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AIC 300 CLAIMS IN AN EVOLVING WORLD
EXAM ACTUAL EXAM QUESTIONS AND
CORRECT ANSWERS | ALREADY GRADED
A+ | LATEST EXAM 2024
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 Correct. 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) 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. Is named in the policy declarations or an endorsement. B. Is the owner of the building. C. Has business interruption coverage. D. Has an insurable interest in the damaged property. -----CORRECT ANSWER----------- -----A. Is named in the policy declarations or an endorsement. 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. In a typical scenario, a summons and complaint initiating litigation is received by these parties in which one of the following sequences?
Select one: A. Defense counsel, insured, claims rep B. Defense counsel, claims rep, insured C. Claims rep, insured, defense counsel D. Insured, claims rep, defense counsel -----CORRECT ANSWER----------------D. Insured, claims rep, defense counsel Incorrect. 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. Which one of the following terms encompasses types of fraud including false claims and intentional losses? Select one: A. Soft fraud B. Staged fraud C. Willful fraud D. Hard fraud -----CORRECT ANSWER----------------Hard Fraud 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. Cluster analysis B. Association rule learning C. Classification D. Regression analysis -----CORRECT ANSWER----------------B Jose is handling a workers compensation claim. The injured worker claims to have strained his back when he lifted a box at work. He waited a day to report the injury because he thought he would be okay. He asked Jose when he would be referred to a back specialist and when he could expect his first check. Which one of the injured worker's actions would be the most pertinent fraud indicator to Jose? Select one: A. Lifting a box B. Waiting to report C. Asking about check D. Asking for referral -----CORRECT ANSWER----------------D. Asking for referral
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. Because a full or partial denial of a claim may result in a bad-faith lawsuit, a claims representative should Select one: A. Carefully document their reasoning for denial. B. Check with the reinsurer before denying a claim. C. Seek a supervisor's approval before denying a claim. D. Make every effort to approve each claim. -----CORRECT ANSWER----------------A. Carefully document their reasoning for denial. Claims reps should carefully document their reason(s) for fully or partially denying a claim. Which one of the following statements regarding subrogation is most accurate? Select one: A. The insured typically must cooperate with the insurer in recovering payment through subrogation, but is not required to testify or appear in court. B. The insured is typically under no obligation to cooperate with the insurer in recovering payment through subrogation. C. Most policies require the insured to cooperate with the insurer in recovering payment through subrogation, to include testifying or appearing in court. D. All policies require the insured to cooperate with the insurer in recovering payment through subrogation. -----CORRECT ANSWER----------------C. Most policies require the insured to cooperate with the insurer in recovering payment through subrogation, to include testifying or appearing in court. Most policies require the insured to cooperate with the insurer in recovering payment through subrogation, to include testifying or appearing in court. Which one of the following elements of a policy can include coverage that is otherwise excluded, exclude coverage that is otherwise included, or add or delete insureds? Select one: A. An endorsement. B. The declarations. C. An exclusion. D. The conditions. -----CORRECT ANSWER----------------A. An endorsement.
An endorsement can include coverage that is otherwise excluded, exclude coverage that is otherwise included, or add or delete insureds. Claims rep Miguel is conducting a settlement with a claimant. He constructs his first offer so that the claimant will likely find it undesirable. This becomes the basis of comparison for the second offer that he makes. Miguel understands that people Select one: A. Are easier to manipulate with choices. B. Feel empowered when given a choice. C. Are naturally suspicious of an initial offer. D. Will typically accept a second offer. -----CORRECT ANSWER----------------B. Feel empowered when given a choice. Feel empowered when given a choice. This is the basis of the choicing technique. Attorney Grace is representing an insurer in a case and is preparing a pretrial motion. Her argument is that the court has no jurisdiction for the cause of action brought by the claimant. Grace is preparing a Select one: A. Motion for summary judgment. B. Motion in limine. C. Motion to dismiss D. Motion to suppress. -----CORRECT ANSWER----------------C. Motion to dismiss. Correct. Motion to dismiss. This is a request that a court terminate an action because of settlement, voluntary withdrawal, or procedural defect. As a claims representative, Joshua frequently requests proofs of loss and affidavits, and conducts examinations under oath and recorded statements. Which one of Joshua's sworn statements is administered by the insurer's attorney at the office of the insurer, attorney, or court reporter? Select one: A. Affidavit B. Examination under oath C. Recorded statement D. Proof of loss -----CORRECT ANSWER----------------B. Examination under oath
Correct. The process of repeatedly increasing the reserve for a claim is called stairstepping. 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. Are potentially discoverable in a trial. B. Continue for as long as the claim is open. C. Present a chronology of the life of the claim. D. Must be able to speak for themselves. -----CORRECT ANSWER----------------A. Are potentially discoverable in a trial. Correct. Are potentially discoverable in a trial. Seemingly innocuous comments can be devastating when read to a jury. Ciara is going to college with the goal of working as a data scientist for an insurer. She will need a strong foundation in mathematics and statistics, computer programming, domain knowledge, and data science. Which one of Ciara's skills will require her to understand the insurance profession to which the data is being applied? Select one: A. Mathematics and statistics B. Data science C. Computer programming D. Domain knowledge -----CORRECT ANSWER----------------Domain knowledge ...is the understanding of the discipline, profession, or activity to which the data is being applied. rin 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. Underwriter B. Premium auditor. C. Claims adjuster. D. Producer. -----CORRECT ANSWER----------------Premium auditor. Premium auditors provide inventory values, contractors' equipment lists, and other facts that are important to the claims function.
