AIC 300 EXAMINATION QUESTIONS AND 100%
VERIFIED ANSWERS
Accuracy - In model performance evaluation, a model's correct predictions divided by its total
predictions
Actuary - A person who uses mathematical methods to analyze insurance data for various
purposes, such as to develop insurance rates or set claim reserves
Algorithm - An operational sequence used to solve mathematical problems and to create
computer programs
Allegation - A claim made in the complaint by the plaintiff, specifying what the plaintiff expects to
prove to obtain a judgement against the defendant
Average value method - A case reserving method that establishes a predetermined dollar amount
of reserve for each claim as it is reported
Big data - Sets of data that are too large to be gathered and analyzed by traditional methods
Blockchain - A distributed digital ledger that facilitates secure transactions without the need for a
third party
Claims representative - A person responsible for investigating, evaluating, and settling claims
Classification tree - A supervised learning technique that uses a structure similar to a tree to
segment data according to known attributes to determine the value of a categorical target variable
Coinsurance clause - A clause that required the insured to carry insurance equal to at least a
specified percentage of the insured property's value
Combination of nodes - A representation of data attributes in a classification tree
Comparative negligence - A common-law principle that requires both parties to a loss to share the
financial burden of the bodily injury or property damage according to their respective degrees of fault
Compensatory damages - A payment awarded by a court to reimburse a victim for actual harm
Complaint - The allegations made by a plaintiff in a lawsuit
Complex claim - A claim that contains one or more characteristics that cause it to cost more than
the average claim
Concealment - An intentional failure to disclose a material fact
Contributory Negligence - A common-law principle that prevents a person who has been harmed
from recovering damages if that person's own negligence contributed in any way to the harm
,Cross Industry Standard Process for Data Mining (CRISP DM) - An accepted standard for the steps
in any data mining process used to provide business solutions
Data mining - The analysis of large amounts of data to find new relationships and patterns that
will assist in developing business solutions
Data science - An interdisciplinary field involving the design and use of techniques to process very
large amounts of data from a variety of sources and to provide knowledge based on the data
Direct loss - A reduction in the value of property that results directly and often immediately from
damage to that property
Discovery - A pretrial exchange of all relevant information between the plaintiff and defendant
Domain knowledge - Information related to the context of the information a data scientist is
working with
Ethics - The study of what constitutes good and bad behavior, dealing with moral duty and
obligation
Expert System method - A method of setting reserves with a software application that estimates
losses and loss adjustment expenses
Federal Rules of Civil Procedure - A set of rules established to ensure that civil actions and
procedures move through the United States district courts as quickly as possible
First notice of loss (FNOL) - The initial report notifying the insurer of a claim
Formula method - A method of setting claims reserves be using a mathematical formula
General damages - A monetary award to compensate a victim for losses, such as pain and
suffering, that do not involve specific, measurable expenses
Hard fraud - Actions that are undertaken deliberately to defraud
Holdout data - In the model training process, existing data with a known target variable that is not
used as part of the training data
Indemnify - To restore a party who has sustained a loss to the same financial position that party
held before the loss occurred
Indirect loss - A loss that arises as a result of damage to property, other than the direct loss to the
property
Individual case method - A method of setting reserves based on the claim's circumstances and the
claims representative's experience in handling similar claims
Information gain - A measure of the predictive power of one or more attributes
,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
Insurance fraud - Any deliberate deception committed against an insurer or an insurance producer
for the purpose of unwarranted financial gain
Internet of Things (IoT) - A network of objects that transmit data to each other and to central hubs
through the internet
Leaf node - A terminal node of a classification tree that is used to classify an instance based on its
attributes
Lift - In model performance evaluation, the percentage of positive predictions made by the model
divided by the percentage of positive predictions that would be made in the absence of the model
Loss adjustment expense (LAE) - The expense that an insurer incurs to investigate, defend, and
settle claims according to the terms specified in the insurance policy
Loss ratio - A ratio that measures losses and loss adjustment expenses against earned premiums
and that reflects the percentage of premiums being consumed by losses
Machine learning - Artificial intelligence in which computers continually teach themselves to make
better decisions based on previous results and new data
Material fact - A fact that is significant to a decision or matter at hand
Misrepresentation - A false statement of a material fact on which a party relies
Motion to dismiss - A request that a court terminate an action because of settlement, voluntary
