CIC INSURANCE COMPANY OPERATIONS EXAM PAPER 2025/2026
QUESTIONS AND ANSWERS GUARANTEE A+
✔✔Insurtech's purpose is to - ✔✔design programs that will increase operational
efficiency, collect and analyze real time data, evaluate risk, improve distribution,
implement digital marketing, and connect with loT devices.
✔✔InsurTech is best described as - ✔✔a start-up business that designs and develops
innovative insurance technology platforms
✔✔Compliance - ✔✔Insurance company is meeting the regulatory/statutory
requirements that exist in the territories where the company does business
✔✔Control - ✔✔makes certain the insurance company in every way is following its own
internal policies, practices and procedures
✔✔Internal Compliance Audits - ✔✔mirror the examinations conducted by regulators
and ensure the insurance company is following its own defined practices and
proceudres
-Usually conducted by and independent body that audits and reports on how the
company is functioning relative to statutory, regulatory, and internally establish
requirements
✔✔Financial Survey Examination - ✔✔Conducted by the state in which the insurance
company resides and ensures the insurance company's financial position is sound and
accurate
✔✔Market conduct Examination - ✔✔Examination is conducted by each state in which
the insurance company operates and ensures the insurance company's service,
underwriting and claim departments are following the appropriator state's statues and
regulations
✔✔Written Premium - ✔✔total premium on all policies written by the insurance
company during a specified period of time, regardless of the portions earned
✔✔Earned premium - ✔✔amount of the premium that has been "used up" during the
term of a policy; for example, if a one- year policy has been in effect six months, half of
the total premium has been earned
✔✔Unearned premium - ✔✔Amount of premium remaining after deducting the earned
premium from written premium; the portion of a premium representing the unexpired
part of the policy
,✔✔Paid Losses - ✔✔amount actually paid in losses during a specified period of time,
not including estimates of amounts (i.e. reserves) that will be paid in the future for
losses occurring in the specified period
✔✔Case Reserve (Claim Reserve) - ✔✔amount the claims adjuster or claims
department places on an individual claim that has not yet been paid, no provision for
IBNR reserves
✔✔Incurred But Not Reported (IBNR) - ✔✔represents the liability for unpaid claims not
reflected in the case reserve estimates for individual losses
*estimated by actuaries on a given risk
✔✔The two components of IBNR reserves are: - ✔✔1. Pure IBNR
2. Borad or Bulk IBNR
✔✔Pure IBNR - ✔✔Claims that have occurred but not reported as of the evaluation
date; since the claim has not been reported there is no basis for establishing a reserve
based up
on the specific characteristics of the claim
*claims that have happened but have not been reported to the insurance company
*not all losses that have occurred have been reported
✔✔Broad or Bulk IBNR - ✔✔the additional development on known claims or the
increase in reserve value as the claim is investigated and settled
*As time goes on the cost of claims may go up and this covers that
*the claim department has not yet established the full reserve value for some claims
✔✔Ultimate Losses - ✔✔total losses that will have been paid when all claims have
reached final settlement
IBNR + Case Reserves + Paid Losses = Ultimate Losses
✔✔Incurred Losses - ✔✔Total amount of paid claims and case reserves associated with
a particular period of time (usually a policy year)
*Paid Losses + Case Reserves = Incurred Losses
✔✔Loss Reserves - ✔✔estimation of the liability for unpaid claims that have occurred
as of a given date, including the IBNR claims, claims due but not yet paid and amounts
not yet due
, *IBNR + Case Reserves = Loss Reserves
✔✔Allocated Loss Adjustment Expense (ALAE) - ✔✔An expense directly assigned to or
that arises from a particular claim
ex. a lawyers cost that is specifically related to the claim
✔✔Unallocated loss adjustment expense (ULAE) - ✔✔Salaries, overhead, and other
related adjustment expenses not specifically allocated or changed to a particular claim.
✔✔Loss Development Factor - ✔✔factors applied to a current valuation of losses to
determine an estimate of ultimate losses
Factors are calculated by comparing period-to-period changes in values of loss
reserves, under the assumption the current losses will be paid according to the same
pattern as the prior loss
✔✔Expected Loss - ✔✔projection of the frequency and/or severity of losses based on
loss history, probability distributions and statistics;
the expected loss projection is commonly called a loss prick
✔✔Loss Trending - ✔✔adjusting historical losses to account for trends so that the
ultimate value is current and meaningful
✔✔Loss Trends take into account: - ✔✔1. Potential Change in Frequency
2. Change in Cost Per Claim
3. Change in Exposure
✔✔Types of claim dates - ✔✔Policy Year - based on policy effective dates
Accident Year - based on accident dates
Calendar Year - based on accounting activity dates
✔✔Loss Triangles - ✔✔are used by actuaries to determine loss development for a given
risk or group of risks
The change overtime, which is represented numerically by loss development factors
✔✔Purpose of Loss Triangulation - ✔✔1. tool used by actuaries to organize data to
identify and analyze patterns in data
2. used to determined loss development for a given risk
QUESTIONS AND ANSWERS GUARANTEE A+
✔✔Insurtech's purpose is to - ✔✔design programs that will increase operational
efficiency, collect and analyze real time data, evaluate risk, improve distribution,
implement digital marketing, and connect with loT devices.
