AIC 30 Chapter 3 Part 1 CORRECT 100%
A leading cause of insurer insolvency is: - ANSWER Inaccurate case reserving.
Claims reps should be familiar with the advantages and dangers of the methods used
to: - ANSWER Establish case loss reserves.
Insurers can establish case reserves using any of several different methods. These are
five common methods: - ANSWER Individual case method.
Roundtable method.
Average value method.
Formula method.
Expert system method.
When any of these methods is used inappropriately: - ANSWER Reserving errors can
occur.
For example, reserving errors can occur when: - ANSWER Misusing the more
subjective individual case method results in the need to repeatedly raise the reserve
amount.
Reserves are: - ANSWER The amount the insurer esta mates and sets aside to pay on
an existing claim that hasn't been settled.
Although the exact timing may differ among insurers, the setting of an initial reserve
usually occurs at this point: - ANSWER Early in the claims handling process.
Claims reps often establish claim reserves, A K A case reserves, A K A loss reserves, in
conjunction with: - ANSWER Identifying the policy.
The types of reserves that are established are often determined by: - ANSWER An
insurer's claims information system.
For example: - ANSWER Establishing one reserve for property damage and another for
bodily injury.
Some systems require separate reserves: - ANSWER For each claimant in a claim.
Some systems require seh per it expense reserves for: - ANSWER The costs of
handling the claim.
For example, in a claim for an auto accident, an individual reserve may be set for: -
ANSWER Damage to the insured's vehicle, damage to the other party's vehicle, medical
expenses for the insured, and the bodily injury of the claimant.
, Therefore an important part of the claims rep's job is: - ANSWER Setting accurate
reserves.
Reserves that are too high or too low can affect: - ANSWER The insurer's profitability.
Establishing and maintaining adequate reserves is important for the insurer's financial
health because: - ANSWER Reserves affect the insurer's ability to maintain and
increase its business.
Common methods of setting case reserves: - ANSWER Individual case method.
Roundtable method.
Average value method.
Formula method.
Expert system method.
These methods of reserving rely on the claims rep's judgment to set the reserve: -
ANSWER The individual case method, and the roundtable method.
Considerations a claims rep may use when setting reserves on a bodily injury claim
using the individual case method include the following: Claimant profile, A K A factors in
calculating economic loss: - ANSWER Age, Gender, Occupation, Level of education,
Dependents, if any, their ages, and to what extent they rely on the claimant financially
and for companionship
Nature and extent of the injury, A K A factors in calculating general damages in a bodily
injury claim: - ANSWER Whether the injury is permanent. Extent of pain and suffering.
Extent of disruption the injury creates in the individual's lifestyle.
Special damages, A K A factors in calculating special damages in a bodily injury claim: -
ANSWER Anticipated medical bills incurred to date and for future care. Type of medical
care that has been or is being provided. Whether the medical care includes diagnostic
care or treatment. Whether the claimant will lose any wages.
Claimant representation, A K A factors in determining the likelihood of a lawsuit and
predicting general damages that could result from a bodily injury claim. - ANSWER
Whether the claimant is represented by a lawyer. If so, the lawyer's reputation. Typical
value of local court verdicts.
Liability factors, A K A factors in calculating compensatory and/or punitive damages in a
bodily injury claim: - ANSWER If the case involves ordinary or gross negligence. Any
comparative or contributory negligence. Any legal limits to recovery, like a cap on
certain types of damages. Any other parties' contribution to the loss or contribution to
the settlement.
Miscellaneous factors in a bodily injury claim include general economic conditions in the
geographic area. This is a factor in: - ANSWER Calculating economic loss.
A leading cause of insurer insolvency is: - ANSWER Inaccurate case reserving.
Claims reps should be familiar with the advantages and dangers of the methods used
to: - ANSWER Establish case loss reserves.
Insurers can establish case reserves using any of several different methods. These are
five common methods: - ANSWER Individual case method.
Roundtable method.
Average value method.
Formula method.
Expert system method.
When any of these methods is used inappropriately: - ANSWER Reserving errors can
occur.
For example, reserving errors can occur when: - ANSWER Misusing the more
subjective individual case method results in the need to repeatedly raise the reserve
amount.
Reserves are: - ANSWER The amount the insurer esta mates and sets aside to pay on
an existing claim that hasn't been settled.
Although the exact timing may differ among insurers, the setting of an initial reserve
usually occurs at this point: - ANSWER Early in the claims handling process.
Claims reps often establish claim reserves, A K A case reserves, A K A loss reserves, in
conjunction with: - ANSWER Identifying the policy.
The types of reserves that are established are often determined by: - ANSWER An
insurer's claims information system.
For example: - ANSWER Establishing one reserve for property damage and another for
bodily injury.
Some systems require separate reserves: - ANSWER For each claimant in a claim.
Some systems require seh per it expense reserves for: - ANSWER The costs of
handling the claim.
For example, in a claim for an auto accident, an individual reserve may be set for: -
ANSWER Damage to the insured's vehicle, damage to the other party's vehicle, medical
expenses for the insured, and the bodily injury of the claimant.
, Therefore an important part of the claims rep's job is: - ANSWER Setting accurate
reserves.
Reserves that are too high or too low can affect: - ANSWER The insurer's profitability.
Establishing and maintaining adequate reserves is important for the insurer's financial
health because: - ANSWER Reserves affect the insurer's ability to maintain and
increase its business.
Common methods of setting case reserves: - ANSWER Individual case method.
Roundtable method.
Average value method.
Formula method.
Expert system method.
These methods of reserving rely on the claims rep's judgment to set the reserve: -
ANSWER The individual case method, and the roundtable method.
Considerations a claims rep may use when setting reserves on a bodily injury claim
using the individual case method include the following: Claimant profile, A K A factors in
calculating economic loss: - ANSWER Age, Gender, Occupation, Level of education,
Dependents, if any, their ages, and to what extent they rely on the claimant financially
and for companionship
Nature and extent of the injury, A K A factors in calculating general damages in a bodily
injury claim: - ANSWER Whether the injury is permanent. Extent of pain and suffering.
Extent of disruption the injury creates in the individual's lifestyle.
Special damages, A K A factors in calculating special damages in a bodily injury claim: -
ANSWER Anticipated medical bills incurred to date and for future care. Type of medical
care that has been or is being provided. Whether the medical care includes diagnostic
care or treatment. Whether the claimant will lose any wages.
Claimant representation, A K A factors in determining the likelihood of a lawsuit and
predicting general damages that could result from a bodily injury claim. - ANSWER
Whether the claimant is represented by a lawyer. If so, the lawyer's reputation. Typical
value of local court verdicts.
Liability factors, A K A factors in calculating compensatory and/or punitive damages in a
bodily injury claim: - ANSWER If the case involves ordinary or gross negligence. Any
comparative or contributory negligence. Any legal limits to recovery, like a cap on
certain types of damages. Any other parties' contribution to the loss or contribution to
the settlement.
Miscellaneous factors in a bodily injury claim include general economic conditions in the
geographic area. This is a factor in: - ANSWER Calculating economic loss.
