10.2 - Responding to Property Insurance Claims Flashcards
The Role of Brokers and Agents
-brokers and agents are intermediaries - vital links between insurers and insureds
-they identify the needs of the applicants or insureds and working closely with UWs to match those needs with products offered by insurers
-insureds often think of their Broker or agent when they want to claim indemnity for a loss
-empathy and knowledge of the broker or agent that eases the insured into the claims proceed and helps the insured throughout
-role of Broker or Agent in the event of a claim is to:
>help report a loss to the insurer by taking the first notice of loss from the insured and transmitting it to the insurer;
>explain the claims process to the insured, thereby reducing anxiety and setting realistic expectations;
>monitor the progress of the claim, as necessary; and
>advocate on the insured’s behalf when the insured has concerns
-reporting a claim to a Broker or Agent is deemed to be notice to the insurer also
-as a rule, the broker or agent avoids comment on the validity of a claim and neither confirms nor denies coverage, but promptly notifies the insurer of the loss
-a broker or agent may make an exception to the rule and advise the insured where a loss is obviously not covered - ex. house fire being claimed against a car insurance policy, however, they may still also just state reservations about coverage, but affirm the insurer will make the final assessment
-as insured’s advocate, the broker or agent should monitor the progress of the claim and help the insured or the adjuster when asked
The Role of the Claims Adjuster
-claims professionals promptly communicate with the insured and assess policy coverage, the seriousness of the claim, what must be done immediately, and who should be assigned to handle the loss/who should adjust the claim
-claims adjusters are often the most expert in the interpretation of policy language, but may still discuss with UW if there is a question of interpretation, as the UW may have insight into the intent of the coverage or exclusion that will help the adjuster determine coverage
-property claims adjusters who deal with damage claims for buildings must know about repair techniques in construction, they need to have sound knowledge and strong relationships with respected contractors who have proven themselves to the insurers and the insureds they have performed work for in the past
-communication skills essential for adjusters because they must be able to adapt their skills to the parties involved and the message must be relayed and clearly understood by all
=adjusters require clear thinking and the ability to solve problems as they arise throughout the claims process, adjusters should have extensive knowledge of civil law and they must be familiar with the insurer’s claims-handling protocol
-independent adjuster may also be used in the settlement of a claim, which is common for insurers when a loss occurs in regions where they do not have offices
-independent adjusters may be needed where a loss affects so many insureds that the insurer by itself cannot deal with all the claims within a reasonable time; ex. natural disaster such as wildfire or flooding
-independent adjusters may also offer specialized expertise that the insurer’s staff adjusters lack for certain kinds of loss
-independent adjusters are required to be licensed in the provinces in which they work; in most provinces, employees of insurance companies do not need to be licensed (provinces of QB, NB, NF&L are exceptions to this rule)
“adjuster”
One who investigates insurance claims, makes recommendations regarding the payment of benefits from insurance policies, and negotiates payments and settlements
The Importance of Claims Service
-insurance is an intangible product; most insureds do not realize its true value until a loss occurs, the settlement process for any claim often represents the insured’s first direct dealing with the insurer
-relationships with claimants can be enhanced by a sincere desire to resolve claims promptly and professionally
-some insureds can become upset and unable to deal with practical issues until their feelings have been resolved, which can block or delay the claims process
-when a loss is reported, the initial response by the broker and agent must acknowledge the insured’s feelings using critical workplace skills such as these:
>using tact and diplomacy to reassure and calm an insured
>recognizing that everyone reacts differently to a crisis
>acknowledging feelings in a neutral way, rather that ignoring them and creating barriers
>being patient
>showing respect for the person even when feelings and views may not be understood
>being observant
>choosing words carefully, so as not to imply coverage
>listening actively
The Property Claims Process
- Steps in Claim Adjustment: Overview
Steps a claims adjuster would follow when deciding whether to pay a loss:
- Does the loss fall within the policy period? - Yes
- Does the loss fall within the insuring agreement? - Yes
- Do any exclusions apply? - No
- Do any endorsements apply? - No
- Have all policy conditions been met? - Yes
- Is there a deductible to be applied? - Yes
- How much should be paid? - $
- Any other reason not to pay the claim? - No
- Pay the Claim - Yes
- Notify the underwriter of any information material to the risk that the insurer may be unaware of
The Property Claims Process
- Steps in Claim Adjustment: A Closer Look
-process described in more detail so that policy review becomes one step among several others in the claims process as a whole:
- The insured reports a loss to the Broker, agent or insurer
- a claims handler for the broker, agent, or insurer records preliminary information and asks for details
- the claims handler does an initial check of the policy coverage:
i. which policy applies to the property involved in the loss?
