Mixed Deck — All ACE Topics Flashcards
100 cards from real ACE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 20 Mixed Deck — All ACE Topics flashcards as text
A physician bills for 30-minute office visits for workers' comp claimants, but surveillance shows visits lasting under 5 minutes. This best illustrates which fraud type?
Answer: Upcoding — billing for a higher level of service than provided
Upcoding occurs when a provider bills for a more extensive or expensive service level than was actually delivered, such as billing extended visits for brief encounters.
Which cancellation reason typically requires the longest advance notice to the insured under state statutes?
Answer: Mid-term nonrenewal of a personal auto policy
Nonrenewal notices generally require longer advance notice (often 30–60 days) than mid-term cancellations for nonpayment, which may only require 10 days.
A customer wants to know why their homeowner's insurance premium increased at renewal. Which of the following is NOT a common reason for a premium increase?
Answer: The customer's credit score improved significantly
An improved credit score typically results in a premium decrease, not an increase, as better credit is associated with lower risk.
A customer asks about the difference between 'occurrence' and 'claims-made' liability policies. Which statement is ACCURATE?
Answer: Occurrence policies cover any incident that happened during the policy period, regardless of when the claim is filed
Occurrence policies provide coverage for incidents that happen during the policy period, even if the claim is reported years later.
Which regulatory concept requires an insurer to treat all similarly situated policyholders consistently in claims handling?
Answer: Good faith and fair dealing
The duty of good faith and fair dealing requires insurers to handle all similarly situated claimants consistently and without arbitrary discrimination.
What is the primary function of ACORD messaging standards?
Answer: Standardize data exchange between insurance entities
ACORD messaging standards facilitate the secure and standardized exchange of insurance data between different entities.
The NAIC's Insurance Data Security Model Law is primarily designed to address:
Answer: Cybersecurity requirements for insurance licensees
The NAIC Insurance Data Security Model Law establishes standards for data security programs and breach notification for insurance licensees.
When an underwriter evaluates 'replacement cost value' for a commercial building, what key principle guides this assessment?
Answer: The cost to rebuild the structure with like kind and quality materials
Replacement cost value reflects the expense to reconstruct the building at current labor and material prices without deducting depreciation.
What is the significance of 'surplus strain' in evaluating an insurer's rapid premium growth?
Answer: Rapid premium growth can deplete surplus because expenses are recognized before premiums are fully earned
Surplus strain occurs when an insurer writes significant new business because acquisition costs are expensed immediately while the related premiums are earned over the policy period.
Which of the following best describes the role of ACORD's Data Model in process automation?
Answer: It provides a common data dictionary enabling consistent field definitions across systems
ACORD's Data Model provides a shared data dictionary so that field definitions are consistent, enabling automated processes to exchange data accurately.
What is the primary purpose of documentation in ACORD Certified Expert?
Answer: Creating an accurate, complete record for accountability and communication
Documentation creates reliable records that support accountability, communication, and legal compliance.
What is due diligence in ACORD Certified Expert?
Answer: Thorough investigation and analysis before making decisions
Due diligence involves comprehensive investigation and analysis to make informed decisions and mitigate risks.
A 'schedule rating' modification in underwriting allows the underwriter to do what?
Answer: Adjust the manual rate based on individual risk characteristics
Schedule rating permits debits or credits to the manual rate to reflect specific risk features not captured in class rating.
In a liability claim, 'comparative negligence' means:
Answer: Damages are allocated based on each party's percentage of fault
Under comparative negligence, each party's damages are reduced by their percentage of fault in causing the loss.
How do ACORD forms enhance efficiency in the insurance industry?
Answer: Standardize data capture and reduce errors
ACORD forms provide a standardized method for capturing and communicating insurance data, reducing manual errors and processing time.
What is the purpose of the ACORD 'Loss Information' section in the ACORD 125 Commercial Insurance Application?
Answer: Documents prior claims history and outstanding losses for underwriting purposes
The Loss Information section of ACORD 125 captures prior claims and loss history, which underwriters use to assess risk and set premiums.
Which ACORD Real-Time transaction type allows an agency to retrieve a list of open claims for a specific policy?
Answer: ClaimStatusInqRq
ClaimStatusInqRq is the ACORD Real-Time transaction used to inquire about the status of open claims associated with a policy.
In a policy analysis context, what does 'manuscript policy' mean?
Answer: A custom-drafted policy tailored to a specific insured's unique needs rather than a standard form
A manuscript policy is individually negotiated and drafted for a specific insured, often for large or unusual risks not covered by standard market forms.
Which technique do analysts use to normalize an insurer's reported earnings for catastrophe losses when projecting future profitability?
Answer: Replace actual catastrophe losses with long-run expected catastrophe loads
Analysts substitute actual (lumpy) catastrophe losses with a normalized expected catastrophe load based on long-run historical averages or model outputs to smooth earnings projections.
How does ACORD compliance benefit InsurTech companies?
Answer: Ensures seamless data standardization
ACORD compliance ensures seamless data standardization, interoperability, and improved communication between insurers and tech providers.