CAWC Exam – Certified Authority of Workers Compensation – Study Guide and Exam Review
Material
What are the different types of Workers Compensation Products? - ANS ✔✔Guaranteed Cost
Small Deductible Plan
Large Deductible Plan
Retroactive Rating Plan
Guaranteed Cost - ANS ✔✔Premium doesn't vary that much during a policy period even if there
are considerable/limited losses. Carrier Assumes all the risk
Dividend Plans - ANS ✔✔Goes along with Guaranteed Cost; allows insured opportunity to
receive money back after policy period has ended
Small Deductible Plan - ANS ✔✔Policy holder shares cost of claims of the injured worker
Retrospective Rating Plan - ANS ✔✔Premium calculated after the policy period has ended;
Takes into consideration all losses that occurred. Large loss > more premium. Small loss > less
premium. "loss sensitive"- amount of losses affect premium
Large Deductible Plan - ANS ✔✔Insured assumes more risk by paying substantial portions (or
all) of each claim. Lower initial premium. Pays for losses as they occur
Monopolistic states - ANS ✔✔North Dakota, Ohio, Washington, Wyoming; Workers comp
regulated and controlled by the state; no private insurance carriers
State Funds - ANS ✔✔25 States offer workers compensation
,Competitive State Funds - ANS ✔✔21 states have state offered workers compensation insurance
but private insurance carriers are permitted to sell WC insurance
Self Insurance - ANS ✔✔Employer retains the risk of workers compensation losses if they have
the financial means to do so;
Excess Insurance - ANS ✔✔Typically purchased by employer who self-insures; cover losses over
a specified amount, provides additional coverage for $$$ claims
Assigned Risk - ANS ✔✔provide coverage for companies that cannot obtain insurance due to
very high risk and poor loss history
Employer's Liability/ Stop-gap Coverage - ANS ✔✔Coverage for employer against law liability for
injured workers whose injuries are not covered by workers comp laws
What factors / economic conditions affect workers compensation premium? - ANS ✔✔Hard and
Soft Markets
Hard Market - ANS ✔✔Rates are higher, not a lot of negotiation with employers when
buying/renewing policies, Carrier has greater leverage. Stricter Underwriting practices. Shorter
duration lasting 3-5 years
Soft Market - ANS ✔✔Rates are lower, Employers have greater leverage to negotiate premiums,
"not as tough" underwriting practices, higher policy limit, longer duration lasting 6-8 years
CAIF estimated _______________ to be estimated total cost of insurance fraud per year - ANS
✔✔+$80 billion
Employee Fraud - ANS ✔✔Claims a bogus injury to get paid time off. Tells employer it happened
on job when it happened on personal time
, Insurance Fraud - ANS ✔✔Intentional misrepresentation of facts and circumstances to an
insurance company to illegally obtain funds
Employer Fraud - ANS ✔✔Employer lowers the amount of the company payroll to lower
premium payments, employer says employees are independent contractors,Employer
misrepresents employee duties/ risk to get lower premiums
Premium Fraud - ANS ✔✔Lying about amount of the payroll, misrepresented job codes, not
carrying the required workers comp insurance, experience mod evasion
How does Experience Mod Evasion factor into insurance fraud? - ANS ✔✔It is a type of
employer fraud and premium fraud
What are the 2 types of Agent Fraud? - ANS ✔✔Delaying the Payment, Keeping the Premium
Delaying the Payment - ANS ✔✔Agent doesn't immediately send client's payment to insurance
carrier, puts money in an interest-bearing account, collects interest on money, sends original
premium minus interest to insurance carrier.
