AIC 30

What are the three qualities that show recorded statements to be effective?

Coherence, completeness, and objectivity

An employee of an insurance company who performs some or all of the insurer's claim-handling activities is called

a staff claim representative

How does legal liability differ from criminal liability/responsibility?

Criminal liability arises from laws that apply to wrongful acts that society deems harmful to the public welfare

If the insured will remain totally disabled as a result of a loss, a(n) _______ may be necessary.

IME

What is a factor that can be used to assess whether an insurer's request for information is reasonable?

Is the request specific and not too vague?

The main reason an insurer would pay claims using a "draft" rather than a check is that

a draft gives the insurer opportunity to verify that the payment is proper when the draft is presented to the bank

An insurance company employee who investigates the scene of a loss; meets with insureds, claimant, lawyers, and others; and inspects damage is most accurately called

a field claim representative

What can a claim rep request from an auto body shop for reference and advice on how to safely handle contact situations for any hazardous material that could be present in an auto body shop?

a material safety data sheet

One of the most powerful means experts often use to explain how an event occurred is

a video recreating the event and showing the damages or injuries

Which one of the following ethical dilemmas represents conflicts of interest? a) Claims in which the claims rep has the opportunity to purchase salvage b) Claims where the claims rep has rejected gifts, favors, gratuities, or other incentives from vendors c) Claims in which the insured retains a public adjuster d) Claims involving different policies and different deductibles

a) Claims in which the claims rep has the opportunity to purchase salvage

Which one of the following describes the behavior and qualities necessary to properly implement an ethical decision a) professionalism b) empathy c) conscientiousness d) propriety

a) professionalism

Which one of the following statements is true concerning the six activities in the claim handling process? a) they are not always undertaken sequentially b) activities cannot be repeated for a particular claim c) only one activity should be performed at a time d) not all activities are performed in every claim

a) they are not always undertaken sequentially

All of the following represent instances of federal laws having an effect on claim handling, EXCEPT a) unfair claims settlement practices acts b) certain social security provisions c) provisions regarding court-ordered child support d) laws regarding recording of conversations

a) unfair claims settlement practices acts

A mini-trial is a cost-effective alternative to a jury trial because it allows lawyers to present a(n) ____________ to a(n) ____________ who give ___________ on the ____________________________ of a case.

abbreviated version of a trial, panel, feedback, strengths and weaknesses

Insurers and claim representatives are bound by the insurance contract to act in good faith. They 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

act in good faith

When spoliation of evidence is found by a court and the jury is instructed to find that had the evidence been available it would have been against the interests of the spoliator, the court is allowing for

an adverse inference

Policy info may be contained in the paper policies and underwriting files, or in

an online database

One benefit of ethical and professional conduct of claim reps for insurers is that such conduct will typically

attract investors and retain customers

An insurance contract is designed to be all of the following in the event of a claim, EXCEPT a) a financial mechanism that can benefit policyholders and other claimants b) a means to provide a profit to the insured c) a means to afford peace of mind to the insured d) a way to restore a claimant to pre-loss condition

b) a means to provide a profit to the insured

Juanita is the senior claim officer for Worthy Insurance Company, which uses the claim audit as a performance measure for its claim operations. Claim audits usually evaluate both quantitative and qualitative factors. Which one of the following facts is qualitative for Juanita and her staff? a) percentage of recovery from subrogation b) accurate evaluation of insured's liability c) average claim settlement value by claim type d) accuracy and completeness of data entry

b) accurate evaluation of insured's liability

All of the following are correct with respect to the benefits of ethical and professional conduct, EXCEPT a) society can reap the benefits of insurance only if the business of insurance is conducted ethically and professionally b) ethical and professional conduct by claim reps benefits consumers by helping to keep insurance premiums as low as possible c) for insurers, ethical and professional conduct can help retain customers and attract investors d) for the claim rep, ethical an professional conduct can be the foundation of a successful, satisfying career

b) ethical and professional conduct by claim reps benefits consumers by helping to keep insurance premiums as low as possible

There are six valid defenses for spoliation of evidence claims, one of which is: a) in workers compensation, spoliation is not precluded by "exclusive remedy" b) litigation was not contemplated when the evidence was destroyed c) the evidence is relevant to the case d) the evidence cannot be reconstructed

b) litigation was not contemplated when the evidence was destroyed

Which of the following pieces of information is most important for a claim rep to obtain upon first contact with a liability claimant? a) claimant's medical history b) nature and extent of the injury c) claimant's accident history d) claimant's sources of additional income

b) nature and extent of the injury

The claim rep received a letter from an insured claiming damage to his property under a homeowners policy. Which one of the following statements about the letter is true? a) this is not an actual loss notice because the producer must submit an ACORD form by mail, email or fax b) this is an actual loss notice because losses can be reported by mail c) this is not an actual loss notice because an actual loss notice must follow a standardized format and be submitted electronically d) this can be an actual loss notice only if it contains all of the information concerning the loss and its causes

b) this is an actual loss notice because losses can be reported by mail

Which of the following describes a factor that can affect an insurance professional's competency? a) in a dynamic work environment, insurance professionals do not require training to maintain their level of knowledge b) research shows that performance-based rewards and promotions provide no incentive for improving competency c) changes in the claims environment including consumer, social, and political forces influence insurance coverage, legal liability, damages, and technology d) research indicates that the costs incurred for staff training do not offset the reduction in loss costs and increased customer satisfaction

c) changes in the claims environment including consumer, social, and political forces influence insurance coverage, legal liability, damages, and technology

