AIC 30 EXAM || 100% VERIFIED.
what are the two primary goals of the claims dept? correct answers keep insurers promise & help
insurer reach profit goal
What is the insurers promise? correct answers to uphold the contract made on the policy (First or
Third), and to protect the insured from lawsuits in claims that are found wrong
What is the insurers promise in a property insurance policy? correct answers Pay for damages
made by the claimant/policyholder to any property if fits the policy.
What is the insurers promise in liability insurance policy? correct answers pay for damages done
to OTHERS (bodily injuries, property damage or other)
When is the insurer responsible to pay first party claims? correct answers direct report from
insured to insurer.
When is the insurer responsible to pay third party claims? correct answers made against the
policyholder by someone to whom the policyholder may be liable
By ensuring fair claim settlement, claims representatives prevent any unnecessary increase in the
cost of insurance and subsequent reduction in the insurer's correct answers underwriting profit
An insurance contract is designed to be all of the following in the event of a claim, EXCEPT
correct answers A means to provide a profit to the insured
Third Party Administrator (TPA) correct answers An organization that provides administrative
services associated with risk financing and insurance.
Independent Adjuster correct answers An independent claim representative who handles claims
for insurers for a fee.
Producer correct answers term "producer" includes agents, brokers, sales representatives, and
intermediaries who place insurance with insurers
Public Adjuster correct answers An outside organization or person hired by an insured to
represent the insured in a claim in exchange for a fee.
Loss adjustment expense (LAE) correct answers The expense that an insurer incurs to
investigate, defend, and settle claims according to the terms specified in the insurance policy.
Which one of the following involves making a choice between what is lawful and what is
unlawful? correct answers legality
For insurers, ethical and professional conduct can help correct answers retain customers and
attract investors
,Ethics and professionalism are important for insurance professionals because correct answers
Consumer regulations may define the minimum expected ethical and professional standards.
Three ways good faith is established: correct answers By satisfying contractual duties and other
promises
By maintaining insurers' credibility
By complying with legal duty
If the business of insurance is conducted ethically and professionally, society can reap the
benefits of insurance, which include correct answers support for credit
Most states require the licensing of correct answers public adjusters
Some jurisdictions have found certain practices in claim handling to be the unauthorized practice
of law. An typical example is correct answers Providing direction on legal strategies
Ethical and professional conduct of claim representatives can benefit consumers by correct
answers Encouraging fair treatment and prompt payment.
If the business of insurance is conducted ethically and professionally, society can reap the
benefits of insurance, which include correct answers the benefits of insurance include peace of
mind, support for credit, efficient use of resources, and reduction of social burdens.
Ethical and professional conduct of claim representatives can benefit consumers by correct
answers Encouraging fair treatment and prompt payment.
Ethics and professionalism are important for insurance professionals because correct answers
Consumer regulations may define the minimum expected ethical and professional standards.
Information gathered by claims representatives in handling claims correct answers May be
protected by privacy laws.
All of the following represent instances of federal laws having an effect on claim handling,
EXCEPT: correct answers Unfair claims settlement practices acts
Most states require the licensing of correct answers Public adjusters.
Some jurisdictions have found certain practices in claim handling to be the unauthorized practice
of law. An typical example is correct answers Providing direction on legal strategies.
A claim representative who believes in high quality claim practices should correct answers Keep
in mind the perspectives of the claimants and insureds.
When a severe hurricane comes ashore in the southeast, the wind and water damage are
extensive. Best Insurance Company's regional claim office is overwhelmed and cannot keep up
,with the volume of claims. The company's home office temporarily assigns claim representatives
from across the country to the southeast region to assist. Which one of the following is correct
concerning potential ethical or professional dilemmas associated with this situation? correct
answers States often grant temporary licenses to out-of-state claim representatives for
catastrophe claim handling
Identify which one of the following activities is not part of the claims handling process. correct
answers Refer the lawsuit to counsel; Although referring a lawsuit to the insurer's counsel is one
of the first things a claims representative should do when notified of a lawsuit, it is not part of the
claims handling process.
