, while AU stops at the technical underwriter level.

How many courses and exams does AU-M require?

AU-M requires four courses: AU 60, AU 61, AU 62, and AU 67. Each course has its own virtual proctored exam with a 70% passing score. Ethics is satisfied through the AU pathway, so AU-M candidates do not have to take a separate ethics module if they completed AU's ethics requirement.

How much does AU-M cost in 2026?

Course tuition is about $415 per course on The Institutes' commercial underwriting course list, so the four-course AU-M path totals roughly $2,000. Costs depend on registration timing, package choice, and whether you also pay for a printed text. Many employers reimburse Institutes tuition.

How is AU 67 different from the other AU courses?

AU 60, AU 61, and AU 62 cover technical underwriting: data and financials, commercial property, and commercial liability. AU 67 changes the lens to management: underwriting strategy, authority delegation, portfolio loss ratio and combined ratio targets, treaty and facultative reinsurance interaction, audit programs, and talent management for an underwriting team.

What is the AU-M exam format?

Each AU-M course uses an Institutes virtual proctored course exam, typically 50 multiple-choice questions in 65 minutes with a 70% passing score. Exams are taken inside Institutes testing windows. There is no single combined comprehensive AU-M exam; you pass each course exam separately.

Should I do AU first or AU-M directly?

AU-M includes everything in AU plus AU 67. If you are already on a management or portfolio track, going directly to AU-M is efficient. If you are still establishing technical underwriting credibility, completing AU first and then adding AU 67 to upgrade to AU-M is a common path because AU 60-62 study time transfers.