AIC 30
Direct loss
A reduction in the value of property that results directly and often immediately from damage to that property.
Loss adjustment expense
The expense that an insurer incurs to investigate, defend, and settle claims according to the terms specified in the insurance policy.
Telematics
the use of technological devices to transmit data via wireless communication and GPS tracking
First-party claim
A demand by an insured person or organization seeking to recover from its insurer for a loss that its insurance policy may cover.
Expert system method
A method of setting reserves with a software application that estimates losses and loss adjustment expenses. This can provide more consistent reserves than the individual case method can. similar to formula method, the expert method includes more subjective info such as loss location or name of treating physician, when creating the reserve.
Cluster analysis
A model that determines previously unknown groupings of data
General damages
A monetary award to compensate a victim for losses, such as pain and suffering, that do not involve specific measurable expenses.
internet of things (IoT)
A network of objects that transmit data to and from each other without human interaction
Jurisdiction
A particular courts power or authority to decide a lawsuit of a certain type within a certain territory
claimant
A party that makes a claim and that can be either a first-party claimant or a third-party claimant.
Punitive damages
A payment award by a court to punish the defendant for a reckless, malicious, or deceitful act to deter similar conduct; the award need not bear any relation to a party's actual damages.
Direct question
A question that seeks specific information and that can often be answered with a short phrase or a yes or no response
Loss ratio
A ratio that measures losses and loss adjustment expenses against earned premiums and that reflects the percentage of premiums of being consumed by losses.
Nonwaiver agreement
A signed agreement indicating that during the course of investigation, neither the insurer not the insured waives rights under the policy.
Sworn statement
A signed record of events surrounding an event as told by the interviewee that contains language attesting that it is true.
mediation
An alternative dispute resolution (ADR) method by which disputing parties use a neutral outside party to examine the issues and develop a mutually agreeable settlement.
Arbitration
An alternative dispute resolution (ADR) method by which disputing parties use a neutral outside party to examine the issues and develop a settlement, which can be final and binding. Can be used when two policies issued by different insurers cover the same loss- to dispute who should pay the claim and how much.
Contributory negligence
a common-law principal that prevents a person who has been harmed from recovering damages if that persons own negligence contributed in any way to the harm.
concealment
An intentional failure to disclose a material fact.
Average value method
A case reserving method that establishes a predetermined dollar amount of reserve for each claim as it is reported. useful when there are small variations in loss size for a particular type of claim and when claims can be concluded quickly. Average values are based
Coinsurance clause
A clause that requires the insured to carry insurance equal to at least a specified percentage of the insured property's value.
Comparative negligence
A common-law principal that requires both parties to a loss to share the financial burden of the bodily injury or property damage according to their respective degrees at fault.
Third-party claim
A demand against an insured by a person or organization other than the insured or insurer, seeking to recover damages that may be payable to the insureds liability insurance.
Independent Medical Examination (IME)
A direct intervention technique that includes a brief review of the patient's history and treatment and a physical examination of the patient. Insurers use this technique in disputed claims for determining causation, current physical impairment, and the need for present or future treatment.
Blockchain
A distributed digital ledger that facilitates secure transactions without the need for a third party.
Special investigation unit
A division set up to investigate suspicious claims, premium fraud, or application fraud
Answer
A document filed in court by a defendant responding to a plaintiffs complaint and explaining why the plaintiff should not win the case
Summons
A document that directs a sheriff or another court designated officer to notify the defendant named in the lawsuit that a lawsuit has been started and the the defendant has a specified amount of time to answer the complaint.
Misrepresentation
A false statement of a material fact on which a party relies
Sarbanes-Oxley Act of 2002
A federal statutory law governing corporate directors in the areas of investor protection, internal controls, and penalties, both civil and criminal.
special damages
A form of compensatory damages that awards a sum of money for specific, identifiable expenses associated with the injured person's loss, such as medical expenses or lost wages.
Pleading
A formal written statement of the facts and claims of each party to a lawsuit
Indirect loss
A loss that arises as a result of damage to property, other than the direct loss to the party.
Formula method
A method of setting claim reserves using a mathematical formula. May be used to set additional living expense reserve under a homeowners policy if the home is destroyed by fire.