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. Telematics C. Smartphones D. Sensors -----CORRECT ANSWER----------------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. Telematics devices are used in automobiles to create a picture of driving patterns. Mustafa is a data scientist who is working with a team of underwriting, IT, and actuary to develop a predictive analytics model. The main goal of the project is to translate the insights gained from the model they develop into business action. In Mustafa's experience, the team member that can provide the bridge between the analytics and the business is Select one: A. Underwriting. B. Data science C. Actuary. D. IT. -----CORRECT ANSWER----------------Actuary. Actuaries are critically important to this process because they understand the business and the analytics. The allegations contained in a summons and complaint typically serve four purposes: To give notice, reveal facts, formulate legal causes of action and Select one: A. State the damages sought B. Suggest an out-of-court settlement. C. Identify the opposing attorney(s). D. Specify a delivery method for the response. -----CORRECT ANSWER----------------A. State the damages sought.
D. Obtain medical records. -----CORRECT ANSWER----------------Obtain Medical Records Among the methods used to pay claims are the issuance of checks and bank drafts. The main difference between the two is that Select one: A. Only checks may be used for claim payments in excess of $10,000. B. With a bank draft, the bank must verify that the insurer has authorized payment. C. Only bank drafts may be used for claim payments in excess of $10,000. D. With a check, the bank must verify that the insurer has authorized payment. ----- CORRECT ANSWER----------------B With a bank draft, the bank must verify that the insurer has authorized payment before disbursing funds. Insurers and claim representatives must keep the promises specified in insurance policies, as well as those created by the law. In insurance transactions, the insured pays a premium for the insurer's promise to Select one: A. Handle claims in good faith. B. Settle all losses in the insured's best interests. C. Compete fairly in the insurance market. D. Comply with federal insurance laws. -----CORRECT ANSWER----------------A. Handle claims in good faith. Correct. In insurance transactions, the insured pays a premium for the insurer's promise to handle claims in good faith. The activities that make up the claims handling process Select one: A. Are not always sequential, but do not overlap. B. Are always sequential but may overlap. C. Are always sequential and do not overlap. D. Are not always sequential, and may overlap. -----CORRECT ANSWER----------------D. Are not always sequential, and may overlap. Correct. The activities that make up the claims handling process are not always sequential, and may overlap.
The NAIC model act specifies that its provisions regarding bad-faith claims are to be enforced by Select one: A. NAIC personnel. B. Insurer personnel, on the honor system. C. The Federal Trade Commission. D. State insurance departments. -----CORRECT ANSWER----------------D. State insurance departments. The NAIC model act specifies that its provisions regarding bad-faith claims are to be enforced by state insurance departments. Antonia has a general liability policy with a self-insured retention of $50,000. The policy has an occurrence limit of $250,000 and an aggregate limit of $500,000. She had submitted one prior claim this policy term for which $100,000 was paid by the insurer. How much will Antonia's insurer pay on a subsequent claim under the same policy period that is valued at $400,000? Select one: A. $200, B. $250, C. $400, D. $500,000 -----CORRECT ANSWER----------------$250,000. After the SIR limit had been reached, the insurer was obligated to pay up to the occurrence limit. Insurers usually send denial letters Select one: A. By email to ensure prompt receipt by the insured. B. By registered mail. C. By certified mail with a return receipt requested. D. By overnight courier. -----CORRECT ANSWER----------------C. By certified mail with a return receipt requested. Correct. Insurers usually send denial letters 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.
