AIC 300 CLAIMS IN AN EVOLVING WORLD ACTUAL EXAM, PRACTICE EXAM AND STUDY GUIDE| Frequently Tested Questions with 100% Correct Detailed Solutions||A+ GRADED!!!UPDATED

AIC 300 CLAIMS IN AN EVOLVING WORLD ACTUAL EXAM, PRACTICE EXAM AND STUDY GUIDE| Frequently Tested Questions with 100% Correct Detailed Solutions||A+ GRADED!!!UPDATED 2025- 2026 C. Maintains regular and prompt communication. Communicating with all parties to a claim is a crucial aspect of good-faith claims handling and resolution. - ANSWER One of Julio's expectations as a claims representative is good-faith claims handling. He keeps insureds informed about the claim because they have that expectation and because they are most likely to make a complaint about bad-faith claim handling. He also wishes to participate in the defense and in discussions about the possibility of settlement. For these reasons, Julio Select one: A. Conducts fair evaluations. B. Maintains complete and accurate documentation. C. Maintains regular and prompt communication. D. Conducts good-faith negotiation. D. Some states allow insureds and claimants to bring lawsuits against insurers, while others allow only insureds. - ANSWER Which one of the following statements regarding state versions of the NAIC model act is correct? Select one: A. Only insureds may bring lawsuits against insurers. B. Only claimants may bring lawsuits against insurers. C. Both insureds and claimants may bring lawsuits against insurers. D. Some states allow insureds and claimants to bring lawsuits against insurers, while others allow only insureds. C. Timely contact with all parties to a claim Timely contact with all parties to a claim helps ensure that parties will be more likely to remember details of the loss accurately. - ANSWER Tobias is a claims representative who understands the importance of good-faith claims handling, including fair evaluation, good-faith negotiation, complete and accurate documentation, and timely contact with all parties to a claim. Which one of Tobias' good-faith claims handling practices helps his employer because the parties will be more likely to remember details of the loss accurately? Select one: A. Fair evaluation B. Complete and accurate documentation C. Timely contact with all parties to a claim D. Good-faith negotiation B. The amount of the judgment must be in excess of the insured's policy limit. For an excess liability claim to be filed, a final judgment or settlement must have been entered against the insured, and the amount of the judgment must be in excess of the insured's policy limit. The insured is not required to have paid the judgment before bringing suit. - ANSWER For an excess liability claim to be filed, a final judgment or settlement must have been entered against the insured, and Select one: A. The insured must have paid that judgment. B. The amount of the judgment must be in excess of the insured's policy limit. C. Evidence of bad faith must be produced. D. The insurer must have determined that coverage does not apply. A. The behaviors necessary to implement an ethical decision - ANSWER Which one of the following best describes the term 'professionalism' as it relates to claims professionals? Select one: A. The behaviors necessary to implement an ethical decision B. Remaining silent when a competitor is disparaged publicly C. Fulfilling the terms of an insurance contract D. A set of principles and values D. Timely contact with all parties to a claim. Early contact with parties helps to ensure details are correct, parties feel heard, and don't feel the need for attorneys. - ANSWER As a claims representative, some of Sara's goals is to benefit her employer by ensuring the parties to a loss remember details accurately, reassuring the parties that their claims are important, and lessening the chance that the parties will retain attorneys. Sara accomplishes these goals through Select one: A. Effective claims management. B. Regular and prompt communication. C. Complete and accurate documentation. D. Timely contact with all parties to a claim. A. Drones Erik would most likely use drones to take photos or videos of the difficult-toreach area and assess the damage and danger. By using the drones, he can assess the danger without risking the safety of the claims representatives. - ANSWER Erik is a claims manager for Taunton Insurance. He is leading a team of property claims representatives responding to a recent tornado in Kentucky. Before sending the representatives into the field, Erik has decided to use Internet of Things (IoT) technology to assess the damage and danger in the area. Which one of the following IoT devices would Erik most likely use in this situation? Select one: A. Drones B. Sensors C. Smartphones D. Telematics B. Is named in the policy declarations or an endorsement. An individual may have an insurable interest in a building, but not be considered an insured under the policy because the person's name is not listed in the declarations or on an endorsement. - ANSWER Luke runs his business out of a store front in a commercial building. After a fire destroyed part of the building, Luke made a claim for damages and received a settlement check from the property insurer. This necessarily means that Luke Select one: A. Has business interruption