AIC 300 Exam study Guide.
Accuracy - answerIn model performance evaluation, a model's correct predictions divided by
its total predictions
Actuary - answerA person who uses mathematical methods to analyze insurance data for
various purposes, such as to develop insurance rates or set claim reser...
Accuracy - answer✔✔In model performance evaluation, a model's correct predictions divided by
its total predictions
Actuary - answer✔✔A person who uses mathematical methods to analyze insurance data for
various purposes, such as to develop insurance rates or set claim reserves
Algorithm - answer✔✔An operational sequence used to solve mathematical problems and to
create computer programs
Allegation - answer✔✔A claim made in the complaint by the plaintiff, specifying what the
plaintiff expects to prove to obtain a judgement against the defendant
Average value method - answer✔✔A case reserving method that establishes a predetermined
dollar amount of reserve for each claim as it is reported
Big data - answer✔✔Sets of data that are too large to be gathered and analyzed by traditional
methods
Blockchain - answer✔✔A distributed digital ledger that facilitates secure transactions without
the need for a third party
Claims representative - answer✔✔A person responsible for investigating, evaluating, and
settling claims
Classification tree - answer✔✔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
Coinsurance clause - answer✔✔A clause that required the insured to carry insurance equal to at
least a specified percentage of the insured property's value
Combination of nodes - answer✔✔A representation of data attributes in a classification tree
Comparative negligence - answer✔✔A common-law principle that requires both parties to a loss
to share the financial burden of the bodily injury or property damage according to their
respective degrees of fault
Compensatory damages - answer✔✔A payment awarded by a court to reimburse a victim for
actual harm
Complaint - answer✔✔The allegations made by a plaintiff in a lawsuit
Complex claim - answer✔✔A claim that contains one or more characteristics that cause it to cost
more than the average claim
Concealment - answer✔✔An intentional failure to disclose a material fact
Contributory Negligence - answer✔✔A common-law principle that prevents a person who has
been harmed from recovering damages if that person's own negligence contributed in any way to
the harm
Cross Industry Standard Process for Data Mining (CRISP DM) - answer✔✔An accepted
standard for the steps in any data mining process used to provide business solutions
Data mining - answer✔✔The analysis of large amounts of data to find new relationships and
patterns that will assist in developing business solutions
Data science - answer✔✔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
Direct loss - answer✔✔A reduction in the value of property that results directly and often
immediately from damage to that property
Discovery - answer✔✔A pretrial exchange of all relevant information between the plaintiff and
defendant
Domain knowledge - answer✔✔Information related to the context of the information a data
scientist is working with
Ethics - answer✔✔The study of what constitutes good and bad behavior, dealing with moral
duty and obligation
Expert System method - answer✔✔A method of setting reserves with a software application that
estimates losses and loss adjustment expenses
Federal Rules of Civil Procedure - answer✔✔A set of rules established to ensure that civil
actions and procedures move through the United States district courts as quickly as possible
First notice of loss (FNOL) - answer✔✔The initial report notifying the insurer of a claim
Formula method - answer✔✔A method of setting claims reserves be using a mathematical
formula
General damages - answer✔✔A monetary award to compensate a victim for losses, such as pain
and suffering, that do not involve specific, measurable expenses
Hard fraud - answer✔✔Actions that are undertaken deliberately to defraud
Holdout data - answer✔✔In the model training process, existing data with a known target
variable that is not used as part of the training data
Indemnify - answer✔✔To restore a party who has sustained a loss to the same financial position
that party held before the loss occurred
Indirect loss - answer✔✔A loss that arises as a result of damage to property, other than the direct
loss to the property
Individual case method - answer✔✔A method of setting reserves based on the claim's
circumstances and the claims representative's experience in handling similar claims
Information gain - answer✔✔A measure of the predictive power of one or more attributes
Insurable interest - answer✔✔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
Insurance fraud - answer✔✔Any deliberate deception committed against an insurer or an
insurance producer for the purpose of unwarranted financial gain
Internet of Things (IoT) - answer✔✔A network of objects that transmit data to each other and to
central hubs through the internet
Leaf node - answer✔✔A terminal node of a classification tree that is used to classify an instance
based on its attributes
Lift - answer✔✔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
Loss adjustment expense (LAE) - answer✔✔The expense that an insurer incurs to investigate,
defend, and settle claims according to the terms specified in the insurance policy
Loss ratio - answer✔✔A ratio that measures losses and loss adjustment expenses against earned
premiums and that reflects the percentage of premiums being consumed by losses
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