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AIC 300 CLAIMS IN AN EVOLVING WORLD
MIDTERM EXAM 2024 GRADED A+
Some will also send a copy via regular mail in case the certified letter is not accepted. - ANSWER-Insurers usually send denial letters Select one: A. By email to ensure prompt receipt by the insured. B. By certified mail with a return receipt requested. C. By overnight courier. D. By registered mail. D. Subpoenaed. Any written claims communication may be subpoenaed. - ANSWER-As methods of communication evolve, it's important for claims professionals to remember that any written claims communication may be Select one: A. Replaced with verbal communication. B. Misinterpreted. C. Edited later. D. Subpoenaed. D. An insured's negotiations with the insurer on a complex claim are not going well. If a claim is complex, or if settlement negotiations are not progressing with the insurer, the insured may hire a public adjuster to protect his or her interests. - ANSWER-In which one of the following scenarios is a public adjuster most likely to become involved? Select one: A. An insurer finds it financially unfeasible to hire its own claims staff in a given state.
B. An insured is unable to afford legal representation to contest a claim. C. A catastrophic disaster strikes, involving damage to many properties. D. An insured's negotiations with the insurer on a complex claim are not going well. B. TPAs handle claims, keep claims records, and perform statistical analyses. - ANSWER-Which one of the following statements regarding third-party administrators (TPAs) is most accurate? Select one: 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 generally found in an insurer's claims department. D. TPAs are employed only by independent adjusting firms. A. Proper releases taken Proper releases taken is a qualitative audit factor; the others are quantitative. - ANSWER-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? Select one: A. Proper releases taken B. Timeliness of reports C. Number of files opened D. Accuracy of data entry D. Line underwriter. Line underwriter. This describes the duties of a line underwriter, rather than a staff underwriter. There is not enough information to determine which line of business is being written. A public underwriter does not exist. Line underwriters evaluate new submissions and perform renewal underwriting, usually by working directly with insurance producers and applicants. Staff underwriters, meanwhile, manage risk selection by working with line underwriters and coordinating decisions about products, pricing and guidelines. - ANSWER-Aaron works for a
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) Select one: A. Medical provider. B. Expert Witness. C. Premium auditor. D. Claim representative. A. Open-ended Open-ended questions can be used to clarify an interviewee's statements. - ANSWER-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? Select one: A. Open-ended B. Direct C. Indirect D. Leading D. Large loss report. Most insurers have guidelines outlining when and under what circumstances large loss reports should be prepared. - ANSWER-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 Select one: A. Status report. B. Summarized report. C. Preliminary report. D. Large loss report.
D. 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. The right of subrogation allows an insurer to recover payment from a negligent third party. - ANSWER-In which one of the following scenarios is the right of subrogation most likely to be employed by the insurer? Select one: A. An insured files a homeowners claim for stolen jewelry. An investigation reveals that the jewelry is still in the insured's possession. B. An investigation reveals that an insured set her own business on fire. C. An insured files a claim for collision damage from a hit and run accident, when in fact he backed into a utility pole. D. 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. D. A medical investigation. All bodily injury claims, including workers compensation claims, require a medical investigation. - ANSWER-In claims investigation, all bodily injury claims require Select one: A. Statements from all witnesses. B. Multiple claims payments C. An attorney. D. A medical investigation. D. Prepare a list of questions for the insured. Before making initial contact with an insured or claimant, a claims representative should prepare a list of questions for the insured, along with information on how the claim will be handled. - ANSWER-Before making initial contact with an insured or claimant, a claims representative should Select one: A. Research similar losses in the same geographical area. B. Contact company counsel for a reservation of rights letter. C. Prepare an approximate estimate based on similar losses. D. Prepare a list of questions for the insured.
