AIC 300EXAM QUESTIONS WITH
SOLVED ANSWERS.
Indemnify - ANSWERTo restore a party who has sustained a loss to the same financial
position that party held before the loss occurred
Third Party Administrator (TPA) - ANSWERAn organization that provides administrative
services associated with risk financing and insurance.
Claims representative - ANSWERA person responsible for investigating, evaluating, and
settling claims.
Producer - ANSWERAny of several kinds of insurance personnel who place insurance
and surety business with insurers and who represent either insurers, insureds, or both
Public Adjuster - ANSWERAn outside organization or person hired by an insured to
represent the insured in a claim in exchange for a fee.
Premium Audit - ANSWERMethodical examination of a policyholder's operations,
records, and books of account to determine the actual exposure units and premium for
insurance coverages already provided
Loss ratio - ANSWERA ratio that measures losses and loss adjustment expenses
against earned premiums and that reflects the percentage of premiums being
consumed by losses
Loss adjustment expense (LAE) - ANSWERThe expense that an insurer incurs to
investigate, defend, and settle claims according to the terms specified in the insurance
policy.
First Notice of Loss (FNOL) - ANSWERThe initial report notifying the insurer of a claim.
Reserve - ANSWERThe amount the insurer estimates and sets aside to pay on an
existing claim.
Individual case method - ANSWERA method of setting reserves based on the claim's
circumstances and the claim representative's experience in handling similar claims.
Roundtable method - ANSWERA method of setting reserves by using the consensus of
two or more claims personnel who have independently evaluated the claims file.
, Average value method - ANSWERA case reserving method that establishes a
predetermined dollar amount of reserve for each claim as it is reported.
Formula method - ANSWERA method of setting claim reserves by using a mathematical
formula.
Expert system method - ANSWERA method of setting reserves with a software
application that estimates losses and loss adjustment expenses.
Direct loss - ANSWERA reduction in the value of property that results directly and often
immediately from damage to that property.
Indirect loss - ANSWERA loss that arises as a result of damage to property, other than
the direct loss to the property.
Pro rata contribution - ANSWERAn approach to other insurance by which the insurers
contribute to the loss payment in the proportion to which they contribute to the total
amount of coverage purchased (their limits of liability).
Insurable interest - ANSWERAn 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.
Punitive damages (exemplary damages) - ANSWERA 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.
Compensatory damages - ANSWERA payment awarded by a court to reimburse a
victim for actual harm.
Special damages - ANSWERA 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.
General damages - ANSWERA monetary award to compensate a victim for losses,
such as pain and suffering, that do not involve specific measurable expenses.
Coinsurance clause - ANSWERA clause that requires the insured to carry insurance
equal to at least a specified percentage of the insured's property value.
Discovery - ANSWERA pretrial exchange of all relevant information between the plaintiff
and defendant.
Summons - ANSWERA 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.
SOLVED ANSWERS.
Indemnify - ANSWERTo restore a party who has sustained a loss to the same financial
position that party held before the loss occurred
Third Party Administrator (TPA) - ANSWERAn organization that provides administrative
services associated with risk financing and insurance.
Claims representative - ANSWERA person responsible for investigating, evaluating, and
settling claims.
Producer - ANSWERAny of several kinds of insurance personnel who place insurance
and surety business with insurers and who represent either insurers, insureds, or both
Public Adjuster - ANSWERAn outside organization or person hired by an insured to
represent the insured in a claim in exchange for a fee.
Premium Audit - ANSWERMethodical examination of a policyholder's operations,
records, and books of account to determine the actual exposure units and premium for
insurance coverages already provided
Loss ratio - ANSWERA ratio that measures losses and loss adjustment expenses
against earned premiums and that reflects the percentage of premiums being
consumed by losses
Loss adjustment expense (LAE) - ANSWERThe expense that an insurer incurs to
investigate, defend, and settle claims according to the terms specified in the insurance
policy.
First Notice of Loss (FNOL) - ANSWERThe initial report notifying the insurer of a claim.
Reserve - ANSWERThe amount the insurer estimates and sets aside to pay on an
existing claim.
Individual case method - ANSWERA method of setting reserves based on the claim's
circumstances and the claim representative's experience in handling similar claims.
Roundtable method - ANSWERA method of setting reserves by using the consensus of
two or more claims personnel who have independently evaluated the claims file.
, Average value method - ANSWERA case reserving method that establishes a
predetermined dollar amount of reserve for each claim as it is reported.
Formula method - ANSWERA method of setting claim reserves by using a mathematical
formula.
Expert system method - ANSWERA method of setting reserves with a software
application that estimates losses and loss adjustment expenses.
Direct loss - ANSWERA reduction in the value of property that results directly and often
immediately from damage to that property.
Indirect loss - ANSWERA loss that arises as a result of damage to property, other than
the direct loss to the property.
Pro rata contribution - ANSWERAn approach to other insurance by which the insurers
contribute to the loss payment in the proportion to which they contribute to the total
amount of coverage purchased (their limits of liability).
Insurable interest - ANSWERAn 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.
Punitive damages (exemplary damages) - ANSWERA 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.
Compensatory damages - ANSWERA payment awarded by a court to reimburse a
victim for actual harm.
Special damages - ANSWERA 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.
General damages - ANSWERA monetary award to compensate a victim for losses,
such as pain and suffering, that do not involve specific measurable expenses.
Coinsurance clause - ANSWERA clause that requires the insured to carry insurance
equal to at least a specified percentage of the insured's property value.
Discovery - ANSWERA pretrial exchange of all relevant information between the plaintiff
and defendant.
Summons - ANSWERA 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.
