AIC 300 - Claims in an Evolving World

Terms in this set (105)

B. By certified mail with a

return receipt requested.

Some will also send a copy via

regular mail in case the
certified letter is not accepted.

D. Subpoenaed.

Any written claims

communication may be
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.
B. TPAs handle claims, keep
claims records, and perform
statistical analyses.

A. Proper releases taken

Proper releases taken is a

qualitative audit factor; the
others are quantitative.
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.

D. Listening.

Claims professionals should

first listen carefully to
understand what the claimant
is saying.
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.

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.
A. Open-ended

Open-ended questions can be

used to clarify an interviewee's
statements.

D. Large loss report.

Most insurers have guidelines

outlining when and under what
circumstances large loss
reports should be prepared.
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.

D. A medical investigation.

All bodily injury claims,

including workers
compensation claims, require 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.
C. Recorded statement.

A recorded statement is taken

by the claims rep over the
phone or in person.

B. Large loss

Large loss reports are required

by most insurers to summarize
claims with reserves above a
certain threshold.

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.
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.

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.

D. Pain and suffering

Pain and suffering,

disfigurement, loss of body
function, and emotional
distress are all forms of general
damages.
 C. The DICE method.

A. Loss of earnings

Loss of earnings, medical bills,

and lost property payments
are all considered special
damages.

D. A medical malpractice claim.

Claims-made forms are most

often used for environmental,
medical malpractice and
directors and officers' policies.
D. Known terrorists and drug
traffickers.

Failure to check a master list of

known terrorists and drug
traffickers may result in
substantial penalties.

B. By electronic funds transfer.

B. Timing settlements
effectively

Timing settlements effectively

can impact how much money a
claimant is willing to accept.
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.

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.

C. A summons and complaint.

The claims litigation process

begins with the receipt of a
summons and complaint
announcing the initiation of a
lawsuit.
C. Motion in limine.

This is a pretrial request that

certain evidence be excluded
from the trial because it is
irrelevant or prejudicial.

C. Using traditional sales

techniques

A common sales technique is

mirroring the behavior of the
customer.
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.

B. Information gain

Information gain is a measure

of the predictive power of one
or more attributes.
B. Data scientist.

Data science involves

experimenting with data using
rapidly evolving methods to
learn and provide solutions to
complex problems.

D. Classification

Classification is a data mining

technique an insurer applies
when it knows what information
it wants to predict.

C. Understand what a business

wants to achieve.

A. Risk selection.
D. Data science

Data science team needs to be

engaged as soon as the need
for a project arises.

D. Cleaning.

Data should be cleaned as

much as possible to eliminate
missing or inaccurate
information.

D. Potentially complex claims

Potentially complex claims are

the most difficult for insurers to
identify at the time of first
report.
B. A legitimate claim is
exaggerated.

Soft fraud, also called

opportunity fraud, occurs
when a legitimate claim is
exaggerated.

B. Continue with her

investigation.

Continue with her investigation.

Indicators of fraud are not
proof of fraud.

A. Data mining.

Data mining. This is using

computers to analyze vast
amounts of data to detect
trends.
 C. Opportunity fraud.

B. Telematics.

Telematics are used to collect

data on personal autos,
commercial vehicles, products,
shipments, machinery, smart
devices, and workers.

A. Blockchain.

By having a transparent ledger

associated with a car, for
example, insurers can detect
fraud that would be difficult to
detect otherwise.
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.
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.

C. Debatable reasonable basis

defense.

The insurer may establish that

defense that it had a
reasonable basis for
questioning whether a claim
was covered.
C. Maintains regular and
prompt communication.

Communicating with all parties

to a claim is a crucial aspect of
good-faith claims handling and
resolution.

D. Some states allow insureds

and claimants to bring lawsuits
against insurers, while others
allow only insureds.
C. Timely contact with all
parties to a claim

Timely contact with all parties

to a claim helps ensure that
parties will be more likely to
remember details of the loss
accurately.

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.
A. The behaviors necessary to
implement an ethical decision

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.
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.

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.
B. Losses and LAE divided by
earned premium.

Losses and LAE divided by

earned premium. Loss ratio
measures losses and loss
adjustment expenses against
earned premium and reflects
the percentage of premiums
being consumed by losses.

B. Obtain medical records.

In liability claims, the claims rep

will require an authorization
from the injured party to obtain
medical records.

