CAWC Exam - Practice Questions & Verified Answers
What are the different types of Workers Compensation Guaranteed Cost
Products? Small Deductible Plan
Large Deductible Plan
Retroactive Rating Plan
Guaranteed Cost Premium doesn't vary that much during a policy period even if there are
considerable/limited losses. Carrier Assumes all the risk
Dividend Plans Goes along with Guaranteed Cost; allows insured opportunity to receive money
back after policy period has ended
Small Deductible Plan Policy holder shares cost of claims of the injured worker
Retrospective Rating Plan 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 Insured assumes more risk by paying substantial portions (or all) of each claim.
Lower initial premium. Pays for losses as they occur
Monopolistic states North Dakota, Ohio, Washington, Wyoming; Workers comp regulated and controlled
by the state; no private insurance carriers
State Funds 25 States offer workers compensation
Competitive State Funds 21 states have state offered workers compensation insurance but private insurance
carriers are permitted to sell WC insurance
Self Insurance Employer retains the risk of workers compensation losses if they have the financial
means to do so;
Excess Insurance Typically purchased by employer who self-insures; cover losses over a specified
amount, provides additional coverage for $$$ claims
Assigned Risk provide coverage for companies that cannot obtain insurance due to very high risk
and poor loss history
Employer's Liability/ Stop-gap Coverage Coverage for employer against law liability for injured workers whose injuries are
not covered by workers comp laws
What factors / economic conditions affect workers Hard and Soft Markets
compensation premium?
Hard Market 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
Stuvia 2026-2027
, CAWC Exam - Practice Questions & Verified Answers
Soft Market 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 +$80 billion
cost of insurance fraud per year
Employee Fraud Claims a bogus injury to get paid time off. Tells employer it happened on job when it
happened on personal time
Insurance Fraud Intentional misrepresentation of facts and circumstances to an insurance company
to illegally obtain funds
Employer Fraud 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 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 It is a type of employer fraud and premium fraud
fraud?
What are the 2 types of Agent Fraud? Delaying the Payment, Keeping the Premium
Delaying the Payment 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 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 Moralist, Conformist, Realist, Critic
why Americans do or do not tolerate insurance fraud?
Moralists Tolerate Insurance Fraud the least, No excuse for this behavior, advocate
punishment of perpetrators severely. Represent 30.7%
Conformists Tolerate insurance fraud to a fair extent, believe that many people do it, making it
more acceptable. Support moderate punishment, represent 26.4%
Realists Tolerate insurance fraud to a low extent, believe some behaviors are justified
depending on circumstance, don't advocate strong punishment, represent 21.6%
Critics Tolerate insurance fraud the most, blame industry for peoples behavior; insurers
don't conduct business cleanly; no punishment for perpetrators, 21.2%
Stuvia 2026-2027
What are the different types of Workers Compensation Guaranteed Cost
Products? Small Deductible Plan
Large Deductible Plan
Retroactive Rating Plan
Guaranteed Cost Premium doesn't vary that much during a policy period even if there are
considerable/limited losses. Carrier Assumes all the risk
Dividend Plans Goes along with Guaranteed Cost; allows insured opportunity to receive money
back after policy period has ended
Small Deductible Plan Policy holder shares cost of claims of the injured worker
Retrospective Rating Plan 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 Insured assumes more risk by paying substantial portions (or all) of each claim.
Lower initial premium. Pays for losses as they occur
Monopolistic states North Dakota, Ohio, Washington, Wyoming; Workers comp regulated and controlled
by the state; no private insurance carriers
State Funds 25 States offer workers compensation
Competitive State Funds 21 states have state offered workers compensation insurance but private insurance
carriers are permitted to sell WC insurance
Self Insurance Employer retains the risk of workers compensation losses if they have the financial
means to do so;
Excess Insurance Typically purchased by employer who self-insures; cover losses over a specified
amount, provides additional coverage for $$$ claims
Assigned Risk provide coverage for companies that cannot obtain insurance due to very high risk
and poor loss history
Employer's Liability/ Stop-gap Coverage Coverage for employer against law liability for injured workers whose injuries are
not covered by workers comp laws
What factors / economic conditions affect workers Hard and Soft Markets
compensation premium?
Hard Market 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
Stuvia 2026-2027
, CAWC Exam - Practice Questions & Verified Answers
Soft Market 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 +$80 billion
cost of insurance fraud per year
Employee Fraud Claims a bogus injury to get paid time off. Tells employer it happened on job when it
happened on personal time
Insurance Fraud Intentional misrepresentation of facts and circumstances to an insurance company
to illegally obtain funds
Employer Fraud 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 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 It is a type of employer fraud and premium fraud
fraud?
What are the 2 types of Agent Fraud? Delaying the Payment, Keeping the Premium
Delaying the Payment 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 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 Moralist, Conformist, Realist, Critic
why Americans do or do not tolerate insurance fraud?
Moralists Tolerate Insurance Fraud the least, No excuse for this behavior, advocate
punishment of perpetrators severely. Represent 30.7%
Conformists Tolerate insurance fraud to a fair extent, believe that many people do it, making it
more acceptable. Support moderate punishment, represent 26.4%
Realists Tolerate insurance fraud to a low extent, believe some behaviors are justified
depending on circumstance, don't advocate strong punishment, represent 21.6%
Critics Tolerate insurance fraud the most, blame industry for peoples behavior; insurers
don't conduct business cleanly; no punishment for perpetrators, 21.2%
Stuvia 2026-2027