An example of a record-only claim would be correct answers A hospital patient slips on a wet
floor in her room but is not injured.
A representative investigating a third-party claim is very concerned about waiving any rights
under the policy. She decides to send a reservation of rights letter to the third-party claimant.
This action is correct answers Not advisable because a third-party claimant has no obligations
under the policy.
Which one of the following describes a tool that claim representatives commonly use to avoid
waiver and estoppel? correct answers Reservation of rights letter
Dan lives in an old home that always seems to need repair. He has known for months that several
of the boards on his front porch are rotten, but he has not replaced them. He and his family avoid
the porch and use the back door instead. One day the rotten boards collapse under the weight of
the letter carrier who is delivering Dan's mail. The letter carrier suffers a broken leg, a sprained
wrist, and contusions. Comparative negligence is followed in Dan's state, and the ordinary
standard of care for liability based on negligence applies as to mail carriers delivering to
residences. Which one of the following best describes liability in this situation? correct answers
Because a reasonably prudent person would repair the porch, and because Dan's failure to do so
was the proximate cause of the letter carrier's injuries, Dan would be considered negligent and
therefore liable for those injuries in accordance with his degree of fault. His insurer would
provide coverage under the liability portion of Dan's homeowners policy.
Johnson has a PAP through Peaceful River Insurance Company for his 2007 Ford. He also has
coverage with Aim Straight Insurance Company for his 2007 Ford. Both policies have the same
effective dates. Johnson hits a tree and totals his Ford. Which one of the following alternative
dispute resolution methods should the companies use to determine who should pay and how
much? correct answers Arbitration
Mediation is an ADR method used to help resolve disputes without going to court. Which one of
the following statements is true with respect to this form of ADR? correct answers Plaintiff and
defendant may choose to mediate the claim, using a neutral mediator to point out weaknesses in
each argument and help reach a compromise.
, Lanny, a claim representative with Babbling Brook Insurance Company, is ready to settle a
serious bodily injury claim with Freda. He notices that Medicare is listed as payer on her hospital
bill of $75,000. He and Freda have agreed to settle her claim for $255,000. Since Freda has been
enrolled in Medicare for four years, which one of the following entities must approve the
settlement? correct answers Center for Medicare and Medicaid Services
Which one of the following databases should a claim representative review prior to issuing a
claim payment? correct answers State databases for delinquent child support payments
Which one of the following alternative dispute resolution methods enables parties to test the
validity of their positions and continue negotiations? correct answers mini-trial
George settled a claim with a claimant who is 63 years of age. The claimant is not receiving
Medicare benefits at the time of settlement. George feels that he is required to advise the Center
for Medicare and Medicaid Services about the payment. Which one of the following statements
is true in this situation? correct answers George is correct. There is a reasonable expectation that
the claimant will obtain Medicare benefits within 30 months.
Reserve adequacy and accuracy are important for supporting an insurer's continued solvency and
correct answers capacity
The average value method of reserving is useful in setting reserves correct answers When there
are small variations in the loss amounts paid for specific types of claims.
An insurer may be held liable for damages beyond a policy's limits in which one of the
following? correct answers Failing to investigate before denying a claim
The claim manager for Reliable Insurance was reviewing a property claim. The loss records
indicated that the claim representative had made contact with the insured three days after the
loss, but inspected the property within 24 hours. An estimate of the damages was completed and
the claim was paid promptly. Which one of the following claim adjustment actions addresses a
weakness in the duty to investigate from the claim representatives handling of the file? correct
answers Untimely contact with the insured
Many policies allow an insurer to request an injured insured to submit to an in-person
examination. This independent medical examination (IME) is listed as a correct answers Policy
condition.
Industry databases are investigative tools which contain claim information from a variety of
sources. The oldest and largest of these industry databases is correct answers ISO ClaimSearch.
