AIC 300 EXAMINATION QUESTIONS AND 100%
VERIFIED ANSWERS
An insurer has received a claim related to an accident involving a hoverboard, and an investigation is
needed to process the claim. However, the company doesn't have any claims representatives who are
knowledgeable about handling hoverboard claims. What type of claims professional should the company
hire to help with this investigation? - . The insurer should hire an independent adjuster to help
with its hoverboard claim investigation. Insurers use independent adjusters when their staff claims
representatives are too busy to meet customer needs or when specialized skills are required.
Natalie is a claims representative attempting to settle a complex claim for an insured. Unfortunately, the
insured is dissatisfied with the way settlement negotiations are progressing. Whom might the insured
hire to make sure that his interests are protected? - . The insured might hire a public adjuster. A
public adjuster is an outside organization or person who represents the insured in a claim.
. Leila was recently hired as a claims representative for an insurer. How will Leila help underwriters, and
how will underwriters rely on Leila? - Claims personnel, such as Leila, help underwriters by
ensuring that claims are paid fairly and according to their respective policy. Conversely, the Claims
Department relies on underwriters for thorough, accurate data about the circumstances under which
coverage was written
. As a claims representative, who might Geoffrey collaborate with in addition to other employees of the
insurer? - During the claims investigation, Geoffrey might collaborate with an expert to evaluate
the cause or value of a loss, investigate the possibility of fraud by an insured or a third-party claimant, or
provide legal advice.
What sets the tone for the claims adjustment process? - The claims rep's initial contact with the
insured sets the tone for the adjustment process. In the immediate aftermath of a loss, an insured is
often shaken or upset, and possibly injured—and still needs to file a claim. It falls on claims professionals
to be sensitive to the insured's vulnerable and emotional state, express empathy, and work hard to fulfill
the promises made in the insurance policy.
. When do claims reps have the greatest opportunity to positively influence others? - One of the
times when claims reps have the greatest opportunity to positively influence others is during
catastrophes, when their help is needed most
. What are a loss ratio and a loss adjustment expense (LAE)? - . A loss ratio is a ratio that measures
losses and loss adjustment expenses against earned premiums and that reflects the percentage of
premiums being consumed by losses. LAE is the expense that an insurer incurs to investigate, defend,
and settle claims according to the terms specified in the insurance policy
An insurer's management team is evaluating the organization's financial well being and wants to
determine whether the Claims Department is functioning properly, whether the Underwriting
Department is selecting appropriate loss exposures, and whether the Actuarial Department is pricing the
insurance products correctly. What is the profitability measure that can help management make these
,determinations? - . The loss ratio can help the management team make these determinations. The
loss ratio compares an insurer's losses and LAE to its collected premiums and reveals the percentage of
premiums being consumed by losses
What is the first activity in the claims handling process? - The first activity in the claims handling
process is acknowledging receipt of the claim, whether filed online, via a phone call, or through a mobile
app, and assigning it to a claims representative.
. What must a claims representative determine after confirming that a policy was in force on the date of
the loss? - . Once a claims representative receives an assignment and identifies the policy that was
in force on the date of loss, he or she must determine whether: the loss occurred within the policy
period, coverage exists under the policy for the type of loss reported, and the insured followed the
policy's terms and conditions.
How do recorded statements and examinations under oath differ? - . An examination under oath
is more formal than a recorded statement. Recorded statements are often taken by claims
representatives, typically by telephone. Examinations under oath are usually performed by an attorney
for the insurer at the insurer's office or a court reporter's office.
. What qualities do effective statements exhibit? - Coherence—The statement follows a logical
sequence. • Completeness—The statement is thorough. • Objectivity—The statement contains facts
relevant to the loss expressed in the interviewee's own words.
. Jenny is in an automobile accident and files a claim. What information should the claims representative
consider when investigating the accident scene? - . The claims representative should consider
details from the accident scene such as tire tracks, curves in the road, and objects or conditions that may
interfere with a driver's view or cause an accident (such as a pothole) to determine whether Jenny's
account of the accident is plausible. The claims representative can also use weather or traffic reports to
identify external factors that may have contributed to the loss.
Freja files a workers compensation claim. What type of an investigation should the claims representative
conduct and why? - ll bodily injury claims, including workers compensation claims, necessitate a
medical investigation. This helps the claims representative determine the costs of medical treatment, the
expected duration of treatment and disability, the need for rehabilitation, and the suitability of medical
care for the type of injuries the claimant suffered.
. While working on an auto collision claim, Lois, a claims representative, adds a remark regarding gender
in the claims file. Is this remark appropriate? - Remarks regarding the gender of claimants or
insureds are not appropriate for inclusion in a claims file.
