As methods of communication evolve, it's important for claims professionals to remember that any written claims communication may be
a. Replaced with verbal communication
b. Misinterpreted
c. Edited later
d. Subpoenaed
d. Subpoenaed
Soft fraud occurs when a claim is exaggerated and is also referred to as
a. Opportunity fraud
b. Financial fraud
c. Reimbursement fraud
d. Victimless fraud
a. Opportunity fraud
Important Examined Terms In AIC 300
In which one of the following scenarios is the right of subrogation most likely to be employed by the insurer?
a. An insured files a homeowners claim for stolen jewelry. An investigation reveals that the jewelry is still in the insured's possession.
b. A claims rep discovers that their insured's car accident was caused by a road contractor who left equipment lying in the travel lanes of a highway.
c. An investigation reveals that an insured set her own business on fire.
d. An insured files a claim for collision damage from a hit and run accident, when in fact he backed into a utility pole.
b. A claims rep discovers that their insured's car accident was caused by a road contractor who left equipment lying in the travel lanes of a highway.
In which one of the following scenarios is a public adjuster most likely to become involved?
a. A catastrophic disaster strikes, involving damage to many properties.
b. An insurer finds it financially unfeasible to hire its own claims staff in a given state.
c. An insured is unable to afford legal representation to contest a claim.
d. An insured's negotiations with the insurer on a complex claim are not going well.
d. An insured's negotiations with the insurer on a complex claim are not going well.
Carla is investigating a claim for a stolen car. The insured provided a copy of the police report, but she notices that the account in the police report differs from the insured's version of events. At this point, Carla should
a. Refer the case to the SIU.
b. Deny the claim.
c. Contact the police.
d. Continue with her investigation.
d. Continue with her investigation
Which one of the following methods of establishing case reserves is used most often when there are small variations in loss size for a particular type of claim?
a. Individual case method.
b. Formula method.
c. Average value method.
d. Roundtable method.
c. Average value method
Chloe is an insurer defense attorney who is preparing a trial strategy. She has researched a court decision that was made in a similar case and is basing the defense on that precedent. Chloe is relying on the principle of stare decisis, which is that
a. Lower courts must follow precedents set by any other courts.
b. Lower courts must follow precedents set by higher courts.
c. Higher courts must follow precedents set by lower courts.
d. Higher courts must follow precedents set by any other counts.
b. Lower courts must follow precedents set by higher courts
Which one of the following statements regarding state versions of the NAIC model act is correct?
a. Only insureds may bring lawsuits against insurers.
b. Only claimants may bring lawsuits against insurers.
c. Some states allow insureds and claimants to bring lawsuits against insurers, while others allow only insureds.
d. Both insureds and claimants may bring lawsuit against insurers.
c. Some states allow insureds and claimants to bring lawsuits against insurers, while others allow only insureds.
In the process of assigning a claim, an internal claims handler will often transfer information to the insurer's standard form, called the
a. Standard claims handling (SCH) form.
b. Claim intake (CI) form.
c. Initial acknowledgment of notice (IAN) form.
d. First notice of loss (FNOL) form.
d. First notice of loss (FNOL) form
When Mehmet interviews witnesses as part of his claims investigation, he asks different types of questions based on need, such as open-ended, direct, indirect, and leading. Which type of question should Mehmet ask when he wants to set the interviewee at ease and he is looking for explanation or elaboration of details in the interviewee's own words?
a. Leading
b. Open-ended
c. Indirect
d. Direct
b. Open-ended
As a claims representative, Beatrice is on the front lines for protecting her employer from insurance fraud. Beatrice should understand that insurance fraud
a. Accounts for 25% of the P&C industry incurred losses.
b. Costs roughly $40 billion per year, excluding health insurance.
c. Is the costliest white-collar crime in the U.S.
d. Costs each American family between $2,000 and $4,000 per year.
b. Costs roughly $40 billion per year, excluding health insurance.
