AIC AIC Workers Compensation & Liability Claims 3

Question 1

What is 'indemnification' in the context of a liability claim settlement?

Accepted Answer

The compensation paid to restore the injured party to their pre-loss financial position

Answer

Indemnification means making the injured party financially whole by compensating them for actual losses suffered as a result of the insured's negligence.

Question 2

What is a 'third-party administrator' (TPA) in workers' compensation?

Accepted Answer

An independent organization hired to manage and administer workers' compensation claims on behalf of self-insured employers or insurers

Answer

A TPA handles claims administration, case management, and reporting for employers or insurers who outsource their workers' compensation claims handling.

Question 3

What is 'loss development' in workers' compensation reserve management?

Accepted Answer

The growth or change in the estimated ultimate cost of a claim over time as new information becomes available

Answer

Loss development tracks how initial reserves change as claims mature and more information about medical costs, disability duration, and legal exposure becomes known.

Question 4

What is an 'occupational disease' claim under workers' compensation?

Accepted Answer

A disease or illness caused by conditions or exposures particular to the worker's occupation over time

Answer

Occupational disease claims arise from gradual exposure to workplace hazards such as chemicals, repetitive motion, or dust, rather than a single accident.

Question 5

In liability claims, what is the purpose of a 'structured settlement'?

Accepted Answer

To pay a large claim as a series of periodic payments over time rather than a single lump sum

Answer

A structured settlement converts a lump-sum award into periodic payments, often funded by an annuity, providing the claimant with long-term financial security while potentially reducing the insurer's total payout.

AIC - Associate in Claims Practice Test

AIC - Associate in Claims Practice Test

AIC AIC Workers Compensation & Liability Claims 3