If a claim for spoliation of evidence is declared valid in a court proceeding, which of the following best identifies the most severe sanction that could apply? a) exclusion of evidence b) adverse inference instruction c) dismissal of a case d) monetary fine

c) dismissal of a case

Which one of the following statements regarding licensing is correct? a) licensing laws regarding who is required to be licensed are consistent among all states b) in most states, agents, customer service reps, adjusters, and staff claim reps need not be licensed if their sole job function is to handle phone calles c) licensure-related ethical dilemmas can arise when a supervisor asks a claims rep to assume responsibilities for which the individual is not licensed d) licensing laws generally require only that insurance professionals pass an examination

c) licensure-related ethical dilemmas can arise when a supervisor asks a claims rep to assume responsibilities for which the individual is not licensed

Which of the following can assist in confirming information on the automobile loss notice? a) agency personnel notes b) prior loss reports c) medical reports d) claims rep's report

c) medical reports

Which one of the following alternative dispute resolution methods enables parties to test the validity of their positions and continue negotiations? a) mediation b) arbitration c) mini-trial d) appraisal provision

c) mini-trial

Anyone who takes photos at an accident scene should be prepared to testify as to

camera settings

Underrated reserves can affect an insurer by

causing errors in ratemaking, eventually affecting an insurer's ability to write business competitively and ultimately affecting its solvency

Ethics and professionalism are of utmost importance for insurers and claim representatives because

claim representatives' behavior can affect public trust in and credibility or insurers

The individual case method is one of ______________________ based on the _________________________ and __________________________ in ______________________.

claim's circumstances, claim rep's experience, handling similar claims

Anyone who submits a claim to an insurer may be called a

claimant

What is it that prepares claim reps for most potential reactions and helps them maintain control of the conversation when dealing with emotional or irate customers?

common sense

What creates legal duties for insurers?

consumer regulations

In which one of the following ways can a claim representative's unethical or unprofessional conduct affect the insurer adversely? a) unethical or unprofessional behavior results in an abuse of consumer privacy issues that exposes the insurer t public scrutiny and potential litigation b) unethical behavior on the part of the claim rep generally leads to a capital or surplus drain having an adverse financial impact for the insurer c) a single excessive overpayment can lead to an expectation of future excess claim payments, thereby wasting insurer resources d) an incident that violates the public's expectations of ethical conduct may receive wide publicity and can damage the insurer's credibility

d) an incident that violates the public's expectations of ethical conduct may receive wide publicity and can damage the insurer's credibility

All of the following correctly descriptive reasons for the use of independent, EXCEPT a) insurers pay use independent adjusters when special skills and expertise are needed, for example to investigate aircraft accidents b) in the case of a catastrophic loss such as a hurricane, an insurer may not have sufficient staff to manage the large number of claims, and may use independent adjusters c) in some areas it is not economically feasible to set up claim offices, and insurers may contract with independent adjusters to handle claims in these remote areas d) the insured may retain an independent adjuster if settlement negotiations with the insurer are not progressing satisfactorily

d) the insured may retain an independent adjuster if settlement negotiations with the insurer are not progressing satisfactorily

Prior to issuing a claim payment, claims reps should review _______________ databases for

delinquent child support payments

When speaking with an insured, claim reps must realize that many insureds

do not understand the details of their insurance coverage and require explanations of coverages, limitation, and possible exclusions

Loss event videos are usually not edited because

editing would detract from the video's credibility

Workers compensation statutes impose strict liability on ______________ to pay ________________ to ______________.

employers, specified benefits, injured workers

Ethical and professional conduct of claim reps can benefit consumers by

encouraging fair treatment and prompt payment

An additional technique if safety is an issue in a crime-prone area besides leaving the area immediately is

ensuring that the vehicle to be used is in good working order and has sufficient fuel

One way for claim managers to help maintain an insurer's undewriting profit is to

establish appropriate spending policies

_________________________ arise when insurance professionals acquire confidential information that, if disclosed, could benefit another

ethical dilemmas

What forms the foundation of good-faith claim handling on the part of the claim rep?

ethics and professionalism

A claimant profile is useful wen setting a bodily injury reserve in a liability claim, using the individual case method of reserving because

factors such as age, gender, occupation and level of education may determine the amount of economic loss

An insurer may be held liable for damages beyond a policy's limits by

failing to investigate before denying a claim

Spoliation is

failure to preserve property for another's use in litigation

Damages that courts award in order to compensate claimants for such things as pain and suffering that do not involve specific measurable expenses are referred to as

general damages

In today's business environment, being ethical is often equated with merely obeying the law; however, ethical behavior

goes beyond merely obeying the law

Under certain circumstances, an insurer ma authorize the adjustment of claims by producers. One of the benefits of providing producers with draft authority is that

if an agent can issue a draft directly to the insured, it reduces the time an insured waits for payment