The Internet can facilitate the inspection of a loss thousands of miles from where the claim
representative is located when the claim representative uses the Internet to correct answers
Contact a local representative who can inspect and report on the damage.
what are the two primary goals of the claims dept? correct answers keep insurers promise & help
insurer reach profit goal
What is the insurers promise? correct answers to uphold the contract made on the policy (First or
Third), and to protect the insured from lawsuits in claims that are found wrong
What is the insurers promise in a property insurance policy? correct answers Pay for damages
made by the claimant/policyholder to any property if fits the policy.
What is the insurers promise in liability insurance policy? correct answers pay for damages done
to OTHERS (bodily injuries, property damage or other)
When is the insurer responsible to pay first party claims? correct answers direct report from
insured to insurer.
When is the insurer responsible to pay third party claims? correct answers made against the
policyholder by someone to whom the policyholder may be liable
By ensuring fair claim settlement, claims representatives prevent any unnecessary increase in the
cost of insurance and subsequent reduction in the insurer's correct answers underwriting profit
An insurance contract is designed to be all of the following in the event of a claim, EXCEPT
correct answers A means to provide a profit to the insured
Third Party Administrator (TPA) correct answers An organization that provides administrative
services associated with risk financing and insurance.
Independent Adjuster correct answers An independent claim representative who handles claims
for insurers for a fee.
Producer correct answers term "producer" includes agents, brokers, sales representatives, and
intermediaries who place insurance with insurers
Public Adjuster correct answers An outside organization or person hired by an insured to
represent the insured in a claim in exchange for a fee.
Loss adjustment expense (LAE) correct answers The expense that an insurer incurs to
investigate, defend, and settle claims according to the terms specified in the insurance policy.
Which one of the following involves making a choice between what is lawful and what is
unlawful? correct answers legality
For insurers, ethical and professional conduct can help correct answers retain customers and
attract investors
,Ethics and professionalism are important for insurance professionals because correct answers
Consumer regulations may define the minimum expected ethical and professional standards.
Three ways good faith is established: correct answers By satisfying contractual duties and other
promises
By maintaining insurers' credibility
By complying with legal duty
If the business of insurance is conducted ethically and professionally, society can reap the
benefits of insurance, which include correct answers support for credit
Most states require the licensing of correct answers public adjusters
Some jurisdictions have found certain practices in claim handling to be the unauthorized practice
of law. An typical example is correct answers Providing direction on legal strategies
Ethical and professional conduct of claim representatives can benefit consumers by correct
answers Encouraging fair treatment and prompt payment.
If the business of insurance is conducted ethically and professionally, society can reap the
benefits of insurance, which include correct answers the benefits of insurance include peace of
mind, support for credit, efficient use of resources, and reduction of social burdens.
Ethical and professional conduct of claim representatives can benefit consumers by correct
answers Encouraging fair treatment and prompt payment.
Ethics and professionalism are important for insurance professionals because correct answers
Consumer regulations may define the minimum expected ethical and professional standards.
Information gathered by claims representatives in handling claims correct answers May be
protected by privacy laws.
All of the following represent instances of federal laws having an effect on claim handling,
EXCEPT: correct answers Unfair claims settlement practices acts
Most states require the licensing of correct answers Public adjusters.
Some jurisdictions have found certain practices in claim handling to be the unauthorized practice
of law. An typical example is correct answers Providing direction on legal strategies.
A claim representative who believes in high quality claim practices should correct answers Keep
in mind the perspectives of the claimants and insureds.
When a severe hurricane comes ashore in the southeast, the wind and water damage are
extensive. Best Insurance Company's regional claim office is overwhelmed and cannot keep up
,with the volume of claims. The company's home office temporarily assigns claim representatives
from across the country to the southeast region to assist. Which one of the following is correct
concerning potential ethical or professional dilemmas associated with this situation? correct
answers States often grant temporary licenses to out-of-state claim representatives for
catastrophe claim handling
Identify which one of the following activities is not part of the claims handling process. correct
answers Refer the lawsuit to counsel; Although referring a lawsuit to the insurer's counsel is one
of the first things a claims representative should do when notified of a lawsuit, it is not part of the
claims handling process.