Aaron works for a multi-line insurer. He works with insurance producers and applicants to evaluate new business submissions and conduct renewal underwriting. Aaron is a
a. Staff underwriter.
b. Public underwriter.
c. Personal lines underwriter.
d. Line underwriter.
d. Line underwriter
One of Julio's expectations as a claims representative is good-faith claims handling. He keeps insureds informed about the claim because they have that expectation and because they are most likely to make a complaint about bad-faith claim handling. He also wishes to participate in the defense and in discussions about the possibility of settlement. For these reasons, Julio
a. Maintains complete and accurate documentation.
b. Conducts fair evaluations.
c. Maintains regular and prompt communication.
d. Conducts good-faith negotiation.
c. Maintains regular and prompt communication
In claims investigation, all bodily injury claims require
a. An attorney.
b. Multiple claims payments.
c. Statements from all witnesses.
d. A medical investigation.
d. A medical investigation
The first step in the data mining process is to
a. Prepare the data that will be used.
b. Understand what a business wants to achieve.
c. Select a data mining technique.
d. Collect the data that will be used.
b. Understand what a business wants to achieve
For an excess liability claim to be filed, a final judgment or settlement must have been entered against the insured, and
a. The insured must have paid that judgment.
b. Evidence of bad faith must be produced.
c. The insurer must have determined that coverage does not apply.
d. The amount of the judgment must be n excess of the insured's policy limit.
d. The amount of the judgment must be in excess of the insured's policy limit
Claims rep Lily is negotiating a claim settlement with an unrepresented claimant and wishes to smooth the process. She is matching her demeanor, tone, and mannerisms to those of the claimant. Lily is using which one of the following negotiation techniques?
a. Collecting extraneous information
b. Performing a needs analysis
c. Using traditional sales techniques
d. Setting expectations
c. Using traditional sales techniques
Samuel was seriously injured in a car accident caused by a drunk driver. His settlement included payments for repairs to his vehicle, medical bills, pain and suffering, and lost wages. Which one of the payments in Samuel's settlement is considered general damages?
a. Lost wages
b. Medical bills
c. Repairs to his vehicle
d. Pain and suffering
d. Pain and suffering
Andrew is a claims representative investigating whether coverage applies to a new claim. To help ensure that he considers every facet of the policy before determining coverage, he might use
a. The DARE method.
b. The DICE method.
c. The CARD method.
d. The CARE method.
b. The DICE method
Hanna is in IT and works on data analytics projects for an insurer. These projects involve analyzing large amounts of data to help underwriting to select risks and price policies. Hanna knows that collaboration between data science, IT, underwriting, and actuary is critical to the success of these projects. In Hanna's experience, as soon as the need for a data project arises, the key to collaborating effectively is to engage which one of the following teams as soon as possible?
a. Data science
b. Actuary
c. Underwriting
d. IT
a. Data science
Benjamin is with the SIU department of an insurer. His company developed technology to identify patterns related to fraudulent claims activity. He is using a program to analyze claims data to identify similarities or connections that might indicate fraud. Benjamin is utilizing
a. Claims audits.
b. Data minning.
c. Telematics.
d. Wearables.
b. Data mining
Linnea is an attorney who is preparing to defend an insurer in a workers compensation case. Discovery produced several documents that are being presented as witnesses statements, but the witnesses admit in the statements to not actually seeing the accident. Linnea would like to omit these statements from the proceedings, so she is filing a
a. Motion to strike.
b. Motion to suppress.
c. Motion to dismiss.
d. Motion to limine.
d. Motion in limine
Ella sued her insurer and alleged bad-faith claim handling after the insurer settled a claim against her that Ella thought should have been denied. As a result of the settlement, Ella's premium increased. In her suit, Ella claimed that the insurer rushed the investigation and did not take all of her facts into consideration in her defense. While the court found that Ella's argument had merit, it did not award her the full value because it found that Ella had not provided her information to the insurer in a timely manner. The insurer used the defense of
a. Comparative negligence.
b. Comparative bad faith.
c. Contributory negligence.
d. Debatable reasonable basis.
a. Comparative negligence
Greatview Insurance wants to predict which auto liability claims will most likely go to litigation, so it can assign them to experienced adjusters early in the process. There are certain known indicators of litigation that Greatview wants to use in the data mining process. Which one of the following data mining techniques would Greatview's analyst most likely use?
