What is the total amount of checks, wire transfers or drafts issued in settlement of claims for the risks insured by the company?

Question

Options

• ATraditional settlements
• BLosses paid
• CSecured claims payment
• DShort-tail claims payment

• A
  4% (1)
• B
  74% (20)
• C
  7% (2)
• D
  15% (4)

Explanation

"Losses paid" (B) is the technical insurance accounting term for the total amount of checks, wire transfers, or drafts issued to settle insured claims - it represents actual cash outflows made to claimants during a reporting period.

Why the distractors are wrong:

• A (Traditional settlements) - not a standard insurance industry or regulatory term; it's fabricated-sounding language with no defined meaning in insurance accounting.
• C (Secured claims payment) - "secured" implies collateral or priority lien arrangements, which doesn't describe routine claim disbursements; this term doesn't exist in standard insurance reporting.
• D (Short-tail claims payment) - "short-tail" describes a type of risk (claims resolved quickly, like auto), not a category of payment method or disbursement total.

Memory tip: Think of "losses paid" as the insurer's checkbook - every dollar that left the company to pay a claim is a "loss paid." If money moved out to settle a covered risk, it's a loss paid, regardless of how it was transferred.

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