An example of a record-only claim would be correct answers A hospital patient slips on a wet
floor in her room but is not injured.
A representative investigating a third-party claim is very concerned about waiving any rights
under the policy. She decides to send a reservation of rights letter to the third-party claimant.
This action is correct answers Not advisable because a third-party claimant has no obligations
under the policy.
Which one of the following describes a tool that claim representatives commonly use to avoid
waiver and estoppel? correct answers Reservation of rights letter
Dan lives in an old home that always seems to need repair. He has known for months that several
of the boards on his front porch are rotten, but he has not replaced them. He and his family avoid
the porch and use the back door instead. One day the rotten boards collapse under the weight of
the letter carrier who is delivering Dan's mail. The letter carrier suffers a broken leg, a sprained
wrist, and contusions. Comparative negligence is followed in Dan's state, and the ordinary
standard of care for liability based on negligence applies as to mail carriers delivering to
residences. Which one of the following best describes liability in this situation? correct answers
Because a reasonably prudent person would repair the porch, and because Dan's failure to do so
was the proximate cause of the letter carrier's injuries, Dan would be considered negligent and
therefore liable for those injuries in accordance with his degree of fault. His insurer would
provide coverage under the liability portion of Dan's homeowners policy.
Johnson has a PAP through Peaceful River Insurance Company for his 2007 Ford. He also has
coverage with Aim Straight Insurance Company for his 2007 Ford. Both policies have the same
effective dates. Johnson hits a tree and totals his Ford. Which one of the following alternative
dispute resolution methods should the companies use to determine who should pay and how
much? correct answers Arbitration
Mediation is an ADR method used to help resolve disputes without going to court. Which one of
the following statements is true with respect to this form of ADR? correct answers Plaintiff and
defendant may choose to mediate the claim, using a neutral mediator to point out weaknesses in
each argument and help reach a compromise.
, Lanny, a claim representative with Babbling Brook Insurance Company, is ready to settle a
serious bodily injury claim with Freda. He notices that Medicare is listed as payer on her hospital
bill of $75,000. He and Freda have agreed to settle her claim for $255,000. Since Freda has been
enrolled in Medicare for four years, which one of the following entities must approve the
settlement? correct answers Center for Medicare and Medicaid Services
Which one of the following databases should a claim representative review prior to issuing a
claim payment? correct answers State databases for delinquent child support payments
Which one of the following alternative dispute resolution methods enables parties to test the
validity of their positions and continue negotiations? correct answers mini-trial
George settled a claim with a claimant who is 63 years of age. The claimant is not receiving
Medicare benefits at the time of settlement. George feels that he is required to advise the Center
for Medicare and Medicaid Services about the payment. Which one of the following statements
is true in this situation? correct answers George is correct. There is a reasonable expectation that
the claimant will obtain Medicare benefits within 30 months.
Reserve adequacy and accuracy are important for supporting an insurer's continued solvency and
correct answers capacity
The average value method of reserving is useful in setting reserves correct answers When there
are small variations in the loss amounts paid for specific types of claims.
An insurer may be held liable for damages beyond a policy's limits in which one of the
following? correct answers Failing to investigate before denying a claim
The claim manager for Reliable Insurance was reviewing a property claim. The loss records
indicated that the claim representative had made contact with the insured three days after the
loss, but inspected the property within 24 hours. An estimate of the damages was completed and
the claim was paid promptly. Which one of the following claim adjustment actions addresses a
weakness in the duty to investigate from the claim representatives handling of the file? correct
answers Untimely contact with the insured
Many policies allow an insurer to request an injured insured to submit to an in-person
examination. This independent medical examination (IME) is listed as a correct answers Policy
condition.
Industry databases are investigative tools which contain claim information from a variety of
sources. The oldest and largest of these industry databases is correct answers ISO ClaimSearch.
The Internet can facilitate the inspection of a loss thousands of miles from where the claim
representative is located when the claim representative uses the Internet to correct answers
Contact a local representative who can inspect and report on the damage.