A. Actuary.

Actuaries are critically

important to this process
because they understand the
business and the analytics.
B. Proof of loss form.

A claims representative may

provide a blank proof of loss
form and any necessary written
instructions so the insured can
document the claim.

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.

A. Stairstepping.
C. Premium auditor.

Premium auditors provide

inventory values, contractors'
equipment lists, and other facts
that are important to the claims
function.

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.
 B. Association rule learning

C. Are potentially discoverable

in a trial.

Are potentially discoverable in

a trial. Seemingly innocuous
comments can be devastating
when read to a jury.
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)
C. Staff underwriter.

This describes the duties of a

staff 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.
D. Insured's collusion with
claimant

Insured's collusion with

claimant. Discovering collusion
between the insured and
claimant, such as a claimant
agreeing not to collect a
judgment from the insured's
assets, can lead to dismissal of
a bad-faith claim.

D. With a bank draft, the bank

must verify that the insurer has
authorized payment.
C. Claimants, insureds,
supervisors and others.

The impression that claims reps

make on claimants, insureds,
and others reflects either
favorably or unfavorably on the
insurer.

C. Insured, claims rep, defense

counsel

A summons and complaint is

typically received by the
insured, who then shares it with
the claims rep, who in turn
sends it to the insurer's defense
counsel.

D. Soft fraud

In soft fraud, a legitimate loss

occurs but the value of that
loss is exaggerated.
C. Best practices

Best practices generally refers

to a system of identified
internal practices that are
shared with claims reps and
produce superior
performance.

D. An endorsement.

An endorsement can include

coverage that is otherwise
excluded, exclude coverage
that is otherwise included, or
add or delete insureds.

B. Examination under oath

Examination under oath is

administered by the attorney
for the insurer after notice is
issued to appear at the office
of the insurer, attorney, or
court reporter.
C. Carefully document their
reasoning for denial.

C. Are not always sequential,

and may overlap.

A. State insurance
departments.

The NAIC model act specifies

that its provisions regarding
bad-faith claims are to be
enforced by state insurance
departments.
 A. Objective.

C. Making concessions
cautiously.

Claims reps should only make

concessions for specific
reasons, the other party has
made a concession, or a
concession would allow the
claim to be settled more
quickly
A. Consistent supervision,
thorough training, and
manageable caseloads help
ensure that claim
representatives are able to
handle claims in good faith.

Consistent supervision,
thorough training, and
manageable caseloads help
ensure that claim
representatives are able to
handle claims in good faith.

B. $250,000

After the SIR limit had been

reached, the insurer was
obligated to pay up to the
occurrence limit.
A. Explain the rationale behind
the decision to the claimant.

If the decision on a claim

settlement is negative, good-
faith claims handling requires
the claims rep to explain the
rationale behind the decision.

C. Being an employee of the

insurer.

The role of staff claims

representative is defined by
being an employee of the
insurer and having a primary
focus on handling claims.

C. Domain knowledge

Domain knowledge is the

understanding of the discipline,
profession, or activity to which
the data is being applied.
C. Roundtable method

With the roundtable method, a

consensus reserve figure may
be reached following
evaluation and discussion
among claims reps.

D. Machine learning

D. Independent adjusters

Insurers may contract with

independent adjusters to
handle claims in strategic
locations.
A. To understand what it wants
to achieve.

A. Asking for referral

Asked for referral could

indicate that the worker has
knowledge of the workers
compensation system because
he had been through it before.
A. Maintain complete and
accurate documentation.

Maintain complete and

accurate documentation. A
claim file must contain a
complete and accurate
account of the claims rep's
activities and actions.

D. Leading question.
A. Feel empowered when
given a choice.

D. Hard fraud
A. Most policies require the
insured to cooperate with the
insurer in recovering payment
through subrogation, to
include testifying or appearing
in court.

D. State the damages sought.

The allegations contained in a

summons and complaint
typically give notice, reveal
facts, formulate legal causes of
action and state the damages
sought.

B. Special Investigation Unit.

D. Exclusions.

The DICE method reminds a

claims professional to check
declarations, insuring
agreement, conditions and
exclusions.

A. Handle claims in good faith.

In insurance transactions, the

insured pays a premium for the
insurer's promise to handle
claims in good faith.

D. Paying fraudulent claims

affects insureds.

An insurer that pays a high

number of fraudulent claims
will have to raise its premiums.
 D. Telematics.

C. Motion to dismiss.