AIC Workers Compensation & Liability Claims Flashcards

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

What is 'waiver of subrogation' and when is it commonly required?

Answer: An agreement by the insurer not to seek recovery from a specified third party after paying a claim

A waiver of subrogation prevents the insurer from pursuing recovery against a named third party, often required in construction contracts or leases to prevent litigation between project participants.