C. Claim intake (CI) form. D. First notice of loss (FNOL) form. B. Average value method The average value method is used most often when their are small variations in loss size for a particular type of claim, and when claims can be concluded quickly. - ANSWER-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? Select one: A. Individual case method B. Average value method C. Formula method D. Roundtable method A. The insurer's case reserves. To determine whether an insurer typically underreserves or overreserves claims, actuaries compare the insurer's paid losses to the insurer's case reserves. - ANSWER-To determine whether an insurer typically underreserves or overreserves claims, actuaries compare the insurer's paid losses to Select one: A. The insurer's case reserves. B. The insurer's profits. C. NAIC model regulations. D. National averages. D. Pain and suffering Pain and suffering, disfigurement, loss of body function, and emotional distress are all forms of general damages. - ANSWER-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? Select one: A. Medical bills
B. Lost wages C. Repairs to his vehicle D. Pain and suffering C. The DICE method. - ANSWER-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 Select one: A. The CARD method. B. The CARE method. C. The DICE method. D. The DARE method. A. Loss of earnings Loss of earnings, medical bills, and lost property payments are all considered special damages. - ANSWER-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? Select one: A. Loss of earnings B. Emotional distress C. Pain and suffering D. Disfigurement D. A medical malpractice claim. Claims-made forms are most often used for environmental, medical malpractice and directors and officers' policies. - ANSWER-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? Select one: A. An automotive collision claim. B. A homeowners liability claim due to a slip and fall.
D. Lower courts must follow precedents set by higher courts. Lower courts must follow precedents set by higher courts. This is the principle of stare decisis. - ANSWER-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 Select one: A. Lower courts must follow precedents set by any other courts. B. Higher courts must follow precedents set by any other courts. C. Higher courts must follow precedents set by lower courts. D. Lower courts must follow precedents set by higher courts. A. A reservation of rights letter. The insurer will issue a reservation of rights letter stating that it will provide defense only until it can establish that there is no coverage. - ANSWER-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 Select one: A. A reservation of rights letter. B. An excess letter. C. A countersuit. D. A claim denial. C. A summons and complaint. The claims litigation process begins with the receipt of a summons and complaint announcing the initiation of a lawsuit. - ANSWER-The claims litigation process begins with the receipt of Select one: A. A notice of claim. B. A civil violation notice. C. A summons and complaint.
D. A settlement offer. C. Motion in limine. This is a pretrial request that certain evidence be excluded from the trial because it is irrelevant or prejudicial. - ANSWER-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 Select one: A. Motion to dismiss. B. Motion to strike. C. Motion in limine. D. Motion to suppress. C. Using traditional sales techniques A common sales technique is mirroring the behavior of the customer. - ANSWER-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? Select one: A. Setting expectations B. Performing a needs analysis C. Using traditional sales techniques D. Collecting extraneous information C. Classification Because Greatview wants to use known characteristics, the analyst would most likely use classification to predict which auto liability claims will go to litigation. - ANSWER-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
Classification is a data mining technique an insurer applies when it knows what information it wants to predict. - ANSWER-Which one of the following is a data mining technique an insurer applies when it knows what information it wants to predict? Select one: A. Machine learning B. Association rule learning C. Cluster analysis D. Classification C. Understand what a business wants to achieve. - ANSWER-The first step in the data mining process is to Select one: A. Collect the data that will be used. B. Select a data mining technique. C. Understand what a business wants to achieve. D. Prepare the data that will be used. A. Risk selection. - ANSWER-Generally speaking, the most common application of predictive modeling in insurance occurs in Select one: A. Risk selection. B. Marketing. C. Reinsurance. D. Claims handling. D. Data science Data science team needs to be engaged as soon as the need for a project arises. - ANSWER-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? Select one:
A. Actuary B. IT C. Underwriting D. Data science D. Cleaning. Data should be cleaned as much as possible to eliminate missing or inaccurate information. - ANSWER-Part of the continuous cycle of data mining is preparing the data to eliminate missing or inaccurate information. This process is called Select one: A. Machine learning. B. Parsing. C. Predictive modeling. D. Cleaning. D. Potentially complex claims Potentially complex claims are the most difficult for insurers to identify at the time of first report. - ANSWER-Which one of the following types of workers compensation claims are the most difficult for insurers to identify at the time of first report? Select one: A. Catastrophic claims B. Medical-only claims C. Potentially minor claims D. Potentially complex claims B. A legitimate claim is exaggerated. Soft fraud, also called opportunity fraud, occurs when a legitimate claim is exaggerated. - ANSWER-Soft fraud, also called opportunity fraud, occurs when Select one: A. An application for insurance contains untrue information. B. A legitimate claim is exaggerated. C. A loss is triggered intentionally. D. A claim is filed for a loss that did not occur.
