CA Project Management & Workflow 3 — Questions and Answers
Question 1: An adjuster sets an initial reserve of $10,000 but new information shows the actual exposure is $85,000. What is the correct action?
- Keep the reserve unchanged to avoid scrutiny
- Adjust the reserve upward and document the basis for the change (Correct answer)
- Close the claim and reopen it with the higher reserve
- Transfer the claim to a senior adjuster
Correct answer: Adjust the reserve upward and document the basis for the change
Reserves must reflect the current best estimate of ultimate liability; prompt adjustment with documentation is required.
Question 2: What is the purpose of a 'diary' system in claims workflow?
- Recording confidential adjuster notes
- Scheduling future follow-up actions on open claims (Correct answer)
- Tracking daily mileage for field inspections
- Logging all phone calls with claimants
Correct answer: Scheduling future follow-up actions on open claims
A diary (or bring-forward) system ensures no claim task is overlooked by scheduling reminders for required actions.
Question 3: Which of the following is a leading indicator that a claim file may be approaching bad faith exposure?
- The claimant submitted a signed proof of loss
- The adjuster failed to respond to a policy limits demand within a reasonable time (Correct answer)
- The insured requested an itemized estimate
- A third-party vendor completed repairs
Correct answer: The adjuster failed to respond to a policy limits demand within a reasonable time
Failure to timely respond to a policy limits demand is a classic bad faith trigger in California.
Question 4: In a multi-party liability claim involving several claimants, what workflow approach prevents inadvertent overpayment?
- Pay each claimant as their demand is received
- Track all demands against the per-occurrence policy limit simultaneously (Correct answer)
- Assign separate adjusters for each claimant
- Issue a global reservation of rights
Correct answer: Track all demands against the per-occurrence policy limit simultaneously
Monitoring cumulative exposure against the per-occurrence limit prevents exhausting coverage before all claimants are resolved.
Question 5: What is the primary purpose of an 'authority level' in claims workflow?
- Defining which claims require litigation
- Setting the maximum dollar amount an adjuster can settle without supervisor approval (Correct answer)
- Determining coverage for high-severity claims
- Classifying claims by line of business
Correct answer: Setting the maximum dollar amount an adjuster can settle without supervisor approval
Authority levels ensure appropriate oversight by routing large settlements through supervisory review.
Question 6: An adjuster receives a demand package from a claimant's attorney. What is the correct initial workflow step?
- Immediately reject the demand in writing
- Log receipt, review coverage, and calendar the response deadline (Correct answer)
- Forward it directly to outside counsel
- Issue a payment within 5 days
Correct answer: Log receipt, review coverage, and calendar the response deadline
Proper intake, coverage review, and deadline calendaring are the foundational first steps before evaluating or responding.
Question 7: Which workflow document formally notifies a claimant that an investigation is ongoing and a coverage decision has not yet been made?
- Reservation of rights letter (Correct answer)
- Proof of loss form
- Declination letter
- Subrogation demand
Correct answer: Reservation of rights letter
A reservation of rights letter preserves the insurer's ability to deny coverage while the investigation continues.
CA Project Management & Workflow 3
An adjuster sets an initial reserve of $10,000 but new information shows the actual exposure is $85,000.
What is the correct action?