AIC 300 EXAMINERS QUESTIONS AND ANSWERS (SOLVED 100% CORRECT)
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Module
AIC 300
Institution
AIC 300
AIC 300 EXAMINERS QUESTIONS AND ANSWERS (SOLVED 100% CORRECT)
Why is establishing and maintaining adequate reserves important? - Answer-. If a claims representative doesn't set accurate case reserves, it could affect the financial health of the insurer for which he or she works. In extreme cases,...
AIC 300 EXAMINERS QUESTIONS
AND ANSWERS (SOLVED 100%
CORRECT)
Why is establishing and maintaining adequate reserves important? - Answer-. If a
claims representative doesn't set accurate case reserves, it could affect the financial
health of the insurer for which he or she works. In extreme cases, inaccurate reserving
could cause insolvency.
What is the formula method of setting claim reserves? - Answer-. With the formula
method of setting claim reserves, a formula for setting a reserve is determined by the
insurer and is automatically created for the claims rep based on the facts of a claim.
What is stairstepping a reserve? - Answer-. A claims rep may set a modest initial
reserve but then raise the reserve by a few thousand dollars to issue payments. Later,
the reserve is increased again when more bills arrive. This is stairstepping.
. Who does an insurance policy typically cover? - Answer-. Some policies cover only
insureds named or listed in the policy. However, most policies define "insured" to cover
additional persons, such as family members of the named insured who reside in the
home.
. What should Kolby, a claims representative, do to determine whether a cause of loss
is covered? - Answer-Kolby should thoroughly investigate all the facts concerning the
loss and apply them to the language in all the policy provisions. He must also carefully
read the exclusions to find possible coverage exceptions and analyze policy definitions.
. Eduardo is the insured in a liability claim. What are the damages for which he may be
liable? - Answer-. For liability claims, the insured may be liable for punitive and
compensatory damages. Punitive damages punish a wrongdoer for a reckless,
malicious, or deceitful act with the purpose of deterring similar conduct. Compensatory
damages include special damages and gen
What must a claims representative do before making any payments - Answer-. The
claims representative must verify all the policy limits applicable to a loss before making
any payments to ensure that payment falls within the available limits of coverage.
. How can claim payments be made? - Answer-Claim payments can be made by check,
bank draft, or electronic transfer of funds.
, . What are some issues claims personnel must be aware of when issuing claim
payments? - Answer-. When issuing claim payments, claims personnel must ensure
that the proper parties are being paid. Many other parties, such as mortgagees on
homes and loss payees on autos and personal property, can have a financial interest in
property. Claims reps must also check various databases to ensure that the claim
payment complies with federal and state laws. Insurers and other claims payors must
also be aware of state child-support enforcement initiatives. And claims reps handling
workers compensation claims and third-party bodily injury claims must be aware of the
Medicare Secondary Payer Program and how it can affect claim payments.
. What are two negotiation techniques that Magnus, a claims representative, can use to
negotiate with any party? - Answer-Magnus can use two techniques when negotiating
with any party:
Principle of yes—Magnus should begin negotiations with a question that will generate a
"yes" answer, which increases the likelihood of getting a "yes" to subsequent questions.
Choicing—Magnus should first present the choice the other party will find least
desirable, making the next choice more appealing.
. Hanna, a claims representative, is negotiating with John, an unrepresented claimant.
What are two techniques Hanna can use? - Answer-Collecting and using extraneous
information
Making the first offer
If the allegations in the complaint do not appear to be covered under the applicable
policy, what should the claims rep do? - Answer-If the allegations in the complaint do
not appear to be covered under the applicable policy, the claims rep should discuss the
coverage issue with coverage counsel before taking any other action and should follow
any insurer procedures, such as requesting a managerial review.
A claims rep receives a summons and complaint. It alleges that the insured caused a
motor vehicle accident in which the plaintiff was injured and demands $800,000 in
damages. The insured's personal auto policy has a $100,000 liability limit. The claims
rep has determined that the policy covers the allegations and has referred the lawsuit to
defense counsel. What additional action does the claims rep need to take? - Answer-If it
appears that the damages could exceed the limits of the insured's policy, the claims rep
should notify the insured in an excess letter, which may also serve to inform the insured
that he or she has the option of hiring separate defense counsel.
Mary is a claims rep who is not actively engaged in litigation or trial preparations. Why is
it a good idea for Mary to read up on case law and court opinions related to the types of
claims she usually handles? - Answer-Mary may find it helpful to stay abreast of recent
court opinions and changes in case law related to the types of claims she usually
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