Telematics are used to collect data on personal autos, commercial vehicles, products, shipments, machinery, smart devices, and workers. - ANSWER-Larissa is an auto claim adjuster. Traditionally, she has relied on police reports and witness testimony in her decision making. Recent technological developments give her access to the driver's driving habits, including acceleration, speed, and braking. This data available to Larissa is known as Select one: A. Artificial Intelligence. B. Telematics. C. Wearables. D. Internet of Things. A. Blockchain. By having a transparent ledger associated with a car, for example, insurers can detect fraud that would be difficult to detect otherwise. - ANSWER-Martin is in SIU and helps his employer, a multi-line insurer, to detect fraudulent claims. He is using a technology that enables insurers to share fraud-related information. This distributed digital ledger that facilitates secure transactions without using a third party is known as Select one: A. Blockchain. B. A predictive model. C. The Internet of Things. D. Telematics. D. He still needs people because the data need to be analyzed in context by a human. - ANSWER-Jack leads the claims department for a large insurer and has embraced the recent developments in claims data collection and analysis. Jack knows that Select one: A. People make little difference in analyzing data and explaining it to a customer. B. Claims determinations and payments will soon be accomplished entirely by AI. C. He will eventually not need people because insurance is not a customer-driven industry. D. He still needs people because the data need to be analyzed in context by a human.
C. Costs roughly $40 billion per year, excluding health insurance. - ANSWER-As a claims representative, Beatrice is on the front lines for protecting her employer from insurance fraud. Beatrice should understand that insurance fraud Select one: A. Is the costliest white-collar crime in the U.S. B. Accounts for 25 percent of the P&C industry incurred losses. C. Costs roughly $40 billion per year, excluding health insurance. D. Costs each American family between $2,000 and $4,000 per year. C. Comparative negligence. In states that permit negligence as a basis for a bad-faith claim, most use a comparative negligence approach, reducing the amount of damages that may be awarded. - ANSWER-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 Select one: A. Contributory negligence. B. Debatable reasonable basis. C. Comparative negligence. D. Comparative bad faith. C. Debatable reasonable basis defense. The insurer may establish that defense that it had a reasonable basis for questioning whether a claim was covered. - ANSWER-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
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? Select one: A. Fair evaluation B. Complete and accurate documentation C. Timely contact with all parties to a claim D. Good-faith negotiation B. The amount of the judgment must be in excess of the insured's policy limit. For an excess liability claim to be filed, a final judgment or settlement must have been entered against the insured, and the amount of the judgment must be in excess of the insured's policy limit. The insured is not required to have paid the judgment before bringing suit. - ANSWER-For an excess liability claim to be filed, a final judgment or settlement must have been entered against the insured, and Select one: A. The insured must have paid that judgment. B. The amount of the judgment must be in excess of the insured's policy limit. C. Evidence of bad faith must be produced. D. The insurer must have determined that coverage does not apply. A. The behaviors necessary to implement an ethical decision - ANSWER-Which one of the following best describes the term 'professionalism' as it relates to claims professionals? Select one: A. The behaviors necessary to implement an ethical decision B. Remaining silent when a competitor is disparaged publicly C. Fulfilling the terms of an insurance contract D. A set of principles and values D. Timely contact with all parties to a claim. Early contact with parties helps to ensure details are correct, parties feel heard, and don't feel the need for attorneys. - ANSWER-As a claims representative, some of Sara's goals is to benefit her employer by ensuring the parties to a loss remember details accurately, reassuring the parties that their claims are
important, and lessening the chance that the parties will retain attorneys. Sara accomplishes these goals through Select one: A. Effective claims management. B. Regular and prompt communication. C. Complete and accurate documentation. D. Timely contact with all parties to a claim. A. Drones Erik would most likely use drones to take photos or videos of the difficult-to-reach area and assess the damage and danger. By using the drones, he can assess the danger without risking the safety of the claims representatives. - ANSWER-Erik is a claims manager for Taunton Insurance. He is leading a team of property claims representatives responding to a recent tornado in Kentucky. Before sending the representatives into the field, Erik has decided to use Internet of Things (IoT) technology to assess the damage and danger in the area. Which one of the following IoT devices would Erik most likely use in this situation? Select one: A. Drones B. Sensors C. Smartphones D. Telematics B. Is named in the policy declarations or an endorsement. An individual may have an insurable interest in a building, but not be considered an insured under the policy because the person's name is not listed in the declarations or on an endorsement. - ANSWER-Luke runs his business out of a store front in a commercial building. After a fire destroyed part of the building, Luke made a claim for damages and received a settlement check from the property insurer. This necessarily means that Luke Select one: A. Has business interruption coverage. B. Is named in the policy declarations or an endorsement. C. Has an insurable interest in the damaged property. D. Is the owner of the building.