withdrawal, or procedural defect
Motion in limine - A pretrial request that certain evidence be excluded from the trial
Motion for summary judgment - A pretrial request asking the court to enter a judgement when no
material facts are in dispute and the moving party is entitled to judgment as a matter of law
Precision - In model performance evaluation, a model's correct positive predictions divided by its
total positive predictions
Predictive model - A model used to predict an unknown outcome by means of a defined target
variable
Premium Audit - Methodical examination of a policyholder's operations, records, and books of
account to determine the actual exposure units and premium for insurance coverages already provided
Pro rata contribution - An approach to other insurance by which the insurers contribute to the
loss payment in proportion to which they contribute to the total amount of coverage purchased (their
limits of liability)
, 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
Public Adjuster - An outside organization or person hired by an insured to represent the insured in
a claim in exchange for a fee
Punitive damages (exemplary damages) - A payment awarded by a court to punish a 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
Recursively - Successively applying a model
Reserve - The amount the insurer estimates and sets aside to pay on an existing claim
Root node - The first node in a classification tree
Roundtable method - A method of setting reserves by using the consensus of two or more claims
personnel who have independently evaluated the claims file
Service of process - The delivery of a summons and complaint to a defendant by an authorized
person
Soft fraud, or opportunity fraud - Fraud that occurs when a legitimate claim is exaggerated
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
Special Investigation unit (SIU) - A division set up to investigate suspicious claims, premium fraud,
or application fraud
Staged Accident - An accident deliberately caused by a person who intends to feign injury and
collect on the ensuing claim
Stare decisis - The principle that lower courts must follow precedents set by higher courts
Statute of limitations - A law that stipulates the length of time after an even during which legal
proceedings (such as a lawsuit or criminal charges may be initiated
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 that the defendant has a specified
amount of time to answer the complaint
Telematics - The use of technological devices to transmit data via wireless communication and
GPS tracking
Third-party administrator (TPA) - An organization that provides administrative services associated
with risk financing and insurance
Tort - A wrongful act or an omission, other than a crime or breach of contract, that invades a
legally protected right
VERIFIED ANSWERS
Accuracy - In model performance evaluation, a model's correct predictions divided by its total
predictions
Actuary - A person who uses mathematical methods to analyze insurance data for various
purposes, such as to develop insurance rates or set claim reserves
Algorithm - An operational sequence used to solve mathematical problems and to create
computer programs
Allegation - A claim made in the complaint by the plaintiff, specifying what the plaintiff expects to
prove to obtain a judgement against the defendant
Average value method - A case reserving method that establishes a predetermined dollar amount
of reserve for each claim as it is reported
Big data - Sets of data that are too large to be gathered and analyzed by traditional methods
Blockchain - A distributed digital ledger that facilitates secure transactions without the need for a
third party
Claims representative - A person responsible for investigating, evaluating, and settling claims
Classification tree - A supervised learning technique that uses a structure similar to a tree to
segment data according to known attributes to determine the value of a categorical target variable
Coinsurance clause - A clause that required the insured to carry insurance equal to at least a
specified percentage of the insured property's value
Combination of nodes - A representation of data attributes in a classification tree
Comparative negligence - A common-law principle that requires both parties to a loss to share the
financial burden of the bodily injury or property damage according to their respective degrees of fault
Compensatory damages - A payment awarded by a court to reimburse a victim for actual harm
Complaint - The allegations made by a plaintiff in a lawsuit
Complex claim - A claim that contains one or more characteristics that cause it to cost more than
the average claim
Concealment - An intentional failure to disclose a material fact
Contributory Negligence - A common-law principle that prevents a person who has been harmed
from recovering damages if that person's own negligence contributed in any way to the harm
,Cross Industry Standard Process for Data Mining (CRISP DM) - An accepted standard for the steps
in any data mining process used to provide business solutions
Data mining - The analysis of large amounts of data to find new relationships and patterns that
will assist in developing business solutions
Data science - An interdisciplinary field involving the design and use of techniques to process very
large amounts of data from a variety of sources and to provide knowledge based on the data
Direct loss - A reduction in the value of property that results directly and often immediately from
damage to that property
Discovery - A pretrial exchange of all relevant information between the plaintiff and defendant