a. Regression analysis
b. Association rule learning
c. Cluster analysis
d. Classification
d. Classification
Mia tracks loss adjustment expense (LAE) as part of her management of the claims department for an insurer. Mia considers LAE to be the
a. Total incurred amount of claims.
b. Cost to investigate, defend, and settle claims.
c. Total amount of loss reserves of all claims.
d. Paid portion of claims.
b. Cost to investigate, defend, and settle claims
Rin works for an insurer designing and using techniques to process large amounts of data from various sources and providing knowledge based on the analysis of that data. Rin is a(n)
a. IT professional.
b. Actuary.
c. Data scientist.
d. Ratemaker.
c. Data science
Soft fraud, also called opportunity fraud, occurs when
a. An application for insurance contains untrue information.
b. A claim is filed for a loss that did not occur.
c. A loss is triggered intentionally.
d. A legitimate claim is exaggerated.
d. A legitimate claim is exaggerated
Kira, a claims representative, receives a summons and complaint from an insured. In reviewing the facts, she has doubts that the insured's applicable policy will provide coverage. She should work with counsel and request a managerial review in order to issue
a. A countersuit.
b. A reservation of rights letter.
c. A claim denial.
d. An excess letter.
b. A reservation of rights letter
One of Juan's responsibilities as a claims representative is to prepare internal reports, such as preliminary, interim, large loss, and captioned. Which one of the reports Juan prepares is required for claims with reserves that exceed a specified threshold?
a. Interim
b. Preliminary
c. Large loss
d. Captioned
c. Large loss
Hugo is conducting an audit of a branch office claims operation. He is evaluating timeliness of reports, number of files opened, proper releases taken, and accuracy of data entry. Which one of Hugo's metrics is a qualitative audit factor?
a. Timeliness of reports
b. Proper releases taken
c. Accuracy of data entry
d. Number of files opened
b. Proper releases taken
Jack leads the claims department for a large insurer and has embraced the recent developments in claims data collection and analysis. Jack knows that
a. He still needs people because the data need to be analyzed in context by a human.
b. People make little difference in analyzing data and explaining it to a customer.
c. He will eventually not need people because insurance is not a customer-driven industry.
d. Claims determinations and payments will soon be accomplished entirely by AI.
a. He still needs people because the data need to be analyzed in context by a human
Although most policies are occurrence forms, covering claims that occur during the policy period, some are claims-made forms. Which one of the following types of loss is most likely to involve a claims-made form?
a. An automotive collision claim.
b. A homeowners liability claim due to a slip and fall.
c. A homeowners claim due to storm damage.
d. A medical malpractice claim.
d. A medical malpractice claim
Before making initial contact with an insured or claimant, a claims representative should
a. Prepare a list of questions for the insured.
b. Contact company counsel for a reservation of rights letter.
c. Prepare an approximate estimate based on similar losses.
d. Research similar losses in the same geographical area.
a. Prepare a list of questions for the insured
Which one of the following best describes the term 'professionalism' as it relates to claims professionals?
a. Fulfilling the terms of an insurance contract
b. The behaviors necessary to implement an ethical decision
c. Remaining silent when a competitor is disparaged publicly
d. A set of principles and values
b. The behaviors necessary to implement an ethical decision
Part of the continuous cycle of data mining is preparing the data to eliminate missing or inaccurate information. This process is called
a. Parsing.
b. Machine learning.
c. Cleaning.
d. Predictive modeling.
c. Cleaning
The Office of Foreign Assets Control requires claims payors to check payees against a database of
a. Policyholders of other insurers.
b. Those who have collected a payment for the same loss.
c. Known terrorists and drug traffickers.
d. Known perpetrators of insurance fraud.
c. Known terrorists and drug traffickers
Which one of the following is a data mining technique an insurer applies when it knows what information it wants to predict?
a. Association rule learning
b. Classification
c. Machine learning
d. Cluster analysis
b. Classification
Claims may be paid in any of three ways: by check, by bank transfer or
a. By the issuance of a credit on the premium for the next policy period.
b. By electronic funds transfer.
c. In a direct transfer of goods or services, as with a contractor performing repairs.
d. In cash.
b. By electronic funds transfer
Charlotte is handling a new claim and she has set the initial reserves at $1,000,000. She has been asked to complete an internal report summarizing all the file status information for distribution to management and updated as more information is received. The report Charlotte is completing is most likely a
a. Preliminary report.