✔✔InsurTech is best described as - ✔✔a start-up business that designs and develops
innovative insurance technology platforms
✔✔Compliance - ✔✔Insurance company is meeting the regulatory/statutory
requirements that exist in the territories where the company does business
✔✔Control - ✔✔makes certain the insurance company in every way is following its own
internal policies, practices and procedures
✔✔Internal Compliance Audits - ✔✔mirror the examinations conducted by regulators
and ensure the insurance company is following its own defined practices and
proceudres
-Usually conducted by and independent body that audits and reports on how the
company is functioning relative to statutory, regulatory, and internally establish
requirements
✔✔Financial Survey Examination - ✔✔Conducted by the state in which the insurance
company resides and ensures the insurance company's financial position is sound and
accurate
✔✔Market conduct Examination - ✔✔Examination is conducted by each state in which
the insurance company operates and ensures the insurance company's service,
underwriting and claim departments are following the appropriator state's statues and
regulations
✔✔Written Premium - ✔✔total premium on all policies written by the insurance
company during a specified period of time, regardless of the portions earned
✔✔Earned premium - ✔✔amount of the premium that has been "used up" during the
term of a policy; for example, if a one- year policy has been in effect six months, half of
the total premium has been earned
✔✔Unearned premium - ✔✔Amount of premium remaining after deducting the earned
premium from written premium; the portion of a premium representing the unexpired
part of the policy
,✔✔Paid Losses - ✔✔amount actually paid in losses during a specified period of time,
not including estimates of amounts (i.e. reserves) that will be paid in the future for
losses occurring in the specified period
✔✔Case Reserve (Claim Reserve) - ✔✔amount the claims adjuster or claims
department places on an individual claim that has not yet been paid, no provision for
IBNR reserves
✔✔Incurred But Not Reported (IBNR) - ✔✔represents the liability for unpaid claims not
reflected in the case reserve estimates for individual losses
*estimated by actuaries on a given risk
✔✔The two components of IBNR reserves are: - ✔✔1. Pure IBNR
2. Borad or Bulk IBNR
✔✔Pure IBNR - ✔✔Claims that have occurred but not reported as of the evaluation
date; since the claim has not been reported there is no basis for establishing a reserve
based up
on the specific characteristics of the claim
*claims that have happened but have not been reported to the insurance company
*not all losses that have occurred have been reported
✔✔Broad or Bulk IBNR - ✔✔the additional development on known claims or the
increase in reserve value as the claim is investigated and settled
*As time goes on the cost of claims may go up and this covers that
*the claim department has not yet established the full reserve value for some claims
✔✔Ultimate Losses - ✔✔total losses that will have been paid when all claims have
reached final settlement
IBNR + Case Reserves + Paid Losses = Ultimate Losses
✔✔Incurred Losses - ✔✔Total amount of paid claims and case reserves associated with
a particular period of time (usually a policy year)
*Paid Losses + Case Reserves = Incurred Losses
✔✔Loss Reserves - ✔✔estimation of the liability for unpaid claims that have occurred
as of a given date, including the IBNR claims, claims due but not yet paid and amounts
not yet due
, *IBNR + Case Reserves = Loss Reserves
✔✔Allocated Loss Adjustment Expense (ALAE) - ✔✔An expense directly assigned to or
that arises from a particular claim
ex. a lawyers cost that is specifically related to the claim
✔✔Unallocated loss adjustment expense (ULAE) - ✔✔Salaries, overhead, and other
related adjustment expenses not specifically allocated or changed to a particular claim.
✔✔Loss Development Factor - ✔✔factors applied to a current valuation of losses to
determine an estimate of ultimate losses
Factors are calculated by comparing period-to-period changes in values of loss
reserves, under the assumption the current losses will be paid according to the same
pattern as the prior loss
✔✔Expected Loss - ✔✔projection of the frequency and/or severity of losses based on
loss history, probability distributions and statistics;
the expected loss projection is commonly called a loss prick
✔✔Loss Trending - ✔✔adjusting historical losses to account for trends so that the
ultimate value is current and meaningful
✔✔Loss Trends take into account: - ✔✔1. Potential Change in Frequency
2. Change in Cost Per Claim
3. Change in Exposure
✔✔Types of claim dates - ✔✔Policy Year - based on policy effective dates
Accident Year - based on accident dates
Calendar Year - based on accounting activity dates
✔✔Loss Triangles - ✔✔are used by actuaries to determine loss development for a given
risk or group of risks
The change overtime, which is represented numerically by loss development factors
✔✔Purpose of Loss Triangulation - ✔✔1. tool used by actuaries to organize data to
identify and analyze patterns in data
2. used to determined loss development for a given risk
