ARM™ 401 Practice Exam Questions

In this blog, we will break down two example ARM™ 401 exam questions. These questions are taken directly from our ARM™ 401 Online Course, the questions are designed to mimic the format and feel of the actual exam.

About the ARM™ 401 Exam Questions

The ARM™ 401 exam is a 65-minute virtual exam consisting of 50 multiple-choice questions. Exams are virtual, and non-proctored, meaning you take the exam alone online directly from your computer. All questions on the virtual exam will be application-based scenario questions. These are tricky questions that require you to apply your knowledge to a real-life scenario to choose the appropriate answer (you will not be repeating a definition or concept). You will be given a real-life scenario; your job will be to select the best recommendation to solve the given scenario.

If you have not previously taken an institute’s administered exam, you will be in for quite the surprise. The questions on these ARM™ exams will be much different than what you may be used to on a typical exam that you took in high school or college. 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. I cannot stress this importance enough, the content of the ARM™ 401 exam is not difficult, but the format is tricky. You must fully understand a topic, DO NOT simply memorize definitions and think you will be able to pass (trust me, I’ve been there!)

You can download one of our free practice exams to see what these questions look like.

Time constraint

Remember, the ARM™ 401 exam consists of 50 multiple-choice questions and you only have 65 minutes to complete the exam. That means, you only have about 1 minute and 18 seconds per exam question. That’s not a lot of time. You need to memorize all of the content of this exam to be able to quickly read, analyze, and correctly answer each scenario-based question.

ARM™ 401 Sample Exam Questions (First Sample Question)

Paul is working at a cable manufacturing company. During the course of his daily activity on the job, Paul is injured. Christina, the RCA process manager, is investigating the accident. Christina charted the causal factors of the incident after collecting the preliminary data in order to determine the root cause of the incident. What step in the RCA process is this?

Step one
Step two
Step three
Step four

Answer: B) Step two

This is step two of the RCA process. The second step in the Root Cause Analysis Process is to chart causal factors. A causal factor is an aspect or agent that causes an event to happen.

There are four steps in the Root Cause Analysis Process:

Step 1: Collect Data – collect complete information about the circumstances, facts, and cause of the This is used to identify the root causes of an event.
Step 2: Chart Causal Factors—casual factor, abbreviated as CF, is the agent(s) that directly result in one event causing another event. In step two, casual factors should be charted. This creates a structure for the risk manager to organize and analyze the data so they can identify gaps in knowledge.
Step 3: Identify Root Cause(s)—after all the causal factors are identified the risk manager can create a map or flow chart. This helps the manager find the underlying reasons for each causal
Step 4: Implement Recommendations—lastly, the risk manager should recommend and implement solutions to address the root cause and prevent the event from

On your exam, you will be given a scenario like the one seen above; it is your job to understand what is being asked of you and how to solve or recommend a solution to the scenario. For more application-based questions, download our free ARM ™ 401 practice exam.

ARM™ 401 Sample Exam Questions (Second Sample Question)

ABC insurer is analyzing its financial resources to ensure its capital investment will be enough to pay for two standard deviations above the expected loss amount. ABC received an initial investment of $2,000,000. They expect to insure 2,000 auto policyholders with a total pooled expected loss of $1,800,000. If the pool’s standard deviation is $250,000, how much will ABC insurer need to generate in additional funds to ensure their financial resources will be enough to pay for expected losses?

$0
$50,000
$300,000
$1,750,000

Answer: C) $300,000

ABC insurer wants to pay for two standard deviations above the expected loss amount ($250,000 * 2 = $500,000).

The expected loss amount is $1,800,000 + the two standard deviations ($500,000) = $2,300,000.

The initial investment is $2,000,000, meaning ABC insurer will need an additional $300,000 ($2,300,00 – $2,000,000) to meet their capital goal of two standard deviations above the expected loss amount.

On your exam, you will be given a math-based scenario like the one seen above; it is your job to understand what is being asked of you and how to solve or recommend a solution to the scenario.

For more scenario-based questions, download our free ARM ™ 401 practice exam.

Free Practice Exam

Ready to get started studying? We’re here to help (for free). Download our free ARM™ 401 practice exams to get a feel for the type of questions you will see on the exam.

Download: Free Practice Exam (CPCU® | API™ | ARM™)

More Information

For more information about the ARM™ 401 exam, check out some of our other free resources:

Disclaimer

Difficulty rank, importance rank, and the advice provided in this resource are solely the opinion of AssociatePI. This resource is intended to provide you with a general idea of where your focus should be. Each exam administered by The Institutes is different. AssociatePI is not affiliated with The Institutes or involved in the exam writing process. Please be sure to thoroughly study every chapter and every topic of this course.

ARM™ exams are administered by the American Institute for Chartered Property Casualty Underwriters (“The Institutes”). AssociatePI does not administer the actual exams, we are an independent resource of free content, advice, and study material for professional insurance education. This blog is intended for informational purposes only, to inform prospective students of the benefit of the ARM™ designation.

CPCU^®, ARM™ and API^™ are trademarks of the American Institute for Chartered Property Casualty Underwriters (“The Institutes”). AssociatePI LLC is not affiliated with, associated with, endorsed by or otherwise supported or recognized by The Institutes in any way. AssociatePI LLC is not authorized by The Institutes to offer courses, practice examinations, or any other resources related to the Institutes’ designations or other programs.

For further information, please email contact@associatepi.com.

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