Claims & Loss Analysis Flashcards
7 cards from real CU practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Claims & Loss Analysis flashcards as text
A commercial property insurer receives a claim for fire damage. The adjuster discovers the insured had recently increased coverage just before the fire. Which concept should the underwriter investigate?
Answer: Moral hazard escalation
A sudden coverage increase shortly before a loss is a classic moral hazard indicator suggesting possible intentional misconduct.
In subrogation, after paying a claim, the insurer acquires the right to:
Answer: Pursue recovery from the responsible third party
Subrogation allows the insurer to step into the insured's shoes and sue the negligent third party to recover paid losses.
An insured suffers a $200,000 loss on a property valued at $500,000, but only carries $300,000 in coverage with an 80% coinsurance clause. What is the insurer's liability?
Answer: $150,000
The coinsurance formula: ($300,000 / $400,000 required) × $200,000 loss = $150,000 covered.
Which loss development factor concept is used in actuarial analysis to project ultimate claim costs from reported losses?
Answer: Chain-ladder method
The chain-ladder method uses historical loss development patterns to project reported losses to their ultimate settled values.
A workers' compensation claim involves a permanently injured employee. The insurer must reserve for:
Answer: Future medical costs and indemnity payments over the claim's lifetime
Permanent injury claims require long-tail reserves covering lifetime medical expenses and ongoing indemnity benefits.
When analyzing a loss run, a high frequency of small claims in a commercial auto account most likely indicates:
Answer: Poor driver training and selection practices
Frequent small auto claims typically signal systemic problems with driver hiring, training, or supervision practices.
An insured reports a claim three years after the policy expired. The underwriter should first review:
Answer: The occurrence versus claims-made policy trigger
Whether the policy uses an occurrence trigger (covers when event happened) or claims-made trigger (requires reporting during policy period) determines coverage applicability.