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AIC 300 ALL CLAIMS EXAM 2025|
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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. CORRECT ANSWER: B. By certified mail with a return receiptrequested. Some will also send a copy via regular mail in case the certified letter is not accepted. 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. CORRECT ANSWER: D. Subpoenaed. Any written claims communication may be subpoenaed. 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. CORRECT ANSWER: 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. CORRECT ANSWER: 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. CORRECT ANSWER: 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 CORRECT ANSWER: 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 CORRECT ANSWER: 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 CORRECT ANSWER: 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. CORRECT ANSWER: b. TPAs handle claims, keep claims records, and perform statistical analyses
Proper releases taken is a qualitative audit factor; the others are quantitative. 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 Select one: A. Staff underwriter. B. Public underwriter. C. Personal lines underwriter. D. Line underwriter. CORRECT ANSWER: 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. The first key to communicating empathetically as a claims professional is Select one: A. A comprehensive understanding of relevant insurance policies. B. Speaking calmly and clearly. C. Being prepared with all documentation relating to the claim. D. Listening. CORRECT ANSWER: D. Listening. Claims professionals should first listen carefully to understand what the claimant is saying. Mia tracks loss adjustment expense (LAE) as part of her management of the claims department for an insurer. Mia considers LAE to be the Select one: A. Total amount of loss reserves of all claims. B. Paid portion of claims. C. Cost to investigate, defend, and settle claims. D. Total incurred amount of claims. CORRECT ANSWER: C. Cost to investigate, defend, and settle claims. Cost to investigate, defend, and settle claims. LAE is the expense that an insurer incurs to investigate, defend, and settle claims according to the terms specified in the insurance policy. 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) Select one:
A. Medical provider. B. Expert Witness. C. Premium auditor. D. Claim representative. CORRECT ANSWER: D. Claim representative. Claim reps collaborate with more than other insurer employees. Many insurers employ a panel of experts that the claims rep can select according to the investigation's needs. 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 CORRECT ANSWER: A. Open-ended Open-ended questions can be used to clarify an interviewee's statements. 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. CORRECT ANSWER: D. Large loss report. Most insurers have guidelines outlining when and under what circumstances large loss reports should be prepared. 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. CORRECT ANSWER: 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.
Large loss reports are required by most insurers to summarize claims with reserves above a certain threshold. In the process of assigning a claim, an internal claims handler will often transfer information to the insurer's standard form, called the Select one: A. Standard claims handling (SCH) form. B. Initial acknowledgment of notice (IAN) form. C. Claim intake (CI) form. D. First notice of loss (FNOL) form. CORRECT ANSWER: D. First notice of loss (FNOL) form. An internal claims handler will often transfer information to the insurer's standard form, called the first notice of loss (FNOL) form. 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 CORRECT ANSWER: 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. 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. CORRECT ANSWER: 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. 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 CORRECT ANSWER: D. Pain and suffering
Pain and suffering, disfigurement, loss of body function, and emotional distress are all forms of general damages. 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. CORRECT ANSWER: C. The DICE method. 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 CORRECT ANSWER: A. Loss of earnings Loss of earnings, medical bills, and lost property payments are all considered special damages. 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. C. A homeowners claim due to storm damage. D. A medical malpractice claim. CORRECT ANSWER: D. A medical malpractice claim. Claims-made forms are most often used for environmental, medical malpractice and directors and officers' policies. The Office of Foreign Assets Control requires claims payors to check payees against a database of Select one: A. Known perpetrators of insurance fraud. B. Policyholders of other insurers. C. Those who have collected a payment for the same loss. D. Known terrorists and drug traffickers. CORRECT ANSWER: D. Known terrorists and drug traffickers.
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. 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. CORRECT ANSWER: C. A summons and complaint. The claims litigation process begins with the receipt of a summons and complaint announcing the initiation of a lawsuit. 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. CORRECT ANSWER: C. Motion in limine. This is a pretrial request that certain evidence be excluded from the trial because it is irrelevant or prejudicial. 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 CORRECT ANSWER: C. Using traditional sales techniques A common sales technique is mirroring the behavior of the customer. 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? Select one: A. Regression analysis B. Association rule learning
C. Classification D. Cluster analysis CORRECT ANSWER: 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. In seeking to identify claims that will potentially develop into complex and more costly claims, the data science team at Great Midsouthwest Insurance ranks a series of attributes by their importance to the data model. Which one of the following terms describes the level of predictive power of each attribute? Select one: A. Statistical relevance B. Information gain C. Lift D. Precision factor CORRECT ANSWER: B. Information gain Information gain is a measure of the predictive power of one or more attributes. 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) Select one: A. Actuary. B. Data scientist. C. IT professional. D. Ratemaker. CORRECT ANSWER: B. Data scientist. Data science involves experimenting with data using rapidly evolving methods to learn and provide solutions to complex problems. 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 CORRECT ANSWER: D. Classification Classification is a data mining technique an insurer applies when it knows what information it wants to predict. 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.
