AIC 300 EXAMINATION QUESTIONS AND 100%
VERIFIED ANSWERS
indemnify - To restore a party who has sustained a loss to the same financial position that party
held before the loss occurred
Third Party Administrator (TPA) - An organization that provides administrative services associated
with risk financing and insurance
Claims representative - A person responsible for investigating, evaluating, and settling claims
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 - In outside organization or person hired by an insured to represent the insured in
a claim in exchange for a fee
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
premium audit - Methodical examination of a policy holder's operations, records, and books of
account to determine the actual exposure units and premium for insurance coverages already provided
loss ratio - measures losses and loss adjustment expenses against earned premiums and that
reflects the percentage of premiums being consumed by losses
loss adjustment expense - The expense that an insurer incurs to investigate, defend, and settle
claims according to the term specified in the insurance policy
first notice of loss - the initial report notifying the insurer of a claim
public adjuster - an outside organization or person hired by an insured to represent the insured in
a claim in exchange for a fee
reserve - the amount the insurer estimates and sets aside to pay on an existing claims
individual case method - a method of setting reserves based on the claim's circumstances and the
claim representative's experience in handling similar claims
roundtable method - A method of setting reserves by using the consensus of two or more claim
personnel who have independently evaluated the claim file
average value method - A case reserving method that establishes a predetermined dollar amount
of reserve for each claim as it is reported
formula method - A method of setting claim reserves by using a mathematical formula.
,expert system method - A method of setting reserves with a software application that estimates
losses and loss adjustment expenses.
direct loss - A reduction in the value of property that results directly and often immediately from
damage to that property.
indirect loss - A loss that arises as a result of damage to property, other than the direct loss to the
property.
Pro Rata Contribution - An 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 - 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.
punitive 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.
Compensatory Damages - A payment awarded by a court to reimburse a victim for actual harm.
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.
General Damages - A monetary award to compensate a victim for losses, such as pain and
suffering, that do not involve specific measurable expenses.
Coinsurance Clause - A clause that requires the insured to carry insurance equal to at least a
specified percentage of the insured property's value.
discovery - A pretrial exchange of all relevant information between the plaintiff and defendant.
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 specific
amount of time to answer the complaint
complaint - The allegations made by a plaintiff in a lawsuit.
service of process - the delivery of a summons or complaint to a defendant by an authorized
person
allegation - A claim made in the complaint by the plaintiff, specifying what the plaintiff expects to
prove to obtain a judgment against the defendant.
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
statue of limitations - a law that stipulates the length of time after an event during which legal
proceedings (such as lawsuit or criminal charges) may be initiated.
,stare decisis - the principle that lower courts must follow precedents set by higher courts
motion to dismiss - a request that a court terminate an action because of settlement, voluntary
withdrawal, or procedural defect.
motion for summary judgment - A pretrial request asking the court to enter a judgment when no
material facts are in dispute and the moving party is entitled to judgement as a matter of law
motion in limine - a pretrial request that certain evidence be excluded from the trial
Big Data - Sets of data that are too large to be gathered and analyzed by traditional methods.
internet of things - a network of objects that transmit data to each other to each other and to
central hubs through the internet.
telematics - The use of technological devices to transmit data via wireless communication and GPS
tracking.
Wearable sensor tag - a sensor attached to or embedded in clothing and accessories
data mining - the analysis of large amounts of data to find new relationships and patterns that will
assist in developing business solutions
Algorithm - an operational sequence used to solve mathematical problems and to create
computer programs
Cross-Industry Process for Data Mining (CRISP-DM) - An accepted standard for the steps in any
data mining process used to provide business solutions.
Machine Learning - artifical intelligence in which computers continually teach themselves to make
better decisions based on previous results and new data
complex claim - a claim that contains one or more characteristics that cause it to cost more than
the average claim
information gain - a measure of the predictive power of one or more attributes
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
recursively - successively applying a model
root node - The first node in a classification tree
combination of nodes - a representation of data attributes in a classification tree
leaf node - A terminal node of a classification tree that is used to classify an instance based on its
attributes
training data - data that is used to train a predictive model and that therefore must have known
values for the target variable of the model
, holdout data - in the model training process, existing data with a known target variable that is not
used as part of the training data
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
accuracy - in model performance evaluation, a model's correct predictions divided by its total
predictions
precision - in model performance evaluation, a model's correct positive predictions divided by its
total positive 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
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.
domain knowledge - Information related to the context of the information a data scientist is
working with.
insurance fraud - Any deliberate deception committed against an insurer or an insurance producer
for the purpose of unwarranted financial gain.
Special Investigation Unit (SIU) - A division set up to investigate suspicious claims, premium fraud,
or application fraud.
predictive model - a model used to predict an unknown outcome by means of a defined target
variable
Blockchain - A distributed digital ledger that facilitates secure transactions without the need for a
third party.
Material Fact - a fact that is significant to a decision or matter at hand
Hard Fraud - Actions that are undertaken deliberately to defraud.
