CAWC Exam QUESTIONS & CORRECT
ANSWERS RATED A+
What are the different types of Workers Compensation Products? - correct answer ✔✔
Guaranteed Cost
Small Deductible Plan
Large Deductible Plan
Retroactive Rating Plan
Guaranteed Cost - correct answer ✔✔ Premium doesn't vary that much during a policy period
even if there are considerable/limited losses. Carrier Assumes all the risk
Dividend Plans - correct answer ✔✔ Goes along with Guaranteed Cost; allows insured
opportunity to receive money back after policy period has ended
Small Deductible Plan - correct answer ✔✔ Policy holder shares cost of claims of the injured
worker
Retrospective Rating Plan - correct answer ✔✔ Premium calculated after the policy period has
ended; Takes into consideration all losses that occurred. Large loss > more premium. Small loss
> less premium. "loss sensitive"- amount of losses affect premium
Large Deductible Plan - correct answer ✔✔ Insured assumes more risk by paying substantial
portions (or all) of each claim. Lower initial premium. Pays for losses as they occur
Monopolistic states - correct answer ✔✔ North Dakota, Ohio, Washington, Wyoming; Workers
comp regulated and controlled by the state; no private insurance carriers
,State Funds - correct answer ✔✔ 25 States offer workers compensation
Competitive State Funds - correct answer ✔✔ 21 states have state offered workers
compensation insurance but private insurance carriers are permitted to sell WC insurance
Self Insurance - correct answer ✔✔ Employer retains the risk of workers compensation losses if
they have the financial means to do so;
Excess Insurance - correct answer ✔✔ Typically purchased by employer who self-insures; cover
losses over a specified amount, provides additional coverage for $$$ claims
Assigned Risk - correct answer ✔✔ provide coverage for companies that cannot obtain
insurance due to very high risk and poor loss history
Employer's Liability/ Stop-gap Coverage - correct answer ✔✔ Coverage for employer against law
liability for injured workers whose injuries are not covered by workers comp laws
What factors / economic conditions affect workers compensation premium? - correct answer
✔✔ Hard and Soft Markets
Hard Market - correct answer ✔✔ Rates are higher, not a lot of negotiation with employers
when buying/renewing policies, Carrier has greater leverage. Stricter Underwriting practices.
Shorter duration lasting 3-5 years
Soft Market - correct answer ✔✔ Rates are lower, Employers have greater leverage to negotiate
premiums, "not as tough" underwriting practices, higher policy limit, longer duration lasting 6-8
years
, CAIF estimated _______________ to be estimated total cost of insurance fraud per year -
correct answer ✔✔ +$80 billion
Employee Fraud - correct answer ✔✔ Claims a bogus injury to get paid time off. Tells employer
it happened on job when it happened on personal time
Insurance Fraud - correct answer ✔✔ Intentional misrepresentation of facts and circumstances
to an insurance company to illegally obtain funds
Employer Fraud - correct answer ✔✔ Employer lowers the amount of the company payroll to
lower premium payments, employer says employees are independent contractors,Employer
misrepresents employee duties/ risk to get lower premiums
Premium Fraud - correct answer ✔✔ Lying about amount of the payroll, misrepresented job
codes, not carrying the required workers comp insurance, experience mod evasion
How does Experience Mod Evasion factor into insurance fraud? - correct answer ✔✔ It is a type
of employer fraud and premium fraud
What are the 2 types of Agent Fraud? - correct answer ✔✔ Delaying the Payment, Keeping the
Premium
Delaying the Payment - correct answer ✔✔ Agent doesn't immediately send client's payment to
insurance carrier, puts money in an interest-bearing account, collects interest on money, sends
original premium minus interest to insurance carrier.
Keeping the Premium - correct answer ✔✔ Agent doesn't send premium to carrier, and keeps it
instead; client is not covered, and agent has committed theft
ANSWERS RATED A+
What are the different types of Workers Compensation Products? - correct answer ✔✔
Guaranteed Cost
Small Deductible Plan
Large Deductible Plan
Retroactive Rating Plan
Guaranteed Cost - correct answer ✔✔ Premium doesn't vary that much during a policy period
even if there are considerable/limited losses. Carrier Assumes all the risk
Dividend Plans - correct answer ✔✔ Goes along with Guaranteed Cost; allows insured
opportunity to receive money back after policy period has ended
Small Deductible Plan - correct answer ✔✔ Policy holder shares cost of claims of the injured
worker
Retrospective Rating Plan - correct answer ✔✔ Premium calculated after the policy period has
ended; Takes into consideration all losses that occurred. Large loss > more premium. Small loss
> less premium. "loss sensitive"- amount of losses affect premium
Large Deductible Plan - correct answer ✔✔ Insured assumes more risk by paying substantial
portions (or all) of each claim. Lower initial premium. Pays for losses as they occur
Monopolistic states - correct answer ✔✔ North Dakota, Ohio, Washington, Wyoming; Workers
comp regulated and controlled by the state; no private insurance carriers
,State Funds - correct answer ✔✔ 25 States offer workers compensation
Competitive State Funds - correct answer ✔✔ 21 states have state offered workers
compensation insurance but private insurance carriers are permitted to sell WC insurance
Self Insurance - correct answer ✔✔ Employer retains the risk of workers compensation losses if
they have the financial means to do so;
Excess Insurance - correct answer ✔✔ Typically purchased by employer who self-insures; cover
losses over a specified amount, provides additional coverage for $$$ claims
Assigned Risk - correct answer ✔✔ provide coverage for companies that cannot obtain
insurance due to very high risk and poor loss history
Employer's Liability/ Stop-gap Coverage - correct answer ✔✔ Coverage for employer against law
liability for injured workers whose injuries are not covered by workers comp laws
What factors / economic conditions affect workers compensation premium? - correct answer
✔✔ Hard and Soft Markets
Hard Market - correct answer ✔✔ Rates are higher, not a lot of negotiation with employers
when buying/renewing policies, Carrier has greater leverage. Stricter Underwriting practices.
Shorter duration lasting 3-5 years
Soft Market - correct answer ✔✔ Rates are lower, Employers have greater leverage to negotiate
premiums, "not as tough" underwriting practices, higher policy limit, longer duration lasting 6-8
years
, CAIF estimated _______________ to be estimated total cost of insurance fraud per year -
correct answer ✔✔ +$80 billion
Employee Fraud - correct answer ✔✔ Claims a bogus injury to get paid time off. Tells employer
it happened on job when it happened on personal time
Insurance Fraud - correct answer ✔✔ Intentional misrepresentation of facts and circumstances
to an insurance company to illegally obtain funds
Employer Fraud - correct answer ✔✔ Employer lowers the amount of the company payroll to
lower premium payments, employer says employees are independent contractors,Employer
misrepresents employee duties/ risk to get lower premiums
Premium Fraud - correct answer ✔✔ Lying about amount of the payroll, misrepresented job
codes, not carrying the required workers comp insurance, experience mod evasion
How does Experience Mod Evasion factor into insurance fraud? - correct answer ✔✔ It is a type
of employer fraud and premium fraud
What are the 2 types of Agent Fraud? - correct answer ✔✔ Delaying the Payment, Keeping the
Premium
Delaying the Payment - correct answer ✔✔ Agent doesn't immediately send client's payment to
insurance carrier, puts money in an interest-bearing account, collects interest on money, sends
original premium minus interest to insurance carrier.
Keeping the Premium - correct answer ✔✔ Agent doesn't send premium to carrier, and keeps it
instead; client is not covered, and agent has committed theft
