AIC 300 Exam Study Guide.
First party insurance - answerinsurer makes payment for covered losses directly to the
policyholder (first party)
third-party insurance - answerinsurer makes payments on behalf of the policyholder to a
claimant (third party)
third party administrators (TPAs) - answer-...
First party insurance - answer✔✔insurer makes payment for covered losses directly to the
policyholder (first party)
third-party insurance - answer✔✔insurer makes payments on behalf of the policyholder to a
claimant (third party)
third party administrators (TPAs) - answer✔✔- an organization that provides administrative
services associated with risk financing and insurance (claims, records, analysis, etc)
- self insured businesses can handle their own claims or hire a TPA
- P&C insurers have subsidiaries that serve as a TPA
staff claims representatives - answer✔✔a person responsible for investigating, evaluating, and
settling claims (ex: adjusters)
independent adjusters - answer✔✔- specialized claims + field work
- if insurer cant afford claims offices in every state
- some are self employed, some work for adjusting firms
producers - answer✔✔- any kinds of insurance personnel who place insurance and surety
business with insurers and who represent either insurers, insureds, or both
- ex: agents, brokers, sales reps
public adjusters - answer✔✔- outside organization or person hired by an insured to represent the
insured in a claim in exchange for a fee
- if insured is not happy with settlement or it is a complex claim
types of staff claims representatives - answer✔✔inside: exclusively from insurer's office
field: outside, both in and out of office, handle claims with tasks like investigating scene of loss,
meeting with insureds, etc
line underwriters - answer✔✔work directly with insurance producers and applicants to evaluate
new submissions & renewals
staff underwriters - answer✔✔work with line underwriters to coordinate decisions about
products, pricing, and guidelines
premium audit - answer✔✔methodical examinations of a policyholder's operations, records, and
books of account to determine the actual exposure units and premium for insurance coverages
already provided
why should claim reps be careful with what they say on claims communication? -
answer✔✔claims investigation activities can later be used as evidence in legal proceedings, any
written claims communication can be subpoenaed
loss ratio - answer✔✔losses & los adjustment expenses / earned premium
measures the performance of claims & uw departments
loss adjustment expenses (LAE) - answer✔✔the expense that an insurer incurs to investigate,
defend, and settle claims according to the terms specified in the policy
short term solution to reduce LAE - answer✔✔reduce expenses by offering settlement payments
instead of paying for investigation and legal defense
3 Quality Measures of a Claims Dept - answer✔✔- best practices
- claims audits
- customer satisfaction data
Quantitative vs Qualitative Audit Factors - answer✔✔quantitative: all come from # data (ex:
timeliness of reports, number of files opened monthly, avg claims settlement value)
qualitative: based on judgement (realistic reserving, proper releases taken, correct coverage
evaluation, good negotiation skills)
Claims Acknowledgement - answer✔✔claims process begins when an insurer receives a claim.
this advises that the claim was received
Activities in the claims handling process - answer✔✔1. Acknowledge a claim and assigning it to
a claims rep
2. Identifying the policy
3. Contacting the insured of the insured's representative
4. Investigating and documenting the claim
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