Misrepresentation - False statement of a material fact on which a party relies
Concealment - an intentional failure to disclose a material fact
staged accident - An accident deliberately caused by a person who intends to feign injury and
collect on the ensuing claim.
soft fraud (opportunity fraud) - Fraud that occurs when a legitimate claim is exaggerated
ethics - the study of what constitutes good and bad behavior, dealing with moral duty and
obligation
VERIFIED ANSWERS
indemnify - To restore a party who has sustained a loss to the same financial position that party
held before the loss occurred
Third Party Administrator (TPA) - An organization that provides administrative services associated
with risk financing and insurance
Claims representative - A person responsible for investigating, evaluating, and settling claims
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 - In outside organization or person hired by an insured to represent the insured in
a claim in exchange for a fee
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
premium audit - Methodical examination of a policy holder's operations, records, and books of
account to determine the actual exposure units and premium for insurance coverages already provided
loss ratio - measures losses and loss adjustment expenses against earned premiums and that
reflects the percentage of premiums being consumed by losses
loss adjustment expense - The expense that an insurer incurs to investigate, defend, and settle
claims according to the term specified in the insurance policy
first notice of loss - the initial report notifying the insurer of a claim
public adjuster - an outside organization or person hired by an insured to represent the insured in
a claim in exchange for a fee
reserve - the amount the insurer estimates and sets aside to pay on an existing claims
individual case method - a method of setting reserves based on the claim's circumstances and the
claim representative's experience in handling similar claims
roundtable method - A method of setting reserves by using the consensus of two or more claim
personnel who have independently evaluated the claim file
average value method - A case reserving method that establishes a predetermined dollar amount
of reserve for each claim as it is reported
formula method - A method of setting claim reserves by using a mathematical formula.
,expert system method - A method of setting reserves with a software application that estimates
losses and loss adjustment expenses.
direct loss - A reduction in the value of property that results directly and often immediately from
damage to that property.
indirect loss - A loss that arises as a result of damage to property, other than the direct loss to the
property.
Pro Rata Contribution - An 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 - 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.
punitive 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.
Compensatory Damages - A payment awarded by a court to reimburse a victim for actual harm.
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.
General Damages - A monetary award to compensate a victim for losses, such as pain and
suffering, that do not involve specific measurable expenses.
Coinsurance Clause - A clause that requires the insured to carry insurance equal to at least a
specified percentage of the insured property's value.
discovery - A pretrial exchange of all relevant information between the plaintiff and defendant.
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 specific
amount of time to answer the complaint
complaint - The allegations made by a plaintiff in a lawsuit.
service of process - the delivery of a summons or complaint to a defendant by an authorized
person
allegation - A claim made in the complaint by the plaintiff, specifying what the plaintiff expects to
prove to obtain a judgment against the defendant.
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
statue of limitations - a law that stipulates the length of time after an event during which legal
proceedings (such as lawsuit or criminal charges) may be initiated.
,stare decisis - the principle that lower courts must follow precedents set by higher courts
motion to dismiss - a request that a court terminate an action because of settlement, voluntary
withdrawal, or procedural defect.
motion for summary judgment - A pretrial request asking the court to enter a judgment when no
material facts are in dispute and the moving party is entitled to judgement as a matter of law
motion in limine - a pretrial request that certain evidence be excluded from the trial
Big Data - Sets of data that are too large to be gathered and analyzed by traditional methods.
internet of things - a network of objects that transmit data to each other to each other and to
central hubs through the internet.
telematics - The use of technological devices to transmit data via wireless communication and GPS
tracking.
Wearable sensor tag - a sensor attached to or embedded in clothing and accessories
data mining - the analysis of large amounts of data to find new relationships and patterns that will
assist in developing business solutions
Algorithm - an operational sequence used to solve mathematical problems and to create
computer programs
Cross-Industry Process for Data Mining (CRISP-DM) - An accepted standard for the steps in any
data mining process used to provide business solutions.
Machine Learning - artifical intelligence in which computers continually teach themselves to make
better decisions based on previous results and new data
complex claim - a claim that contains one or more characteristics that cause it to cost more than
the average claim
information gain - a measure of the predictive power of one or more attributes
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
recursively - successively applying a model
root node - The first node in a classification tree
combination of nodes - a representation of data attributes in a classification tree
leaf node - A terminal node of a classification tree that is used to classify an instance based on its
attributes
training data - data that is used to train a predictive model and that therefore must have known
values for the target variable of the model
, holdout data - in the model training process, existing data with a known target variable that is not
used as part of the training data
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
accuracy - in model performance evaluation, a model's correct predictions divided by its total
predictions
precision - in model performance evaluation, a model's correct positive predictions divided by its
total positive 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
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.
domain knowledge - Information related to the context of the information a data scientist is
working with.
insurance fraud - Any deliberate deception committed against an insurer or an insurance producer
for the purpose of unwarranted financial gain.
Special Investigation Unit (SIU) - A division set up to investigate suspicious claims, premium fraud,
or application fraud.
predictive model - a model used to predict an unknown outcome by means of a defined target
variable
Blockchain - A distributed digital ledger that facilitates secure transactions without the need for a
third party.
Material Fact - a fact that is significant to a decision or matter at hand
Hard Fraud - Actions that are undertaken deliberately to defraud.
Misrepresentation - False statement of a material fact on which a party relies
Concealment - an intentional failure to disclose a material fact
staged accident - An accident deliberately caused by a person who intends to feign injury and
collect on the ensuing claim.
soft fraud (opportunity fraud) - Fraud that occurs when a legitimate claim is exaggerated
ethics - the study of what constitutes good and bad behavior, dealing with moral duty and
obligation