Individual case method
A method of setting reserves based on the claims circumstances and the claims representatives experience in handling similar claims.
Roundtable method
A method of setting reserves by using the consensus of two or more claim personnel who have independently evaluated the claim file. Ideally personnel should not know the reserves that the others have set. This method is time consuming and not appropriate for setting initial reserves. Can be used for prolonged claims.
Compensatory damages
A payment awarded by a court to reimburse a victim for actual harm Includes- Contractual damages, Consequential damages, emotional distress damage
Claims representative
A person responsible for investigating, evaluating, and settling claims.
Appraisal clause
A policy provision that prescribes a method for resolving a disputed claim about the value of property or the amount of property loss.
Deposition
A pretrial discovery tool involving oral examination of a witness under oath to produce a written verbatim record 2 purposes- 1.Allow each party to discover what the other parties witnesses know about the facts of the matter or the opinions of physicians or other expert witnesses 2. Because the testimony is transcribed, it can be used to challenge any conflicting testimony given by the same witness at trial. Such a challenge can discredit the witness, and in come cases, expose the witness to a perjury charge. Attorneys can depose 2 types of witnesses: party witnesses and nonparty witnesses.
Discovery
A pretrial exchange of all relevant information between the plaintiff and the defendant Can narrow the issues of the lawsuit, which may lead to an earlier resolution Common methods of discovery- *requests for production of documents *interrogatories *depositions *Physical or mental examinations *admissions of facts not in dispute
Open-ended question
A question that seeks an answer that explains or elaborates on the circumstances under consideration.
Leading question
A question that seeks or suggests a particular answer
Conflict of interest
A situation that occurs when a decision makers personal interests interfere to the extent that he or she makes decisions that adversely affect customers or employers
Examination under oath (EUO)
A statement given by a person who has sworn to tell the truth before an officer of the court. More formal than recorded statement Notice is issued to insured to appear at office of insurer, attorney, or court reporter.
Hard fraud
Actions that are undertaken deliberately to defraud
Arbitrator
Acts as a judge, weighing the facts of the case and making a decision based on the evidence presented. Benefit- someone other than insurer/claimant decides the case.
Staged accident
An accident deliberately caused by a person who intends to feign injury and collect on the ensuing claim
Mini trial
An alternative dispute resolution method by which a case undergoes an abbreviated version of a trial before a panel or an adviser who poses questions and offers opinions on the outcome of a trial, based on the evidence presented. Main advantage is that claimants and insurers can learn the likely outcome of their cases without having to contend with delays in the legal system.
Summary jury trial
An alternative dispute resolution method by which disputing parties participate in an abbreviated trial, presenting the evidence of a few witnesses to a panel of mock jurors who decide the case. Evidence must be presented in both oral and written format. less costly.
Pro rata contribution
An approach to other insurance by which the insurers contribute to the loss payment in the proportion to which they contribute to the total amount of coverage purchased.
Independent adjuster
An independent claims representative who handles claims for insurers for a fee.
Terminal credibility
An individuals perceived credibility after interpersonal communication in a given situation has occurred.
Derived credibility
An individuals perceived credibility during an interpersonal communication.
Bad faith
An insurers denial of coverage without cause, which can result in extracontractual damages, punitive damages, or both. Black Laws dictionary is most accepted definition.
Reservation of rights letter
An insurers letter that specifies coverage issues and informs the insured that the insurer is handling a claim with the understanding that the insurer may later deny coverage should the facts warrant it. doesnt require signature from insured Can be costly to insurer
Insurable interest
An interest in the subject of an insurance policy that is not unduly remote and that would cause the interested party to suffer financial loss if an insured event occurred.
Third Party Administrator (TPA)
An organization that provides administrative services associated with risk financing and insurance.
Public adjuster
An outside organization or person hired by an insure to represent the insured in a claim in exchange for a fee.