. Linnea, a new claims representative, wants to know what elements should be reflected in claims file
status notes? What would you tell her? - Clear, concise, and accurate information
• Timely claims handling
,• A fair and balanced investigation that considers the insured's and insurer's interests
Objective comments about the insurer, insured, or other parties associated with the claim
A thorough good-faith investigation
Why is establishing and maintaining adequate reserves important? - . If a claims representative
doesn't set accurate case reserves, it could affect the financial health of the insurer for which he or she
works. In extreme cases, inaccurate reserving could cause insolvency.
What is the formula method of setting claim reserves? - . With the formula method of setting
claim reserves, a formula for setting a reserve is determined by the insurer and is automatically created
for the claims rep based on the facts of a claim.
What is stairstepping a reserve? - . A claims rep may set a modest initial reserve but then raise the
reserve by a few thousand dollars to issue payments. Later, the reserve is increased again when more
bills arrive. This is stairstepping.
. Who does an insurance policy typically cover? - . Some policies cover only insureds named or
listed in the policy. However, most policies define "insured" to cover additional persons, such as family
members of the named insured who reside in the home.
. What should Kolby, a claims representative, do to determine whether a cause of loss is covered? -
Kolby should thoroughly investigate all the facts concerning the loss and apply them to the
language in all the policy provisions. He must also carefully read the exclusions to find possible coverage
exceptions and analyze policy definitions.
. Eduardo is the insured in a liability claim. What are the damages for which he may be liable? - .
For liability claims, the insured may be liable for punitive and compensatory damages. Punitive damages
punish a wrongdoer for a reckless, malicious, or deceitful act with the purpose of deterring similar
conduct. Compensatory damages include special damages and gen
What must a claims representative do before making any payments - . The claims representative
must verify all the policy limits applicable to a loss before making any payments to ensure that payment
falls within the available limits of coverage.
. How can claim payments be made? - Claim payments can be made by check, bank draft, or
electronic transfer of funds.
. What are some issues claims personnel must be aware of when issuing claim payments? - .
When issuing claim payments, claims personnel must ensure that the proper parties are being paid.
Many other parties, such as mortgagees on homes and loss payees on autos and personal property, can
have a financial interest in property. Claims reps must also check various databases to ensure that the
claim payment complies with federal and state laws. Insurers and other claims payors must also be
aware of state child-support enforcement initiatives. And claims reps handling workers compensation
, claims and third-party bodily injury claims must be aware of the Medicare Secondary Payer Program and
how it can affect claim payments.
. What are two negotiation techniques that Magnus, a claims representative, can use to negotiate with
any party? - Magnus can use two techniques when negotiating with any party:
Principle of yes—Magnus should begin negotiations with a question that will generate a "yes" answer,
which increases the likelihood of getting a "yes" to subsequent questions.
Choicing—Magnus should first present the choice the other party will find least desirable, making the
next choice more appealing.
. Hanna, a claims representative, is negotiating with John, an unrepresented claimant. What are two
techniques Hanna can use? - Collecting and using extraneous information
Making the first offer
If the allegations in the complaint do not appear to be covered under the applicable policy, what should
the claims rep do? - If the allegations in the complaint do not appear to be covered under the
applicable policy, the claims rep should discuss the coverage issue with coverage counsel before taking
any other action and should follow any insurer procedures, such as requesting a managerial review.
A claims rep receives a summons and complaint. It alleges that the insured caused a motor vehicle
accident in which the plaintiff was injured and demands $800,000 in damages. The insured's personal
auto policy has a $100,000 liability limit. The claims rep has determined that the policy covers the
allegations and has referred the lawsuit to defense counsel. What additional action does the claims rep
need to take? - If it appears that the damages could exceed the limits of the insured's policy, the
claims rep should notify the insured in an excess letter, which may also serve to inform the insured that
he or she has the option of hiring separate defense counsel.
Mary is a claims rep who is not actively engaged in litigation or trial preparations. Why is it a good idea
for Mary to read up on case law and court opinions related to the types of claims she usually handles? -
Mary may find it helpful to stay abreast of recent court opinions and changes in case law related
to the types of claims she usually handles so she knows how specific types of claims and legal defenses
are likely to be dealt with in the courtroom moving forward
Victor is an insured defendant in a lawsuit that alleges negligence on his part for failing to stop at a red
light, which caused a traffic accident resulting in a serious head injury to the plaintiff, Max. Defense
counsel proposes filing a motion to dismiss the lawsuit before the start of the trial. How should the
claims rep respond to the defense counsel's proposal? - . The claims rep should ask the defense
counsel what basis will be used for the motion to dismiss. Unless a good legal basis exists, the claims rep
should recommend against it because of the expense in filing a motion that is virtually certain to be
VERIFIED ANSWERS
An insurer has received a claim related to an accident involving a hoverboard, and an investigation is
needed to process the claim. However, the company doesn't have any claims representatives who are
knowledgeable about handling hoverboard claims. What type of claims professional should the company
hire to help with this investigation? - . The insurer should hire an independent adjuster to help
with its hoverboard claim investigation. Insurers use independent adjusters when their staff claims
representatives are too busy to meet customer needs or when specialized skills are required.
