Study 2

Question 1

An amount carried as a liability in an insurer’s balance sheet representing, in respect of each claim, an amount equal to the estimated final settlement cost less any amounts already paid.

Answer 1

loss reserve

Question 2

A federal statute that governs the collection and use of personal information. It states that personal information to be collected must be relevant, and that all information that has been collected, is being collected, or will be collected must be held in the strictest of confidence.

Answer 2

Personal Information Protection and Electronic Documents Act (PIPEDA)

Question 3

One who specializes in the mathematics of insurance, mortality rates, and the like.

Answer 3

actuary

Question 4

The process of compiling and analyzing data to establish rates that accurately reflect the level of risk. Usually performed by actuaries.

Answer 4

ratemaking

Question 5

Set up automatically when loss adjusters open a particular file. Actuaries predetermine a reserve amount for the particular type of claim by using historical data from a large sample of similar claims, noting their settlement amounts, and considering any inflation factors. Also known as a volume reserve.

Answer 5

average cost reserving

Question 6

Used when only the loss adjuster can effectively estimate a reserve. The loss adjuster assesses each claim carefully in order to estimate how much should be put in reserve.

Answer 6

individual reserving

Question 7

(1) Methods used to deceive to cause an unwarranted favorable decision for one’s own benefit. (2) Deliberate misrepresentation or misstatement. (3) Concealment of facts that should at the time be made known.

Answer 7

fraud

Question 8

A vehicle that does not exist or is already wrecked.

Answer 8

phantom vehicle