Insurance Quality Control & Assurance 3 — Questions and Answers
Question 1: In insurance, 'leakage' in the context of QC refers to:
- Water damage claims specifically
- Overpayments on claims due to process or judgment errors (Correct answer)
- Premium revenue lost to competitor pricing
- Data breaches of policyholder information
Correct answer: Overpayments on claims due to process or judgment errors
Claim leakage is money paid beyond the appropriate settlement amount due to errors, fraud, or poor claims management practices.
Question 2: Which of the following is a leading indicator of future claims quality problems?
- Historical loss ratios from prior years
- High employee turnover in the claims department (Correct answer)
- The number of new policies written
- The age of the company's software systems
Correct answer: High employee turnover in the claims department
High turnover reduces experienced staff, leading to more errors and inconsistent claim handling before quality metrics even reflect the decline.
Question 3: An insurer's QA scorecard shows a spike in 'late acknowledgment' errors. Which regulatory requirement is most at risk?
- Prompt payment laws requiring timely claim acknowledgment within a set period (Correct answer)
- Rate filing requirements
- Surplus lines regulations
- Gramm-Leach-Bliley privacy rules
Correct answer: Prompt payment laws requiring timely claim acknowledgment within a set period
Most states mandate insurers acknowledge claims within 10–15 days, and late acknowledgment errors directly indicate violations of prompt payment laws.
Question 4: What is the main goal of 'calibration sessions' in an insurance QA program?
- To set annual budgets
- To align auditors on scoring criteria so evaluations are consistent (Correct answer)
- To negotiate vendor contracts
- To process backdated policy changes
Correct answer: To align auditors on scoring criteria so evaluations are consistent
Calibration sessions bring QA reviewers together to score the same files and reconcile differences, ensuring uniform evaluation standards.
Question 5: A market conduct examination by a state insurance department primarily evaluates:
- An insurer's investment portfolio returns
- Whether the insurer's business practices comply with state laws and regulations (Correct answer)
- The insurer's solvency margin
- Reinsurance treaty terms
Correct answer: Whether the insurer's business practices comply with state laws and regulations
Market conduct exams assess how an insurer treats policyholders and whether its practices — including claims handling — follow state laws.
Question 6: Which quality assurance technique involves shadowing a claims adjuster during live calls to evaluate performance?
- File desk review
- Side-by-side monitoring (Correct answer)
- Retrospective audit
- Benchmarking study
Correct answer: Side-by-side monitoring
Side-by-side monitoring allows QA staff to observe and score an adjuster's real-time interactions as they happen.
Question 7: In a root cause analysis following repeated QA failures, which tool maps the sequence of causes leading to a defect?
- Gantt chart
- Fishbone (Ishikawa) diagram (Correct answer)
- Scatter plot
- PERT chart
Correct answer: Fishbone (Ishikawa) diagram
A fishbone diagram visually traces contributing causes back to a central problem, making it ideal for insurance QA root cause investigations.
Insurance Quality Control & Assurance 3
In insurance, 'leakage' in the context of QC refers to: