Insurance Quality Control & Assurance 4 — Questions and Answers
Question 1: Which of the following best describes a 'closed-file review' in insurance QA?
- Auditing claim files after they have been fully settled and closed (Correct answer)
- Reviewing only claims that are currently in litigation
- Examining files where coverage was denied
- Inspecting only catastrophe-related claims
Correct answer: Auditing claim files after they have been fully settled and closed
A closed-file review examines settled claims to assess whether the handling, documentation, and payment decisions were appropriate.
Question 2: An insurer implements a '100% review' QA approach for newly hired adjusters. This is an example of:
- Statistical process control
- Risk-based sampling
- Universal sampling for high-risk populations (Correct answer)
- Benchmarking against industry peers
Correct answer: Universal sampling for high-risk populations
New employees represent a higher risk of errors, so reviewing all of their work (universal sampling) mitigates quality risk until competence is proven.
Question 3: A QA analyst notices that denial rates are significantly higher for a specific adjuster compared to peers. The BEST next step is to:
- Immediately terminate the adjuster
- Conduct a targeted file review to determine if denials are justified or erroneous (Correct answer)
- Ignore it as normal variation
- Automatically approve the denied claims
Correct answer: Conduct a targeted file review to determine if denials are justified or erroneous
A targeted review identifies whether the outlier denial rate reflects poor judgment or legitimate pattern recognition before any action is taken.
Question 4: In insurance quality management, 'Six Sigma' methodology aims to reduce defects to approximately:
- 1 per 1,000 opportunities
- 3.4 per million opportunities (Correct answer)
- 1 per 100 opportunities
- 10 per 10,000 opportunities
Correct answer: 3.4 per million opportunities
Six Sigma targets 3.4 defects per million opportunities, representing a near-perfect process quality level.
Question 5: Which of the following is an example of a 'critical error' in an insurance claims QA scorecard?
- Missing the required signature on a claims payment log
- Paying a claim for a coverage that was explicitly excluded under the policy (Correct answer)
- Failing to update a phone number in the claim file
- Using an outdated claim form template
Correct answer: Paying a claim for a coverage that was explicitly excluded under the policy
Paying a claim for an excluded coverage is a critical error because it results in direct financial harm and potential regulatory violation.
Question 6: When an insurance company uses a 'control chart' to monitor claims processing times, the 'upper control limit' (UCL) signals:
- The average processing time across all adjusters
- A point at which variation exceeds acceptable process limits and investigation is needed (Correct answer)
- The maximum time any claim has ever taken
- The time limit set by state regulation
Correct answer: A point at which variation exceeds acceptable process limits and investigation is needed
The UCL on a control chart marks the boundary beyond which a data point suggests the process is out of statistical control and needs investigation.
Question 7: What is the purpose of a 'QA feedback loop' in an insurance organization?
- To loop all calls for legal recording purposes
- To route audit findings back to employees and managers so errors can be corrected and learning applied (Correct answer)
- To automatically route claims to senior adjusters
- To feed premium data into the underwriting system
Correct answer: To route audit findings back to employees and managers so errors can be corrected and learning applied
A feedback loop ensures that QA findings translate into actionable coaching, training, and process improvements rather than sitting unused in reports.
Insurance Quality Control & Assurance 4
Which of the following best describes a 'closed-file review' in insurance QA?