AIC

Question 1

Indemnify

Answer 1

to restore a party who has sustained a loss to the same financial position that party held before the loss occurred

Question 2

Third-party administrator

Answer 2

An organization that provides administrative services associated with risk financing and insurance

Question 3

Claims representative

Answer 3

A person responsible for investigating, evaluating, and settling claims

Question 4

Producer

Answer 4

Any of several kinds of insurance personnel who place insurance and surety business with insurers and who represent either insurers or insureds, or both.

Question 5

Public adjuster

Answer 5

An outside organization or person hired by an insured to represent the insured in a claim in exchange for a fee.

Question 6

Premium audit

Answer 6

Methodical examination of a policyholder’s operations, records, and books of account to determine the actual exposure units and premium for insurance coverages already provided.

Question 7

Loss ratio

Answer 7

A ratio that measures losses and loss adjustment expenses against earned premiums and that reflects the percentage of premiums being consumed by losses.

Question 8

Loss adjustment expense (LAE)

Answer 8

The expense that an insurer incurs to investigate, defend, and settle claims according to the terms specified in the insurance policy.

Question 9

Individual case method

Answer 9

A method of setting reserves based on the claim’s circumstances and the claims representative’s experience in handling similar claims.

Question 10

Roundtable method

Answer 10

A method of setting reserves by using the consensus of two or more claims personnel who have independently evaluated the claims file.

Question 11

Average value method

Answer 11

A case reserving method that establishes a predetermined dollar amount of reserve for each claim as it is reported.

Question 12

Formula method

Answer 12

A method of setting claim reserves by using a mathematical formula.

Question 13

Expert system method

Answer 13

A method of setting reserves with a software application that estimates losses and loss adjustment expenses.

Question 14

Pro rata contribution

Answer 14

An approach to other insurance by which the insurers contribute to the loss payment in the proportion to which they contribute to the total amount of coverage purchased (their limits of liability).

Question 15

Insurable interest

Answer 15

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.

Question 16

Punitive damages (exemplary damages)

Answer 16

A payment awarded by a court to punish a defendant for a reckless, malicious, or deceitful act to deter similar conduct; the award need not bear any relation to a party’s actual damages.

Question 17

Compensatory damages

Answer 17

A payment awarded by a court to reimburse a victim for actual harm.

Question 18

Special damages

Answer 18

A form of compensatory damages that awards a sum of money for specific, identifiable expenses associated with the injured person’s loss, such as medical expenses or lost wages.

Question 19

General damages

Answer 19

A monetary award to compensate a victim for losses, such as pain and suffering, that do not involve specific, measurable expenses.

Question 20

Coinsurance clause

Answer 20

A clause that requires the insured to carry insurance equal to at least a specified percentage of the insured property’s value.

Question 21

Discovery

Answer 21

A pretrial exchange of all relevant information between the plaintiff and defendant.

Question 22

Summons

Answer 22

A document that directs a sheriff or another courtdesignated officer to notify the defendant named in the lawsuit that a lawsuit has been started and that the defendant has a specified amount of time to answer the complaint.

Question 23

Service of process

Answer 23

The delivery of a summons and complaint to a defendant by an authorized person.

Question 24

Allegation

Answer 24

A claim made in the complaint by the plaintiff, specifying what the plaintiff expects to prove to obtain a judgment against the defendant.

Question 25

Federal Rules of Civil Procedure

Answer 25

A set of rules established to ensure that civil actions and procedures move through the United States district courts as quickly as possible.

Question 26

Statute of limitations

Answer 26

A law that stipulates the length of time after an event during which legal proceedings (such as a lawsuit or criminal charges) may be initiated.

Question 27

Stare decisis

Answer 27

The principle that lower courts must follow precedents set by higher courts.

Question 28

Motion for summary judgment

Answer 28

A pretrial request asking the court to enter a judgment when no material facts are in dispute and the moving party is entitled to judgment as a matter of law.

Question 29

Motion in limine

Answer 29

A pretrial request that certain evidence be excluded from the trial.

Question 30

Internet of Things (IoT)

Answer 30

A network of objects that transmit data to each other and to central hubs through the internet.

Question 31

Cross Industry Standard Process for Data Mining (CRISP-DM)

Answer 31

An accepted standard for the steps in any data mining process used to provide business solutions.

Question 32

Information gain

Answer 32

A measure of the predictive power of one or more attributes.

Question 33

Classification tree

Answer 33

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.

Question 34

Recursively

Answer 34

Successively applying a model.

Question 35

Root node

Answer 35

The first node in a classification tree.

Question 36

Leaf node

Answer 36

A terminal node of a classification tree that is used to classify an instance based on its attributes.

Question 37

Holdout data

Answer 37

In the model training process, existing data with a known target variable that is not used as part of the training data.

Question 38

Lift

Answer 38

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.

Question 39

Precision

Answer 39

In model performance evaluation, a model’s correct positive predictions divided by its total positive predictions.

Question 40

Actuary

Answer 40

A person who uses mathematical methods to analyze insurance data for various purposes, such as to develop insurance rates or set claim reserves.

Question 41

Data science

Answer 41

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.

Question 42

Blockchain

Answer 42

A distributed digital ledger that facilitates secure transactions without the need for a third party.

Question 43

Hard fraud

Answer 43

Actions that are undertaken deliberately to defraud.

Question 44

Soft fraud, or opportunity fraud

Answer 44

Fraud that occurs when a legitimate claim is exaggerated.

Question 45

Tort

Answer 45

A wrongful act or an omission, other than a crime or a breach of contract, that invades a legally protected right.

Question 46

Tortfeasor

Answer 46

A person or an organization that has committed a tort.

Question 47

Contributory negligence

Answer 47

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.

Question 48

Comparative negligence

Answer 48

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.

Question 49

Aaron works for a multi-line insurer. He works with insurance producers and applicants to evaluate new business submissions and conduct renewal underwriting. Aaron is a

Answer 49

Line underwriter.

Question 50

Hugo is conducting an audit of a branch office claims operation. He is evaluating timeliness of reports, number of files opened, proper releases taken, and accuracy of data entry. Which one of Hugo’s metrics is a qualitative audit factor?

Answer 50

Proper releases taken

Question 51

Which one of the following methods of establishing case reserves is used most often when there are small variations in loss size for a particular type of claim?

Answer 51

Average value method

Question 52

In the process of assigning a claim, an internal claims handler will often transfer information to the insurer’s standard form, called the

Answer 52

First notice of loss (FNOL) form.

Question 53

To determine whether an insurer typically underreserves or overreserves claims, actuaries compare the insurer’s paid losses to

Answer 53

The insurer’s case reserves.

Question 54

The Office of Foreign Assets Control requires claims payors to check payees against a database of

Answer 54

Known terrorists and drug traffickers.

Question 55

Andrew is a claims representative investigating whether coverage applies to a new claim. To help ensure that he considers every facet of the policy before determining coverage, he might use

Answer 55

The DICE method.

Question 56

Chloe is an insurer defense attorney who is preparing a trial strategy. She has researched a court decision that was made in a similar case and is basing the defense on that precedent. Chloe is relying on the principle of stare decisis, which is that

Answer 56

Lower courts must follow precedents set by higher courts.