b. Summarized report.
c. Status report.
d. Large loss report.
d. Large loss report
Tobias is a claims representative who understands the importance of good-faith claims handling, including fair evaluation, good-faith negotiation, complete and accurate documentation, and timely contact with all parties to a claim. Which one of Tobias' good-faith claims handling practices helps his employer because the parties will be more likely to remember details of the loss accurately?
a. A Good-faith negotiation
b. Timely contract with all parties to a claim
c. Fair evaluation
d. Complete and accurate documentation
b. Timely contact with all parties to a claim
Not long after Valteri issued a denial and closed the claim, the insured sued for coverage and alleged bad-faith claim handling against the insurer. Valteri was able to demonstrate for his superiors that he had made a good-faith investigation and determined that the claim was not covered by the policy. The insurer maintains that Valteri had reasonable justification in fact for denying the claim. The insurer is employing the
a. Debatable reasonable basis defense.
b. Statute of limitations defense.
c. Advice of counsel defense.
d. Lack of standing defense.
a. Debatable reasonable basis defense
To determine whether an insurer typically underreserves or overreserves claims, actuaries compare the insurer's paid losses to
a. The insurer's profits.
b. NAIC model regulations.
c. National averages.
d. The insurer's case reserves.
d. The insurer's case reserve
The first key to communicating empathetically as a claims professional is
a. A comprehensive understanding of relevant insurance policies.
b. Listening.
c. Speaking calmly and clearly.
d. Being prepared with all documentation relating to the claim.
b. Listening
Carolina is a claim representative handling a liability claim. She is speaking to the claimant over the phone and has informed him that his statements must be true under penalty of perjury. When completed, she sent a transcription of the conversation to the claimant for him to sign before a notary. Carolina has taken a(n)
a. Deposition.
b. Examination under oath.
c. Recorded statement.
d. Affidavit.
c. Recorded statement
Riko is an experienced settlement negotiator. When negotiating with claimant representatives, she uses techniques such as timing settlements effectively, enticing a reasonable demand, making concessions cautiously, and leaning on the evaluation. She understands that her current claimant is eager to receive money, so she is delaying the negotiations as long as possible. Which negotiation technique is Riko using?
a. Enticing a reasonable demand
b. Timing settlements effectively
c. Learning on the evaluation
d. Making concessions cautiously
b. Timing settlements effectively
Mitsuki was severely injured when the safety latch on an amusement park ride failed and she was thrown from the ride. In her lawsuit with the amusement park, Mitsuki was awarded payment for pain and suffering, emotional distress, disfigurement, and loss of earnings. Which one of Mitsuki's awards is considered special damages?
a. Loss of earnings
b. Disfigurement
c. Emotional distress
d. Pain and suffering
a. Loss of earnings
Which one of the following explains why a computer recursively applies a model?
a. To determine the probability of a target variable
b. To analyze different splits in the values of attributes
c. To identify attributes that can be used
d. To analyze claims data from previous years
b. To analyze different splits in the values of attributes
Which one of the following explains why a computer recursively applies a model?
a. TPAs are typically used by businesses that have chosen not to self-insure.
b. TPAs handle claims, keep claims records, ,and perform statistical analyses.
c. TPAs are employed only by independent adjusting firms.
d. TPAs are generally found in an insurer's claims department.
b. TPAs handle claims, keep claims records, and perform statistical analyses
In her role with an insurer, Katarina has opportunity to collaborate with not only employees from her company, but also external experts with particular expertise. For example, as part of her investigation, she hired an engineer to conduct a review of a machine that was involved in a personal injury. Katarina is a(n)
a. Claim representative.
b. Medical provider.
c. Expert Witness.
d. Premium auditor.
a. Claim representative
The claims litigation process begins with the receipt of
a. A notice of claim.
b. A summons and complaint.
c. A civil violation notice.
d. A settlement offer.
b. A summons and complaint
Which one of the following types of workers compensation claims are the most difficult for insurers to identify at the time of first report?
a. Medical-only claims
b. Catastrophic claims
c. Potentially complex claims
d. Potentially minor claims
c. Potentially complex claims
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