CAWC EXAM | 150 QUESTIONS | WITH
ACTUAL SOLUTIONS!!
What are the different types of Workers Compensation Products? Answer -
Guaranteed Cost
Small Deductible Plan
Large Deductible Plan
Retroactive Rating Plan
Guaranteed Cost Answer - Premium doesn't vary that much during a policy
period even if there are considerable/limited losses. Carrier Assumes all the
risk
Dividend Plans Answer - Goes along with Guaranteed Cost; allows insured
opportunity to receive money back after policy period has ended
Small Deductible Plan Answer - Policy holder shares cost of claims of the
injured worker
Retrospective Rating Plan Answer - 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 Answer - Insured assumes more risk by paying
substantial portions (or all) of each claim. Lower initial premium. Pays for losses
as they occur
,Monopolistic states Answer - North Dakota, Ohio, Washington, Wyoming;
Workers comp regulated and controlled by the state; no private insurance
carriers
State Funds Answer - 25 States offer workers compensation
Competitive State Funds Answer - 21 states have state offered workers
compensation insurance but private insurance carriers are permitted to sell WC
insurance
Self Insurance Answer - Employer retains the risk of workers compensation
losses if they have the financial means to do so;
Excess Insurance Answer - Typically purchased by employer who self-insures;
cover losses over a specified amount, provides additional coverage for $$$
claims
Assigned Risk Answer - provide coverage for companies that cannot obtain
insurance due to very high risk and poor loss history
Employer's Liability/ Stop-gap Coverage Answer - 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?
Answer - Hard and Soft Markets
Hard Market Answer - 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 Answer - 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 Answer - +$80 billion
Employee Fraud Answer - Claims a bogus injury to get paid time off. Tells
employer it happened on job when it happened on personal time
Insurance Fraud Answer - Intentional misrepresentation of facts and
circumstances to an insurance company to illegally obtain funds
Employer Fraud Answer - 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 Answer - 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? Answer - It is a
type of employer fraud and premium fraud
What are the 2 types of Agent Fraud? Answer - Delaying the Payment, Keeping
the Premium
ACTUAL SOLUTIONS!!
What are the different types of Workers Compensation Products? Answer -
Guaranteed Cost
Small Deductible Plan
Large Deductible Plan
Retroactive Rating Plan
Guaranteed Cost Answer - Premium doesn't vary that much during a policy
period even if there are considerable/limited losses. Carrier Assumes all the
risk
Dividend Plans Answer - Goes along with Guaranteed Cost; allows insured
opportunity to receive money back after policy period has ended
Small Deductible Plan Answer - Policy holder shares cost of claims of the
injured worker
Retrospective Rating Plan Answer - 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 Answer - Insured assumes more risk by paying
substantial portions (or all) of each claim. Lower initial premium. Pays for losses
as they occur
,Monopolistic states Answer - North Dakota, Ohio, Washington, Wyoming;
Workers comp regulated and controlled by the state; no private insurance
carriers
State Funds Answer - 25 States offer workers compensation
Competitive State Funds Answer - 21 states have state offered workers
compensation insurance but private insurance carriers are permitted to sell WC
insurance
Self Insurance Answer - Employer retains the risk of workers compensation
losses if they have the financial means to do so;
Excess Insurance Answer - Typically purchased by employer who self-insures;
cover losses over a specified amount, provides additional coverage for $$$
claims
Assigned Risk Answer - provide coverage for companies that cannot obtain
insurance due to very high risk and poor loss history
Employer's Liability/ Stop-gap Coverage Answer - 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?
Answer - Hard and Soft Markets
Hard Market Answer - 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 Answer - 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 Answer - +$80 billion
Employee Fraud Answer - Claims a bogus injury to get paid time off. Tells
employer it happened on job when it happened on personal time
Insurance Fraud Answer - Intentional misrepresentation of facts and
circumstances to an insurance company to illegally obtain funds
Employer Fraud Answer - 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 Answer - 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? Answer - It is a
type of employer fraud and premium fraud
What are the 2 types of Agent Fraud? Answer - Delaying the Payment, Keeping
the Premium
