10 Claims Handlingn Flashcards
Role of claims team
Leaving good impression on client, interfacing with other departments to enable organisation to flourish in the
marketplace
Points of interface between Claims team and other insurer departments
1. Underwriting
Report wordings causing problems
Advise on new wordings
Provide claims data to review risk performance
Liaising if claim outside coverage
Liaising re commercial pressures to settle certain claims
Points of interface between Claims team and other insurer departments
2. Outwards reinsurance
Monitor which reinsurances are claims control/co-op clauses to avoid breaches
Provide data to reinsurers
Code losses to monitor aggregation for reinsurance claims
Keep claims data / reserves up to date for accurate loss data
Points of interface between Claims team and other insurer departments
3. Complaints
Provide clear information on handling of claims to assist complaints handlers
Ask complaints to advise on regulatory information so can incorporate into work
Points of interface between Claims team and other insurer departments
4. Management Information (MI)
Provide input for system designs
Liaise with MI to ensure data is being reported correctly
Points of interface between Claims team and other insurer departments
5. Legal
Manage agreements for the outsourcing of claims
Liaise if claims go to litigation
Advise legal if any problems with particular clauses
Points of interface between Claims team and other insurer departments
6. Compliance
Ensure claims team are trained and authorised
All staff aware of regulatory requirements
Points of interface between Clams team and other insurer departments
7. Marketing
Highlight issues where product is not being explained clearly
Use claims as a marketing tool
Points of interface between Claims team and other insurer departments
8. Senior Management / Board
Report large claims
Report matters of concern to company - director must be in charge of claims
Points of interface between Claims team and other insurer departments
9. Finance
Liaise on claim payments
Liaise if a catastrophe event has happened and might affect cash flows
Broker’s role in claims process
First point of contact for client, called “first advice” or “first notification”
Broker gathers all information and reviews wording
Broker presents a claim either electronically or paper file
Broker’s ongoing role in claims process
Provide updated information (from client or experts appointed)
Negotiate for client
Receive claim funds (usually)
Claims agreement rules
Lloyd’s Market
Claims handling in Lloyds market is governed by documents called Lloyd’s Claim Schemes (Combined)
Contains rules concerning agreement parties for claims / some exceptions for certain classes
If not singleton business, claims are either single or dual leader agreements in Lloyds. Two categories are:
- Standard Claims (under GBP 500k) handled by Leader. This is under GBP 1m for energy or property treaty.
- Complex Claims (over GBP 500k) handled by first two syndicates. This is cover GBP 1m for energy and property classes. Claims can be deemed complex in other circumstances such as their facts, but the Leader will decide this at time of presentation. It might be deemed complex to start with, and then downgraded to Standard when more facts become available
Claims agreement rules
IUA Company Market (marine and aviation)
IUA claims handling agreements
Rules vary depending on whether it is
- An advice or settlement
- there is Lloyd’s involvement
- direct / XoL reinsurance (proportional outside rules)
Advices can be agreed by Leader.
Settlements have a combination of requirements
- Marine (not XoL): if Lloyd’s, only 1 company market required to bind. If no Lloyds, first 2 companies
- Aviation (not XoL): if direct business, first 2 company markets required to bind. If it is facultative reinsurance, lead company only.
- XoL reinsurance: Always first 2 company markets must agree
Claims agreement rules
IUA Company Market (non-marine)
No binding possible, each insurer has to agree for its own share
Company Markets are not prepared to be bound by one leader on claims decisions. Broker needs to seek agreement from everyone. Applies to information too.
Exception - can set up claims agreement system to bypass certain insurers if their share is below a pre-set financial limit
Singleton business
Policy written by one syndicate or two syndicates managed by same managing agent
Claims Transformation Programme
Lloyds doc - rules about how leaders can handle claims. Invented when Claims agreement moved from Leaders and Xchanging to just leaders in 2010 to streamline process, make it more competitive
Single Claims Agreement Party (SCAP) - LMA 9150
invented to streamline smaller, standard claims. Clause LMA 9150 sets out basis for agreement of claims.
NOT FOR PROPORTIONAL TREATY REINSURANCES OR BINDING AUTHORITIES.
Can be used on a binder if an open market subscription
Claim eligible if under GBP 250k or equivalent, and the claim is neither complex or controversial. Leader decides this, not broker
If claim is under SCAP rules, Slip Leader (either lloyds or company market) binds all other insurers irrespective of whether they’re Lloyds or company
Role of XCS in claims process
XCS - a DXC company
maintains Lloyd’s claims database. Enters data, sends out overnight messages to insurers, moves funds from syndicates to brokers (“Technical Processing”)
Leaders can delegate claims handling to XCS (as well as other organisations). This means a XCS claims adjuster might liaise with another XCS colleague for market data
Role of experts in claims process
Investigates claims
If a liability matter, defends insured against legal action that might commence against them
Usually appointed by the broker, so reports sent to insurer via broker
Sometimes insurers appoint experts for advice regarding claim coverage. The insurer wouldn’t want the insured to know this, so in this instance the expert reports directly to the insurer
Types of experts used in the claims process
Lawyers - defend insured, advise insurer on coverage
Loss adjusters - inspect damage, advise on repairs
Loss assessors - same as above, but client is insured and assist in making claim presentation
Surveyors - evaluate loss/damage
Third party administrators - delegated claims administrators which are delegated responsibility of claims process by insurer
Accountants - for business interruption claims
Investigators - personal injury claims
Specialist experts - fire/ship collision/chemist claims
Average adjusters - specialise in marine claims, assess claims for particular and general average to all interested parties
Translators/interpreters
Subrogation/recovery specialists
Appointment of expert management by an insurer
Insurer must brief the expert properly and explain what is required of them, how much they will be paid eg with a detailed instruction letter - usually using a Terms of Engagement
Insurer cannot hold expert accountable if they cannot do what’s required of them
Process of claims handling (general steps)
Once notified of loss, broker works out which insurers they need to discuss with (agreement parties)
Then Broker submits information to chosen agreement parties
Agreement parties consider and respond to broker. Here, insurers should consider conflicts of interest
For Lloyds only, XCS enters claims data into system
Broker receives comments from agreement parties. Agreement parties receive daily messages updating information re claims on their own systems
If claim agreed, funds are debited from their accounts and sent to broker
Broker updates file and repeats process as required
Process of claims handling - Step 1 First Notification of Loss (general)
First advice/notification generally sent to broker.
Sometimes insurer will require an expert to be a notification party in event of a loss (for eg Professional indemnity, a lawyer will be nominated. for Cargo, a surveyor local to the loss). Important for cargo insurance as sometimes immediate action will be required, so instructing insured to take particular steps/pre agreed expert means chance of a dispute later on is reduced.
Broker must consider if any conflict of interest internally - eg if they also have delegated authority.
Insurer might also have conflict of interest, for eg
- Professional indemnity - two experts being sued for same reason
- Marine hull - two vessels in a collision
- Aviation - product liability from manufacturer and distributor
If insurer cannot mitigate the conflict of interest internally (eg by separating claims team for each part) they may declare an organisational conflict and give up their right as an agreement party, and ask another insurer to do so.