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. CORRECT ANSWER: B. A legitimate claim is exaggerated. Soft fraud, also called opportunity fraud, occurs when a legitimate claim is exaggerated. 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 Select one: A. Refer the case to the SIU. B. Continue with her investigation. C. Deny the claim. D. Contact the police. CORRECT ANSWER: B. Continue with her investigation. Continue with her investigation. Indicators of fraud are not proof of fraud. 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 Select one: A. Data mining. B. Telematics. C. Claims audits. D. Wearables. CORRECT ANSWER: A. Data mining. Data mining. This is using computers to analyze vast amounts of data to detect trends. Soft fraud occurs when a claim is exaggerated and is also referred to as Select one: A. Victimless fraud. B. Reimbursement fraud. C. Opportunity fraud. D. Financial fraud. CORRECT ANSWER: C. Opportunity fraud. 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. CORRECT ANSWER: B. Telematics. Telematics are used to collect data on personal autos, commercial vehicles, products, shipments, machinery, smart devices, and workers. 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. CORRECT ANSWER: A. Blockchain. By having a transparent ledger associated with a car, for example, insurers can detect fraud that would be difficult to detect otherwise. 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. CORRECT ANSWER: D. He still needs people because the data need to be analyzed in context by a human. 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. CORRECT ANSWER: C. Costs roughly $40 billion per year, excluding health insurance. 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:
D. Some states allow insureds and claimants to bring lawsuits against insurers, while others allow only insureds. CORRECT ANSWER: D. Some states allow insureds and claimants to bring lawsuits against insurers, while others allow only insureds. 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? Select one: A. Fair evaluation B. Complete and accurate documentation C. Timely contact with all parties to a claim D. Good-faith negotiation CORRECT ANSWER: C. Timely contact with all parties to aclaim Timely contact with all parties to a claim helps ensure that parties will be more likely to remember details of the loss accurately. 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. CORRECT ANSWER: 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. 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 CORRECT ANSWER: A. The behaviors necessary to implement an ethical decision 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. CORRECT ANSWER: 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. 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 CORRECT ANSWER: 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. 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. CORRECT ANSWER: 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. Rodrigo manages a claims department for an insurer and uses loss ratio as a measure of the department's performance. Rodrigo calculates loss ratio as Select one: A. Losses divided by written premium. B. Losses and LAE divided by earned premium. C. Losses and LAE divided by written premium. D. Losses divided by earned premium. CORRECT ANSWER: B. Losses and LAE divided by earned premium.
D. She was immune to prosecution as an employee. CORRECT ANSWER: A. Too much time had expired after the claim concluded. Too much time had expired after the claim concluded. A statute of limitations is a law that stipulates the length of time after an event during which legal proceedings may be initiated. DaJuan, a claims representative, sets a low case reserve for a seemingly simple claim. A few weeks later it becomes apparent that the initial reserve was too low, and he increases it in order to issue payments. More bills related to the claim arrive a few months later, and he increases the reserve again. This process is known as Select one: A. Stairstepping. B. Reopening. C. Readjusting. D. Incremental reserving. CORRECT ANSWER: A. Stairstepping. Erin helps her employer, a multi-line insurer, to determine actual exposure and premium for coverage. She does this by conducting detailed examinations of policyholder operations, records, and accounting. Erin is a(n) Select one: A. Producer. B. Claims adjuster. C. Premium auditor. D. Underwriter. CORRECT ANSWER: C. Premium auditor. Premium auditors provide inventory values, contractors' equipment lists, and other facts that are important to the claims function. Thomas is an attorney who is defending an insurer in a litigated case. He has located documents that show the insured was aware of the issue that cause the injury to the claimant before the accident. Thomas is concerned that this evidence will hurt his case. He should Select one: A. Preserve the evidence as part of the record. B. File a motion to suppress the evidence. C. File a motion in limine to exclude the evidence. D. Destroy the evidence to make the defense stronger. CORRECT ANSWER: A. Preserve the evidence as part of the record. An insurer defending a first-party coverage lawsuit could be found liable if evidence is intentionally or negligently lost or destroyed. Through data mining, Goshen Mutual discovers that customers who insure two or more vehicles on a personal auto policy are very likely to buy a personal umbrella policy. Algorithms are then used to identify potential customers who might be interested in
purchasing both personal auto and umbrella policies. Which one of the following data mining techniques did Goshen Mutual use? Select one: A. Classification B. Association rule learning C. Regression analysis D. Cluster analysis CORRECT ANSWER: B. Association rule learning Olivia is careful to keep proper claim status notes when she handles a claim. For example, she makes sure to only include neutral, objective comments about the parties involved. This is because claim notes Select one: A. Continue for as long as the claim is open. B. Present a chronology of the life of the claim. C. Are potentially discoverable in a trial. D. Must be able to speak for themselves. CORRECT ANSWER: C. Are potentially discoverable in a trial. Are potentially discoverable in a trial. Seemingly innocuous comments can be devastating when read to a jury. Millstone Insurance wanted to assign its most complex workers compensation claims to experienced claim adjusters as early as possible. The data science team used the classification tree technique to develop a predictive model. When holdout data was used to test the model's predictive accuracy, 45% of the complex claims were assigned to experienced adjusters. When claims were randomly assigned, only 15% of the complex claims were assigned to experienced adjusters. What is the lift provided by the predictive model? Select one: A. 0. B. 3 C. 30 D. 45 CORRECT ANSWER: B. 3 The lift provided by the predictive model is 3. The lift is calculated by dividing the model percentage by the nonmodel percentage. (45/15 = 3) Alva works for an international, multi-line insurer. She helps her company to manage risk selection by working with other underwriters and coordinating decisions about products, pricing, and guidelines. Alva is a Select one: A. Master underwriter. B. Line underwriter. C. Staff underwriter. D. Chief Underwriting Officer. CORRECT ANSWER: C. Staff underwriter.