Claim reps must be aware of the factors that can adversely affect their claim-handling competency, which include

imperfections in human memory that cause normal loss of knowledge over time

The value of an insurance contract in the event of a claim is

includes peace of mind

Jerry is an experienced claim adjuster who handles claims for jackson Insurance company during hurricane season when Jackson's staff adjusters need assistance. Jerry is a(n)

independent adjuster

Most insurers give some producers the authority to pay claims up to a certain amount. In this role, producers function much like a(n)

inside claim representative

To avoid conflict of interest when an insurer provides multiple coverages for one insured triggered by the same occurrence or when the insurer covers multiple insureds involved in the same claim

insurers may require the claim to be bifurcated with a different claim representative handling each part independently

A basic identification of the policy should occur before the claim

investigation occurs

What is a business rule engine?

investigative tool used to analyze claims for fraud indicators or coverage issues and then refer the claim to the appropriate party for a response

A claim rep who believes in high quality claim practices should

keep in mind the perspectives of the claimants and insureds

What should be noted on a diagram of an accident scene?

location

Successful insurers follow a systematic approach to handling claims. The first step in the claims process is the

loss notice and acknowledgment and assignment

Incurred losses (including loss adjustment expenses) divided by earned premium is the formula for

loss ratio

The best description of a third-party claim is a claim

made against the policyholder by someone to whom the policyholder may be liable

The best description of a first-party claim is a claim

made by the policyholder against the insurer

To prevent potential conflict of interest in situations when a stolen item is recovered and is being sold as salvage

most insurers have specific guidelines that prohibit claim reps from purchasing salvage

A rep 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

not advisable because a third-party claimant has no obligations under the policy

Compensatory damages normally covered by a liability policy include

pain and suffering and out-of-pocket expenses claimed up to the policy limit

For serious or complex claims which type of photo should be used?

photos taken with film

An IME is listed as a _____________.

policy condition

Information gathered by claims reps in handling claims may be protected by

privacy laws

People who handle claims may be staff claim representatives, independent adjusters, employees of third-party administrators, or

producers who sell policies to insureds

Claim customer service includes

prompt and courteous contact, and prompt payment

If a claim is complex or if settlement negotiations are not progressing with the insurer, the insured may hire a(n)

public adjuster

Most states require the licensing of

public adjusters

For liability claims, damages for which the insured may be found liable include compensatory and

punitive

The Internet allows online reporting and

real-time loss notification

A hospital patient slips on a wet floor in her room but is not injured is an example of a _______________________ claim.

record-only

What can provide guidance to claim reps regarding ethical and professional claim handling conduct?

regulatory requirements and insurer's guidelines

Photographs, maps, diagrams, and video are referred to as __________ documents.

representational

What is a tool that claim reps commonly use to avoid waiver and estoppel?

reservation of rights letter

With the aid of an interpreter, a written statement is taken from a claimant who neither speaks, reads, nor writes English. At the end of the interview, the interpreter should be required to

sign a separate statement noting that the interpreter understood and translated from English into the claimant's language

Reserve adequacy are important for supporting an insurer's continued __________ and ___________.

solvency, capacity

For a claim rep, ethical and professional dilemmas arise because

state laws relating to licensing inside claim reps can be ambiguous

The expert system method uses ____________________ or the name of the _____________________________ in creating a reserve.

subjective information, treating physician

If the business of insurance is conducted ethically and professionally, society can reap the benefits of insurance, which include

support for credit

Olivia is taking the statement of a claimant who does not read English. Olivia decides that her best alternative is to

take a recorded statement so that the claimant can verbally affirm that the info is accurate

A claim rep acknowledging receipt of a claim should advise

that the claim was received and provide the name of the claim rep, his/her telephone number and the claim number

Information gained during the investigation of a claim helps the claims rep to determine

the cause of loss, liability for the loss, and the amount of loss

Medical documentation helps determine

the costs of treatment and the amount of pain and suffering that resulted from the injury or accident

Mary refuses to give testimony to assist her insurer in a subrogation claim against the liable third party involved in her auto accident. What may the insurer do?

the insurer may pursue Mary to pay the amount that the insurer could have collected from the liable third party

Ethics is particularly important for insurance professionals who face numerous ethical dilemmas trying to balance

the interests of the insureds, who are their customers, and the interests of insurers, who are their employers

In addition to the promises made in the insurance policy, claim reps make promises to insureds, claimants, vendors and

their employers

The average value method of reserving is useful in setting reserves when

there are small variations in the loss amounts paid for specific types of claims

Anyone who is not a party to an insurance contract who submits a claim against an insured is known as the

third party

People who handle claims fall into a number of categories Those who handle claims, keep claim records, and perform statistical analysis on behalf of self-insureds are called

third-party administrators

Ethics involves making a choice between

what is an acceptable course of action and what is a better one

A claim rep should change a reserve

when new info is received that warrants a change in the overall cost of the claim

When does contractual liability arise?

when someone's rights under a contract's terms are violated