coverage. B. Is named in the policy declarations or an endorsement. C. Has an insurable interest in the damaged property. D. Is the owner of the building. B. Losses and LAE divided by earned premium. Losses and LAE divided by earned premium. Loss ratio measures losses and loss adjustment expenses against earned premium and reflects the percentage of premiums being consumed by losses. - ANSWER Rodrigo manages a claims department for an insurer and uses loss ratio as a measure of the department's performance. Rodrigo calculates loss ratio as Select one: A. Losses divided by written premium. B. Losses and LAE divided by earned premium. C. Losses and LAE divided by written premium. D. Losses divided by earned premium. B. Obtain medical records. In liability claims, the claims rep will require an authorization from the injured party to obtain medical records. - ANSWER In liability claims, the claims rep will require an authorization from the injured party to Select one: A. Investigate the claim. B. Obtain medical records. C. Contact the insured. D. Issue a partial claim settlement. A. Actuary. Actuaries are critically important to this process because they understand the business and the analytics. - ANSWER Mustafa is a data scientist who is working with a team of underwriting, IT, and actuary to develop a predictive analytics model. The main goal of the project is to translate the insights gained from the model they develop into business action. In Mustafa's experience, the team member that can provide the bridge between the analytics and the business is Select one: A. Actuary. B. IT. C. Underwriting. D. Data science. B. Proof of loss form. A claims representative may provide a blank proof of loss form and any necessary written instructions so the insured can document the claim. - ANSWER As a part of the first contact with an insured on a property damage claim, a claims representative may provide a blank Select one: A. Reservation of rights form. B. Proof of loss form. C. First notice of loss form. D. Nondisclosure form. A. Too much time had expired after the claim concluded. Too much time had expired after the claim concluded. A statute of limitations is a law that stipulates the length of time after an event during which legal proceedings may be initiated. - ANSWER Ida was named in a bad-faith lawsuit as the claims representative who handled the file. The court dismissed the suit, however, because the statute of limitations had expired. This means that Select one: A. Too much time had expired after the claim concluded. B. The limits of the policy had been exceeded. C. There was no basis to pierce the corporate veil. D. She was immune to prosecution as an employee. A. Stairstepping. - ANSWER DaJuan, a claims representative, sets a low case reserve for a seemingly simple claim. A few weeks later it becomes apparent that the initial reserve was too low, and he increases it in order to issue payments. More bills related to the claim arrive a few months later, and he increases the reserve again. This process is known as Select one: A. Stairstepping. B. Reopening. C. Readjusting. D. Incremental reserving. C. Premium auditor. Premium auditors provide inventory values, contractors' equipment lists, and other facts that are important to the claims function. - ANSWER Erin helps her employer, a multi-line insurer, to determine actual exposure and premium for coverage. She does this by conducting detailed examinations of policyholder operations, records, and accounting. Erin is a(n) Select one: A. Producer. B. Claims adjuster. C. Premium auditor. D. Underwriter. A. Preserve the evidence as part of the record. An insurer defending a first-party coverage lawsuit could be found liable if evidence is intentionally or negligently lost or destroyed. - ANSWER Thomas is an attorney who is defending an insurer in a litigated case. He has located documents that show the insured was aware of the issue that cause the injury to the claimant before the accident. Thomas is concerned that this evidence will hurt his case. He should Select one: A. Preserve the evidence as part of the record. B. File a motion to suppress the evidence. C. File a motion in limine to exclude the evidence. D. Destroy the evidence to make the defense stronger. B. Association rule learning - ANSWER Through data mining, Goshen Mutual discovers that customers who insure two or more vehicles on a personal auto policy are very likely to buy a personal umbrella policy. Algorithms are then used to identify potential customers who might be interested in purchasing both personal auto and umbrella policies. Which one of the following data mining techniques did Goshen Mutual use? Select one: A. Classification B. Association rule learning C. Regression analysis D. Cluster analysis C. Are potentially discoverable in a trial. Are potentially discoverable in a trial. Seemingly innocuous comments can be devastating when read to a jury. - ANSWER Olivia is careful to keep proper claim status notes when she handles a claim. For example, she makes sure to only include neutral, objective comments about the parties involved. This is because claim notes Select one: A. Continue for as long as the claim is open. B. Present a chronology of the life of the claim. C. Are potentially discoverable in a