Insurance fraud
Any deliberate deception committed against an insurer or an insurance producer for the purpose of unwarranted financial gain.
producer
Any of several kinds of insurance personnel who place insurance and surety business with insurers and who represent either insurers or insureds, or both
Individual case method
Claim rep should consider these when setting a reserve for bodily injury- Page 3.9 1. Claimant profile 2. Nature and extent of injury 3. Special damages 4. Claimant representation 5. Liability factors 6. Miscellaneous factors
Nonverbal communication
Communication that is not spoken or written, including eye movement, kinesics, appearance, and time and space.
Health Insurance Portability and Accountability Act (HIPAA)
Federal legislation establishing standards for health insurance information exchanges and health coverage protection when jobs are lost or changed.
material fact
In insurance, a fact that would affect the insurer's decision to provide or maintain insurance or to settle a claim.
Methods of setting case reserves
Individual case method Roundtable method Average value method Formula method Expert system method
Nonbinding arbitation
Neither party is forced to accept the arbitrators decision. This method is cost effective.
Mediator
Often a retired judge or an expert in the field. Mediator may be appointed y the court or selected by the parties. Both parties present their cases and the mediator points out the weaknesses in each argument or in the evidence presented, proposes solutions, and helps the participants reach a mutually agreeable settlement.
Reserve
The amount the insurer estimates and sets aside to pay on an existing claim that has not been settled.
Complaint
The allegations made by a plaintiff in a lawsuit
Negligence
The failure to exercise the degree of care that a reasonable person in a similar situation would exercise to avoid harming others. Elements- *Duty owed *Duty breached *Proximate cause *Damages used in bad faith to award compensatory damages.
Breach of contract
The failure, without legal excuse, of a promisor to perform the obligations of a contract. To avoid this, claim rep should conduct an appropriate investigation. The legal remedy when this occurs is damages in amounts up to the contracts terms, or the policy limits.
Statutory law
The formal laws, or statutes, enacted by federal, state, or local legislative bodies
First notice of loss (FNOL)
The initial report notifying the insurer of a claim
Waiver
The intentional relinquishment of a known right.
Venue
The locale in which the lawsuit may be brought
Receiver
The person who chooses from the verbal and nonverbal symbols in the sender's message to interpret the message's meaning.
Sender
The person who initiates the communication process
Subrogation
The process by which an insurer can, after it has paid a loss under the policy. recover the amount paid from any party (other than the insured) who caused the loss or is otherwise legally liable for the loss.
Active listening
The process of listening with mental and physical openness to more clearly determine a message's meaning
Network analysis
The study of the nodes (vertices) and edges (lines) in a network
Ethics
The study of what constitutes good and bad behavior dealing with moral duty and obligation. Making choice between acceptable course of action and a better one.
Message
The words a sender uses in the communications process and their underlying theme
Stairstepping
When a claims rep adjusts a reserve multiple times due to their own lack of knowledge. Page 3.7 in the book. Claim reps should adjust reserves when new info or changes in the claim happens.
Estoppel
a legal principal that prohibits a party from asserting a claim or right that is inconsistent with that party's past statement or conduct on which another party has detrimentally relied.
Proof of loss
a statement of facts about a loss for which the insured is making a claim. Mailed to insured Insured signs that it is truthful and mails back to insurer
unsupervised learning
a type of model creation, derived from the field of machine learning, that does not have a defined target variable.
K-means
an algorithm in which "K" indicates the number of clusters and "means" represents the clusters' centroids
Soft fraud
fraud that occurs when a legitimate claim is exaggerated.
Alternative dispute resolution
procedures to help settle disputes without litigation, including arbitration, mediation, and negotiation.
Data mining
the analysis of large amounts of data to find new relationships and patterns that will assist in developing business solutions.
Centroid
the center of a cluster
Initial credibility
the degree of credibility an individual had before interpersonal communication begins
Legal Liability
the legally enforceable obligation of a person or organization to pay a sum of money (called damages) to another person or organization
Good faith
the manner of handling claims that requires an insurer to give consideration to the insureds interests that is at least equal to the consideration it gives its own interests.
medium
the means by which a message is transmitted from sender to receiver
Binding arbitration
the parties must accept the arbitrators decision.
decoding
the process by which a receiver interprets a senders message
Encoding
the process of translating a message into words
Social network analysis
the study of the connections and relationships amoung people in a network