Domain knowledge - Information related to the context of the information a data scientist is
working with
Ethics - The study of what constitutes good and bad behavior, dealing with moral duty and
obligation
Expert System method - A method of setting reserves with a software application that estimates
losses and loss adjustment expenses
Federal Rules of Civil Procedure - A set of rules established to ensure that civil actions and
procedures move through the United States district courts as quickly as possible
First notice of loss (FNOL) - The initial report notifying the insurer of a claim
Formula method - A method of setting claims reserves be using a mathematical formula
General damages - A monetary award to compensate a victim for losses, such as pain and
suffering, that do not involve specific, measurable expenses
Hard fraud - Actions that are undertaken deliberately to defraud
Holdout data - In the model training process, existing data with a known target variable that is not
used as part of the training data
Indemnify - To restore a party who has sustained a loss to the same financial position that party
held before the loss occurred
Indirect loss - A loss that arises as a result of damage to property, other than the direct loss to the
property
Individual case method - A method of setting reserves based on the claim's circumstances and the
claims representative's experience in handling similar claims
Information gain - A measure of the predictive power of one or more attributes
,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
Insurance fraud - Any deliberate deception committed against an insurer or an insurance producer
for the purpose of unwarranted financial gain
Internet of Things (IoT) - A network of objects that transmit data to each other and to central hubs
through the internet
Leaf node - A terminal node of a classification tree that is used to classify an instance based on its
attributes
Lift - In model performance evaluation, the percentage of positive predictions made by the model
divided by the percentage of positive predictions that would be made in the absence of the model
Loss adjustment expense (LAE) - The expense that an insurer incurs to investigate, defend, and
settle claims according to the terms specified in the insurance policy
Loss ratio - A ratio that measures losses and loss adjustment expenses against earned premiums
and that reflects the percentage of premiums being consumed by losses
Machine learning - Artificial intelligence in which computers continually teach themselves to make
better decisions based on previous results and new data
Material fact - A fact that is significant to a decision or matter at hand
Misrepresentation - A false statement of a material fact on which a party relies
Motion to dismiss - A request that a court terminate an action because of settlement, voluntary
withdrawal, or procedural defect
Motion in limine - A pretrial request that certain evidence be excluded from the trial
Motion for summary judgment - A pretrial request asking the court to enter a judgement when no
material facts are in dispute and the moving party is entitled to judgment as a matter of law
Precision - In model performance evaluation, a model's correct positive predictions divided by its
total positive predictions
Predictive model - A model used to predict an unknown outcome by means of a defined target
variable
Premium Audit - Methodical examination of a policyholder's operations, records, and books of
account to determine the actual exposure units and premium for insurance coverages already provided
Pro rata contribution - An approach to other insurance by which the insurers contribute to the
loss payment in proportion to which they contribute to the total amount of coverage purchased (their
limits of liability)
, 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
Public Adjuster - An outside organization or person hired by an insured to represent the insured in
a claim in exchange for a fee
Punitive damages (exemplary damages) - A payment awarded by a court to punish a 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
Recursively - Successively applying a model
Reserve - The amount the insurer estimates and sets aside to pay on an existing claim
Root node - The first node in a classification tree
Roundtable method - A method of setting reserves by using the consensus of two or more claims
personnel who have independently evaluated the claims file
Service of process - The delivery of a summons and complaint to a defendant by an authorized
person
Soft fraud, or opportunity fraud - Fraud that occurs when a legitimate claim is exaggerated
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
Special Investigation unit (SIU) - A division set up to investigate suspicious claims, premium fraud,
or application fraud
Staged Accident - An accident deliberately caused by a person who intends to feign injury and
collect on the ensuing claim
Stare decisis - The principle that lower courts must follow precedents set by higher courts
Statute of limitations - A law that stipulates the length of time after an even during which legal
proceedings (such as a lawsuit or criminal charges may be initiated
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 that the defendant has a specified
amount of time to answer the complaint
Telematics - The use of technological devices to transmit data via wireless communication and
GPS tracking
Third-party administrator (TPA) - An organization that provides administrative services associated
with risk financing and insurance
Tort - A wrongful act or an omission, other than a crime or breach of contract, that invades a
legally protected right
