ARM™ 402 Difficulty

The ARM™ 402 exam focuses on the topics of risk financing, insurance, reinsurance, and financial risk. This exam is broken up into three parts:

  • Part A – Risk Treatment
  • Part B – Types of Risk (Property, Fleet, and Legal)
  • Part C – Financial risk, Operational Risk, and Strategic Risk

In this blog we will break down the most difficult aspects of the exam. We will detail exactly what you should focus on when studying to pass this exam. I’ve personally had success studying for this exam because of this study material from AB Training Center, which does a great job of focusing on the difficult topics covered in this blog.

ARM™ 402 Pass Rate

According to nationally published ARM™ pass rates, the ARM™ 402 is one of the easiest exams published by The Institutes. The pass rate is typically around 76% or higher. This means, out of everyone that attempts the ARM™ 402 exam, 76% pass. As of writing this blog, the pass rate is 80% for the ARM™ 402 exam. This makes it one of the easier exams from The Institutes.

Although the pass rate is high do not take this exam lightly. This exam is very math-heavy, it is deceivingly difficult. We often hear that some students consider this the most difficult ARM™ exam because of the math topics.

ARM™ 402 Exam Difficulty

The ARM™ 402 is considered by some students to be the most difficult ARM™ exam. There is a good amount of math and formulas that you need to memorize and use in scenario-based questions on this exam. This is the most math-intensive exam of the ARM™ exams.

The hardest part of the ARM™ 402 will be memorizing the math-intensive topics. There is a ton of information to digest and comprehend. Not only do you need to understand and memorize each formula, but you must comprehend the content to a high enough degree that you can apply the concepts and formulas in a real-life scenario.

You will see some questions that require you to calculate how much the insurance company will pay in a real-life scenario. For example, ABC Company is insured under a large deductible plan with $100,000 per person coverage, $250,000 per accident coverage, and a $1 Million aggregate limit. An employee of ABC Company causes an auto accident resulting in $150,000 of medical expenses incurred by the driver of the other car, $50,000 of medical expenses incurred by the passenger of the other car, and $250,000 in damage incurred by the employee of ABC Company that caused the accident. How much will ABC’s insurance company pay for this loss under the large deductible plan?

You will see some difficult questions like this that require you to understand all of the complex concepts of the ARM™ 402 and require you to apply your knowledge in a real-life scenario acting as a risk management professional.

Luckily we know exactly which topics and minor details you need to know. You can click here to download the list of ARM™ 402 topics that you need to memorize (we’ll also include a free practice exam with the download).

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

ARM™ 402 –Study Tip

A lot of students fail the ARM™ 402 because there is just too much content on the exam. It is too much information to memorize all at one time.

One tip that we’ve seen a lot of students apply to help pass the ARM™ 402 exam is to break the exam into three parts and take the ARM™ 402 in segments.

The ARM™ 402 exam is broken up into three parts. ARM™ 402 Part A, ARM™ 402 Part B, and ARM™ 402 Part C. The testing center allows you to take each of these segments as individual exams.

You can choose to take the ARM™ 402 as one exam, or take three separate exams and take each “part” separately. We see a lot of students take each segment separately; this helps to break up the exam and allows for easier studying. When you break up the ARM™ 402 into three segments it allows you to study 3-4 chapters at a time, memorize a small chunk of the content, then pass that segment before you move onto the next segment and memorize another 3-4 chapters to pass the next exam.

For example, we see a lot of students study ARM™ 402 Part A first. Part A covers the topics of risk financing, hazard risk, and insurance. Students master the chapters of Part A (about 4 chapters) and then pass the Part A exam. Then, they move onto ARM™ 402 Part B. Part B covers the topics of reinsurance, captive insurance, and contractual risk transfer. The student then masters these few chapters, passes ARM™ 402 Part B, and moves on to Part C. Once you pass all three parts (Part A, Part B, and Part C) you will have officially completed the ARM™ 402 exam. It is the exact same as if you took all three parts at once.

Personally, I took the whole exam in one go. I did not personally break the exam into three parts. That being said, we see lots of students do this. It is a great way to break the exam into smaller manageable chunks, making it much easier to digest the large amount of content to pass one part of the exam at a time.

Free Practice Exam

Ready to get started studying? We’re here to help (for free). Download our free ARM™ 402 practice exam (comes with study guide and coverage guide) 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™ 402 exam, checkout some of our other free resources:



Remember, every CPCU® and ARM™ exam is different. No single exam is the same. Be sure to study ALL topics (not just our recommendation). This resource is intended to provide you with a general idea of where your focus should be. Make sure to thoroughly study every topic of this exam.

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.

CPCU® and 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 CPCU® 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.

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