trial. D. Must be able to speak for themselves. B. 3 The lift provided by the predictive model is 3. The lift is calculated by dividing the model percentage by the nonmodel percentage. (45/15 = 3) - ANSWER Millstone Insurance wanted to assign its most complex workers compensation claims to experienced claim adjusters as early as possible. The data science team used the classification tree technique to develop a predictive model. When holdout data was used to test the model's predictive accuracy, 45% of the complex claims were assigned to experienced adjusters. When claims were randomly assigned, only 15% of the complex claims were assigned to experienced adjusters. What is the lift provided by the predictive model? Select one: A. 0.333 B. 3 C. 30 D. 45 C. Staff underwriter. This describes the duties of a staff underwriter. Line underwriter. This describes the duties of a line underwriter, rather than a staff underwriter. There is not enough information to determine which line of business is being written. A public underwriter does not exist. Line underwriters evaluate new submissions and perform renewal underwriting, usually by working directly with insurance producers and applicants. Staff underwriters, meanwhile, manage risk selection by working with line underwriters and coordinating decisions about products, pricing and guidelines. - ANSWER Alva works for an international, multi-line insurer. She helps her company to manage risk selection by working with other underwriters and coordinating decisions about products, pricing, and guidelines. Alva is a Select one: A. Master underwriter. B. Line underwriter. C. Staff underwriter. D. Chief Underwriting Officer. D. Insured's collusion with claimant Insured's collusion with claimant. Discovering collusion between the insured and claimant, such as a claimant agreeing not to collect a judgment from the insured's assets, can lead to dismissal of a bad-faith claim. - ANSWER Maja handled a large liability claim that settled above the policy limits. The insured is now charging the claim was handled in bad faith. During their investigation of the bad-faith claim, Maja and defense counsel discovered that the claimant had received the payment from the insurer, but not the amount above the policy limits that was to come from the insured's assets. Which one of the following defenses would Maja's defense most likely invoke? Select one: A. Contributory negligence B. Advice of counsel C. Debatable reasonable basis D. Insured's collusion with claimant D. With a bank draft, the bank must verify that the insurer has authorized payment. - ANSWER Among the methods used to pay claims are the issuance of checks and bank drafts. The main difference between the two is that Select one: A. Only checks may be used for claim payments in excess of $10,000. B. With a check, the bank must verify that the insurer has authorized payment. C. Only bank drafts may be used for claim payments in excess of $10,000. D. With a bank draft, the bank must verify that the insurer has authorized payment. C. Claimants, insureds, supervisors and others. The impression that claims reps make on claimants, insureds, and others reflects either favorably or unfavorably on the insurer. - ANSWER A claims representative should have the ability to persuade or influence Select one: A. Supervisors. B. Insureds. C. Claimants, insureds, supervisors and others. D. Claimants. C. Insured, claims rep, defense counsel A summons and complaint is typically received by the insured, who then shares it with the claims rep, who in turn sends it to the insurer's defense counsel. - ANSWER In a typical scenario, a summons and complaint initiating litigation is received by these parties in which one of the following sequences? Select one: A. Defense counsel, insured, claims rep B. Defense counsel, claims rep, insured C. Insured, claims rep, defense counsel D. Claims rep, insured, defense counsel D. Soft fraud In soft fraud, a legitimate loss occurs but the value of that loss is exaggerated. - ANSWER Bettina's apartment is burglarized and several items are stolen. In filing her claim, she tells her insurer that her stolen television was both newer and larger than it actually was. This constitutes which one of the following types of fraud? Select one: A. Concealment B. Misrepresentation C. False claim D. Soft fraud C. Best practices Best practices generally refers to a system of identified internal practices that are shared with claims reps and produce superior performance. - ANSWER Adam manages a claims department for an insurer. He measures the department's performance by best practices, claims audits, customer satisfaction data, and loss ratio. Which one of Adam's measures refers to a system of identified internal practices that claims representatives perform to produce superior performance? Select one: A. Customer satisfaction data B. Loss ratio C. Best practices D. Claims audits D. An endorsement. An endorsement can include coverage that is otherwise excluded, exclude coverage that is otherwise included, or add or delete insureds. - ANSWER Which one of the following elements of a policy can include coverage that is otherwise excluded, exclude coverage that is otherwise included, or add or delete insureds? Select one: A. The declarations.