Tonya is a claims representative tasked with determining whether coverage applies to a new claim. To ensure that she considers all facets of the claim, she uses the DICE method, which stands for declarations, insuring agreement, conditions and Select one: A. Exclusions. B. Endorsements. C. Extras. D. Encumbrances. -----CORRECT ANSWER----------------A. Exclusions. Correct. The DICE method reminds a claims professional to check declarations, insuring agreement, conditions and exclusions. James works for a multi-line insurer. He is responsible for investigating claims that raise suspicion of fraud. James is in the Select one: A. Claims department. B. Legal department. C. Special Investigation Unit. D. Loss control department. -----CORRECT ANSWER----------------C. Special Investigation Unit. Correct. Special Investigation Unit. Insurers have created SIUs to help claims reps detect and report insurance fraud. Conor is a claims representative whose supervisor is reviewing his claim status notes. The supervisor took exception with one of Conor's notes, which read, "The claimant is obviously lying because his account of how the accident happened keeps changing." The supervisor should advise Conor that this statement is inappropriate because it is not Select one: A. Concise. B. Objective. C. Accurate. D. Clear. -----CORRECT ANSWER----------------B. Objective. Claim status notes should contain objective comments about the parties. As a part of the first contact with an insured on a property damage claim, a claims representative may provide a blank Select one:
A. Proof of loss form. B. First notice of loss form. C. Nondisclosure form. D. Reservation of rights form. -----CORRECT ANSWER----------------A. 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. If the decision on a claim settlement is negative, as in a denial, good-faith claims handling requires the claims rep to Select one: A. Explain the rationale behind the decision to the claimant. B. Have a supervisor sign off on the communication to the claimant. C. Deliver the decision to the claimant in writing. D. Deliver a hard copy of the decision to the claimant by mail. -----CORRECT ANSWER----------------A. Explain the rationale behind the decision to the claimant. Correct. If the decision on a claim settlement is negative, good-faith claims handling requires the claims rep to explain the rationale behind the decision. Sho is a claims representative. With regard to his responsibility for defending his employer against fraud, Sho understands that Select one: A. Fraud indicators are proof of fraud. B. Claims reps are the last defense against fraud. C. Insurers rely only on SIU to defend against fraud. D. Paying fraudulent claims affects insureds. -----CORRECT ANSWER----------------D. Paying fraudulent claims affects insureds. Correct. Paying fraudulent claims affects insureds. An insurer that pays a high number of fraudulent claims will have to raise its premiums. Cristobal is negotiating a settlement with a claimant attorney in a workers compensation claim. The attorney has requested 200 weeks of benefits, which was more than Cristobal was hoping to pay. Cristobal countered with an offer to pay the 200 weeks if the worker would sign an agreement to resign his position and to never reopen the claim. Cristobal's negotiation strategy is an example of Select one: A. Timing settlements effectively.
B. When resolving a coverage question, insurers should avoid the appearance of bad faith by dealing only with those lawyers hired to defend the insured. C. If the insured has excess insurance, the claim representative should merely notify the excess insurer of the claim. D. Claim representatives should avoid using policy provisions, such as arbitration clauses, to resolve disputes over the settlement amount. -----CORRECT ANSWER------- ---------A. Consistent supervision, thorough training, and manageable caseloads help ensure that claim representatives are able to handle claims in good faith. Correct. Consistent supervision, thorough training, and manageable caseloads help ensure that claim representatives are able to handle claims in good faith. 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. File a motion to suppress the evidence. B. Destroy the evidence to make the defense stronger. C. File a motion in limine to exclude the evidence. D. Preserve the evidence as part of the record. -----CORRECT ANSWER----------------D. Preserve the evidence as part of the record. Incorrect. 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. 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 and LAE divided by earned premium. B. Losses divided by written premium. C. Losses divided by earned premium. D. Losses and LAE divided by written premium. -----CORRECT ANSWER----------------A. Losses and LAE divided by earned premium. Correct. 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.
Daniel is a claims supervisor. One of his responsibilities is to review claim files to monitor the performance of the adjusters and to provide guidance. He also realizes that claims department peers review files as part of roundtable discussions and that state insurance department representatives might review files as part of market conduct studies. For these reasons, Daniel makes sure his direct reports Select one: A. Provide competent legal advice. B. Make fair evaluations. C. Maintain complete and accurate documentation. D. Conduct good-faith negotiations. -----CORRECT ANSWER----------------C. Maintain complete and accurate documentation. Correct. Maintain complete and accurate documentation. A claim file must contain a complete and accurate account of the claims rep's activities and actions. 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 -----CORRECT ANSWER--------------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 -----CORRECT ANSWER--------------a. Opportunity fraud 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. -----CORRECT ANSWER--------------b. A claims rep
d. Higher courts must follow precedents set by any other counts. -----CORRECT ANSWER--------------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. -----CORRECT ANSWER--------------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. -----CORRECT ANSWER--------------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 -----CORRECT ANSWER--------------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. -----CORRECT ANSWER--------------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. -----CORRECT ANSWER--------------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. -----CORRECT ANSWER--------------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. -----CORRECT ANSWER--------------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.
