CAIA Regulatory Compliance and Ethics 3 — Questions and Answers
Question 1: A claimant requests a copy of their claim file. Under most state regulations, what is the adjuster's obligation?
- Deny the request as proprietary information
- Provide access to non-privileged portions of the file (Correct answer)
- Provide the entire file including attorney work product
- Refer all file requests to the state insurance commissioner
Correct answer: Provide access to non-privileged portions of the file
Claimants generally have a right to non-privileged file materials, while attorney work product and investigative notes may be protected.
Question 2: Which of the following is an example of misrepresentation by an insurance adjuster?
- Explaining policy exclusions clearly to a claimant
- Misstating the amount of coverage available to induce a quick settlement (Correct answer)
- Requesting a recorded statement
- Issuing a partial payment while the claim is investigated
Correct answer: Misstating the amount of coverage available to induce a quick settlement
Misstating coverage limits to pressure a claimant into settling is misrepresentation, a violation of UCSPA and ethics codes.
Question 3: Under typical state continuing education (CE) requirements, what happens if an adjuster fails to meet CE hours before license renewal?
- The license automatically converts to inactive status
- The adjuster pays a small fee and continues working
- The license may be suspended or non-renewed (Correct answer)
- The insurer is fined on behalf of the adjuster
Correct answer: The license may be suspended or non-renewed
Failure to complete CE hours before the renewal deadline typically results in license suspension or denial of renewal.
Question 4: What is the primary purpose of a reservation of rights letter?
- To deny a claim outright
- To notify the insured that coverage is being investigated and may be limited or denied (Correct answer)
- To request additional premiums from the policyholder
- To authorize a repair shop to begin work
Correct answer: To notify the insured that coverage is being investigated and may be limited or denied
A reservation of rights letter preserves the insurer's right to deny or limit coverage while the investigation continues.
Question 5: An adjuster accepts a gift from a body shop owner who regularly receives referrals. This most directly violates which ethical principle?
- Duty of care
- Impartiality and freedom from conflicts of interest (Correct answer)
- Confidentiality
- Subrogation rights
Correct answer: Impartiality and freedom from conflicts of interest
Accepting gifts from vendors who benefit from referrals compromises the adjuster's impartiality and constitutes a conflict of interest.
Question 6: Which federal law requires insurers and adjusters to protect non-public personal information of policyholders?
- Sherman Antitrust Act
- Gramm-Leach-Bliley Act (GLBA) (Correct answer)
- Fair Credit Reporting Act
- McCarran-Ferguson Act
Correct answer: Gramm-Leach-Bliley Act (GLBA)
The Gramm-Leach-Bliley Act requires financial institutions, including insurers, to safeguard customers' non-public personal information.
Question 7: A claimant threatens to file a bad faith lawsuit if the adjuster does not immediately pay their disputed claim. What is the appropriate response?
- Immediately pay the claimed amount to avoid litigation
- Continue a thorough investigation while documenting all actions taken (Correct answer)
- Refer the threat to marketing as a customer complaint
- Ignore the threat and close the file
Correct answer: Continue a thorough investigation while documenting all actions taken
The proper response is to maintain a documented, thorough investigation process regardless of litigation threats.
CAIA Regulatory Compliance and Ethics 3
A claimant requests a copy of their claim file.
Under most state regulations, what is the adjuster's obligation?