Regulatory Compliance and Ethics Flashcards
7 cards from real CAIA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Regulatory Compliance and Ethics flashcards as text
Which of the following best defines 'bad faith' in the context of automotive insurance claims?
Answer: Intentionally or unreasonably denying, delaying, or underpaying a valid claim
Bad faith involves an insurer's intentional or unreasonable failure to honor its obligations under a policy.
An independent adjuster working for multiple insurers receives a claim involving two of their client insurers on opposite sides of a dispute. What must they do?
Answer: Disclose the conflict and decline one of the assignments
Adjusters must disclose conflicts of interest and cannot represent adverse parties in the same dispute.
Under most state regulations, how long does an insurer typically have to accept or deny a claim after receiving all necessary documentation?
Answer: 45 calendar days
Most states require a coverage decision within 45 calendar days after receipt of a properly completed proof of loss.
What is the primary ethical issue with an adjuster pressuring a claimant to use a specific repair facility when the policy does not require it?
Answer: It may limit the claimant's rights and benefit the insurer unfairly
Steering a claimant to a specific shop when the policy does not mandate it may infringe on the claimant's rights and create a conflict of interest.
Which of the following actions would help an adjuster demonstrate ethical conduct during a disputed total loss settlement?
Answer: Providing the claimant with a written explanation of the valuation methodology
Transparency about valuation methods supports ethical standards and helps claimants make informed decisions.
Which regulatory body has primary oversight of insurance claims practices at the state level?
Answer: State Department of Insurance (DOI)
State Departments of Insurance have primary authority to regulate claims practices and license adjusters within their jurisdictions.
An adjuster learns during an investigation that a claimant also submitted the same claim to a second insurer and received payment. This is an example of:
Answer: Insurance fraud
Collecting the same loss from two insurers (double-dipping) is insurance fraud and must be reported.