Natalie is a claims representative attempting to settle a complex claim for an insured. Unfortunately, the
insured is dissatisfied with the way settlement negotiations are progressing. Whom might the insured
hire to make sure that his interests are protected? - . The insured might hire a public adjuster. A
public adjuster is an outside organization or person who represents the insured in a claim.
. Leila was recently hired as a claims representative for an insurer. How will Leila help underwriters, and
how will underwriters rely on Leila? - Claims personnel, such as Leila, help underwriters by
ensuring that claims are paid fairly and according to their respective policy. Conversely, the Claims
Department relies on underwriters for thorough, accurate data about the circumstances under which
coverage was written
. As a claims representative, who might Geoffrey collaborate with in addition to other employees of the
insurer? - During the claims investigation, Geoffrey might collaborate with an expert to evaluate
the cause or value of a loss, investigate the possibility of fraud by an insured or a third-party claimant, or
provide legal advice.
What sets the tone for the claims adjustment process? - The claims rep's initial contact with the
insured sets the tone for the adjustment process. In the immediate aftermath of a loss, an insured is
often shaken or upset, and possibly injured—and still needs to file a claim. It falls on claims professionals
to be sensitive to the insured's vulnerable and emotional state, express empathy, and work hard to fulfill
the promises made in the insurance policy.
. When do claims reps have the greatest opportunity to positively influence others? - One of the
times when claims reps have the greatest opportunity to positively influence others is during
catastrophes, when their help is needed most
. What are a loss ratio and a loss adjustment expense (LAE)? - . A loss ratio is a ratio that measures
losses and loss adjustment expenses against earned premiums and that reflects the percentage of
premiums being consumed by losses. LAE is the expense that an insurer incurs to investigate, defend,
and settle claims according to the terms specified in the insurance policy
An insurer's management team is evaluating the organization's financial well being and wants to
determine whether the Claims Department is functioning properly, whether the Underwriting
Department is selecting appropriate loss exposures, and whether the Actuarial Department is pricing the
insurance products correctly. What is the profitability measure that can help management make these
,determinations? - . The loss ratio can help the management team make these determinations. The
loss ratio compares an insurer's losses and LAE to its collected premiums and reveals the percentage of
premiums being consumed by losses
What is the first activity in the claims handling process? - The first activity in the claims handling
process is acknowledging receipt of the claim, whether filed online, via a phone call, or through a mobile
app, and assigning it to a claims representative.
. What must a claims representative determine after confirming that a policy was in force on the date of
the loss? - . Once a claims representative receives an assignment and identifies the policy that was
in force on the date of loss, he or she must determine whether: the loss occurred within the policy
period, coverage exists under the policy for the type of loss reported, and the insured followed the
policy's terms and conditions.
How do recorded statements and examinations under oath differ? - . An examination under oath
is more formal than a recorded statement. Recorded statements are often taken by claims
representatives, typically by telephone. Examinations under oath are usually performed by an attorney
for the insurer at the insurer's office or a court reporter's office.
. What qualities do effective statements exhibit? - Coherence—The statement follows a logical
sequence. • Completeness—The statement is thorough. • Objectivity—The statement contains facts
relevant to the loss expressed in the interviewee's own words.
. Jenny is in an automobile accident and files a claim. What information should the claims representative
consider when investigating the accident scene? - . The claims representative should consider
details from the accident scene such as tire tracks, curves in the road, and objects or conditions that may
interfere with a driver's view or cause an accident (such as a pothole) to determine whether Jenny's
account of the accident is plausible. The claims representative can also use weather or traffic reports to
identify external factors that may have contributed to the loss.
Freja files a workers compensation claim. What type of an investigation should the claims representative
conduct and why? - ll bodily injury claims, including workers compensation claims, necessitate a
medical investigation. This helps the claims representative determine the costs of medical treatment, the
expected duration of treatment and disability, the need for rehabilitation, and the suitability of medical
care for the type of injuries the claimant suffered.
. While working on an auto collision claim, Lois, a claims representative, adds a remark regarding gender
in the claims file. Is this remark appropriate? - Remarks regarding the gender of claimants or
insureds are not appropriate for inclusion in a claims file.
