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
What is the primary purpose of the NAIC Model Unfair Claims Settlement Practices Act?
Answer: To establish minimum standards for fair and timely claims handling
The NAIC Model Act sets baseline standards that states adopt to ensure insurers handle claims fairly and promptly.
An adjuster is offered a bonus by their employer for closing the most claims in a month with the lowest payouts. Which ethical concern does this raise?
Answer: It may incentivize undervaluing or improperly denying valid claims
Financial incentives tied to low payouts can create pressure to underpay valid claims, raising bad faith and ethical concerns.
Which of the following is a required element of a proper claim denial letter under most state regulations?
Answer: The specific policy provision, exclusion, or condition that supports the denial
Denial letters must cite the specific policy language relied upon to deny the claim, per UCSPA and most state laws.
A claimant is a non-English speaker. What ethical obligation does the adjuster have during the claims process?
Answer: Take reasonable steps to communicate effectively, including providing a translator if needed
Ethical and regulatory standards require adjusters to make reasonable accommodations to ensure effective communication with all claimants.
When an adjuster suspects staged accident fraud, which of the following is the most appropriate next step?
Answer: Document suspicions and refer to the Special Investigations Unit (SIU)
Suspected fraud must be properly documented and escalated to the SIU, which is equipped to conduct formal fraud investigations.
Under the principle of indemnity, what is the maximum amount an insured should receive from a valid automotive insurance claim?
Answer: An amount that restores the insured to their pre-loss financial position, no more
The principle of indemnity limits recovery to the actual financial loss — preventing unjust enrichment from an insurance claim.
Which of the following constitutes a violation of adjuster ethics regarding recorded statements?
Answer: Taking a recorded statement after the claimant has retained an attorney without attorney consent
Once a claimant is represented by an attorney, direct contact — including recorded statements — must go through the attorney.