Keeping the Premium - ANS ✔✔Agent doesn't send premium to carrier, and keeps it instead;
client is not covered, and agent has committed theft
What are the 4 demographic groups in the CAIF study for why Americans do or do not tolerate
insurance fraud? - ANS ✔✔Moralist, Conformist, Realist, Critic
Moralists - ANS ✔✔Tolerate Insurance Fraud the least, No excuse for this behavior, advocate
punishment of perpetrators severely. Represent 30.7%
Material
What are the different types of Workers Compensation Products? - ANS ✔✔Guaranteed Cost
Small Deductible Plan
Large Deductible Plan
Retroactive Rating Plan
Guaranteed Cost - ANS ✔✔Premium doesn't vary that much during a policy period even if there
are considerable/limited losses. Carrier Assumes all the risk
Dividend Plans - ANS ✔✔Goes along with Guaranteed Cost; allows insured opportunity to
receive money back after policy period has ended
Small Deductible Plan - ANS ✔✔Policy holder shares cost of claims of the injured worker
Retrospective Rating Plan - ANS ✔✔Premium calculated after the policy period has ended;
Takes into consideration all losses that occurred. Large loss > more premium. Small loss > less
premium. "loss sensitive"- amount of losses affect premium
Large Deductible Plan - ANS ✔✔Insured assumes more risk by paying substantial portions (or
all) of each claim. Lower initial premium. Pays for losses as they occur
Monopolistic states - ANS ✔✔North Dakota, Ohio, Washington, Wyoming; Workers comp
regulated and controlled by the state; no private insurance carriers
State Funds - ANS ✔✔25 States offer workers compensation
,Competitive State Funds - ANS ✔✔21 states have state offered workers compensation insurance
but private insurance carriers are permitted to sell WC insurance
Self Insurance - ANS ✔✔Employer retains the risk of workers compensation losses if they have
the financial means to do so;
Excess Insurance - ANS ✔✔Typically purchased by employer who self-insures; cover losses over
a specified amount, provides additional coverage for $$$ claims
Assigned Risk - ANS ✔✔provide coverage for companies that cannot obtain insurance due to
very high risk and poor loss history
Employer's Liability/ Stop-gap Coverage - ANS ✔✔Coverage for employer against law liability for
injured workers whose injuries are not covered by workers comp laws
What factors / economic conditions affect workers compensation premium? - ANS ✔✔Hard and
Soft Markets
Hard Market - ANS ✔✔Rates are higher, not a lot of negotiation with employers when
buying/renewing policies, Carrier has greater leverage. Stricter Underwriting practices. Shorter
duration lasting 3-5 years
Soft Market - ANS ✔✔Rates are lower, Employers have greater leverage to negotiate premiums,
"not as tough" underwriting practices, higher policy limit, longer duration lasting 6-8 years
CAIF estimated _______________ to be estimated total cost of insurance fraud per year - ANS
✔✔+$80 billion
Employee Fraud - ANS ✔✔Claims a bogus injury to get paid time off. Tells employer it happened
on job when it happened on personal time
, Insurance Fraud - ANS ✔✔Intentional misrepresentation of facts and circumstances to an
insurance company to illegally obtain funds
Employer Fraud - ANS ✔✔Employer lowers the amount of the company payroll to lower
premium payments, employer says employees are independent contractors,Employer
misrepresents employee duties/ risk to get lower premiums
Premium Fraud - ANS ✔✔Lying about amount of the payroll, misrepresented job codes, not
carrying the required workers comp insurance, experience mod evasion
How does Experience Mod Evasion factor into insurance fraud? - ANS ✔✔It is a type of
employer fraud and premium fraud
What are the 2 types of Agent Fraud? - ANS ✔✔Delaying the Payment, Keeping the Premium
Delaying the Payment - ANS ✔✔Agent doesn't immediately send client's payment to insurance
carrier, puts money in an interest-bearing account, collects interest on money, sends original
premium minus interest to insurance carrier.
Keeping the Premium - ANS ✔✔Agent doesn't send premium to carrier, and keeps it instead;
client is not covered, and agent has committed theft
What are the 4 demographic groups in the CAIF study for why Americans do or do not tolerate
insurance fraud? - ANS ✔✔Moralist, Conformist, Realist, Critic
Moralists - ANS ✔✔Tolerate Insurance Fraud the least, No excuse for this behavior, advocate
punishment of perpetrators severely. Represent 30.7%