. Linnea, a new claims representative, wants to know what elements should be reflected in claims file
status notes? What would you tell her? - Clear, concise, and accurate information
• Timely claims handling
,• A fair and balanced investigation that considers the insured's and insurer's interests
Objective comments about the insurer, insured, or other parties associated with the claim
A thorough good-faith investigation
Why is establishing and maintaining adequate reserves important? - . If a claims representative
doesn't set accurate case reserves, it could affect the financial health of the insurer for which he or she
works. In extreme cases, inaccurate reserving could cause insolvency.
What is the formula method of setting claim reserves? - . With the formula method of setting
claim reserves, a formula for setting a reserve is determined by the insurer and is automatically created
for the claims rep based on the facts of a claim.
What is stairstepping a reserve? - . A claims rep may set a modest initial reserve but then raise the
reserve by a few thousand dollars to issue payments. Later, the reserve is increased again when more
bills arrive. This is stairstepping.
. Who does an insurance policy typically cover? - . Some policies cover only insureds named or
listed in the policy. However, most policies define "insured" to cover additional persons, such as family
members of the named insured who reside in the home.
. What should Kolby, a claims representative, do to determine whether a cause of loss is covered? -
Kolby should thoroughly investigate all the facts concerning the loss and apply them to the
language in all the policy provisions. He must also carefully read the exclusions to find possible coverage
exceptions and analyze policy definitions.
. Eduardo is the insured in a liability claim. What are the damages for which he may be liable? - .
For liability claims, the insured may be liable for punitive and compensatory damages. Punitive damages
punish a wrongdoer for a reckless, malicious, or deceitful act with the purpose of deterring similar
conduct. Compensatory damages include special damages and gen
What must a claims representative do before making any payments - . The claims representative
must verify all the policy limits applicable to a loss before making any payments to ensure that payment
falls within the available limits of coverage.
. How can claim payments be made? - Claim payments can be made by check, bank draft, or
electronic transfer of funds.
. What are some issues claims personnel must be aware of when issuing claim payments? - .
When issuing claim payments, claims personnel must ensure that the proper parties are being paid.
Many other parties, such as mortgagees on homes and loss payees on autos and personal property, can
have a financial interest in property. Claims reps must also check various databases to ensure that the
claim payment complies with federal and state laws. Insurers and other claims payors must also be
aware of state child-support enforcement initiatives. And claims reps handling workers compensation
, claims and third-party bodily injury claims must be aware of the Medicare Secondary Payer Program and
how it can affect claim payments.
. What are two negotiation techniques that Magnus, a claims representative, can use to negotiate with
any party? - Magnus can use two techniques when negotiating with any party:
Principle of yes—Magnus should begin negotiations with a question that will generate a "yes" answer,
which increases the likelihood of getting a "yes" to subsequent questions.
Choicing—Magnus should first present the choice the other party will find least desirable, making the
next choice more appealing.
. Hanna, a claims representative, is negotiating with John, an unrepresented claimant. What are two
techniques Hanna can use? - Collecting and using extraneous information
Making the first offer
If the allegations in the complaint do not appear to be covered under the applicable policy, what should
the claims rep do? - If the allegations in the complaint do not appear to be covered under the
applicable policy, the claims rep should discuss the coverage issue with coverage counsel before taking
any other action and should follow any insurer procedures, such as requesting a managerial review.
A claims rep receives a summons and complaint. It alleges that the insured caused a motor vehicle
accident in which the plaintiff was injured and demands $800,000 in damages. The insured's personal
auto policy has a $100,000 liability limit. The claims rep has determined that the policy covers the
allegations and has referred the lawsuit to defense counsel. What additional action does the claims rep
need to take? - If it appears that the damages could exceed the limits of the insured's policy, the
claims rep should notify the insured in an excess letter, which may also serve to inform the insured that
he or she has the option of hiring separate defense counsel.
Mary is a claims rep who is not actively engaged in litigation or trial preparations. Why is it a good idea
for Mary to read up on case law and court opinions related to the types of claims she usually handles? -
Mary may find it helpful to stay abreast of recent court opinions and changes in case law related
to the types of claims she usually handles so she knows how specific types of claims and legal defenses
are likely to be dealt with in the courtroom moving forward
Victor is an insured defendant in a lawsuit that alleges negligence on his part for failing to stop at a red
light, which caused a traffic accident resulting in a serious head injury to the plaintiff, Max. Defense
counsel proposes filing a motion to dismiss the lawsuit before the start of the trial. How should the
claims rep respond to the defense counsel's proposal? - . The claims rep should ask the defense
counsel what basis will be used for the motion to dismiss. Unless a good legal basis exists, the claims rep
should recommend against it because of the expense in filing a motion that is virtually certain to be