ii. does the loss fall within the policy period?
iii. does the loss fall within the insuring agreement? - if the insured reported the loss to the broker or agent, the broker or agent would then report the claim to the insurer
- the insurer may need to promptly advise the insured that the loss is not covered by the policy
- alternatively, if the loss falls within the policy period and appears to fall within the insuring agreement, the insured will assign an adjuster to the claim. the adjuster will proceed with the next steps:
i. provide and ask that the insured complete and submit a proof of loss form
ii. confirm the policy coverage
iii. investigate the loss
iv. evaluate the damage
v. negotiate as necessary or deny the claim
vi. arrive at a settlement
vii. recommend payment
The Property Claims Process
- Proof of loss form
-insurance acts of the common law provinces and territories require that a blank proof of loss form be provided to an insured within 60 days of the notice of a loss, and if an insured asks for the form, then the insurer must promptly comply.
-providing a form to an insured is not a requirement in Quebec
-Statutory Condition 8 of the insurance act specifies that, if the insured cannot or refuses to give notice or make proof of loss to the insurer, then an agent of the insured or anyone to whom some of the insurance money is payable may give notice of proof
-when the insurer provides a proof of loss form to the insured, it is not an admission that a policy is in force, nor does it imply that a loss falls within the policy coverage
-most insurers follow IBC industry claims agreements that forgo the requirement of a formal, sworn, completed proof of loss on certain claims that meet the following criteria:
>the amount of the loss falls below a specified threshold
>there is no suspicion of fraud in the claim
>there is no possibility of subrogation
>there is no threat of litigation by the insured
The Property Claims Process
- Confirmation of Coverage
-a claims adjuster must develop a fact base of information for a claim that will allow the adjuster to determine whether a loss is covered under the policy and its value
-the circumstances of the claim and the type of property damages must be examined
-the application and policy wording must be examined carefully
-after a payment of a loss, the insurer is assigned the rights of the insured to recover the amount of the loss from those legally liable for it, depending on the cause of loss, the adjuster may also investigate the possibility of subrogation
-because subrogation is usually undertaken after the settlement of the loss, the success of the process largely depends on the completion of a thorough investigation by the adjuster during the early stages of the claim
The Property Claims Process
- Investigation of loss
- Obtaining a written statement from the insured
- Interviewing the insured
- Obtaining photographs of the damaged property from before and after the loss
- Arranging emergency services and assigning a contractor
The Property Claims Process
- Investigation of loss:
1. Statements
-a statement by the insured is meant to explain what occurred that resulted in the reported loss
-the statement must include the following information
>the insured’s name, address and policy number
>date and time of the loss
>the specific location at which the loss occurred
>a description of the loss
>how the loss was discovered
>whether the police were called
>names of the household occupants
>a description of the damaged item or items that includes:
-the ownership of the item, to evaluate insurable interest
-the location of the item
-the make, model, size and serial number of the item
-information on the purchase of the item: when, where, cost, receipt
-whether any items have been in storage or repaired recently
-whether a financing contract exists on the damaged item; and
-any other information pertinent to the loss
The Property Claims Process
- Investigation of loss
2. Interview Techniques
-done in person or over the phone, may be recorded orally (audio or video), or may be handwritten
-personal interview is usually best for larger, more complicated losses because it produces more comprehensive information
-statements are taken to record info while it is still fresh in the insured’s mind
-statements enable witnesses to refresh their memory at a later date
-statements are a blueprint for investigation
-a model interview system may include the following recommendations for the interviewer:
>plan: a checklist should be prepared of subjects to be covered in the interview
>listen: the interviewer should never interrupt the interview subject or start speaking as soon as the subject stops. the subject should be allowed to vent strong feelings and express themself freely. The later part of an interview often reveals the most as the subject becomes more comfortable with the interviewer and the interview process
>the interviewer must avoid threatening language or gestures
>the interviewer must maintain composure and not get excited or upset
>only one question should be asked at a time
>the interviewer should be alert to and prepared to evaluate the body language of the subject
>the interviewer should ask for explanations whenever the subject says something unclear
>notes should be taken even if the interview is recorded. Notes should be reviewed with the interview subject
>a respectful attitude must be maintained at all times
-at the beginning of an interview, the adjuster is to ask only simple, direct, non-threatening questions, more open-ended questions should follow. For example, the interview subject might be asked to describe how the loss happened
-most important thing for adjuster to do when asking open-ended questions is to listen, subject should be given the time and encouragement to reveal all the facts
-once subject is finished, adjuster should be ready with questions to clarify any ambiguities, asking the right questions is critical for effective communication
-stiff and formal question-and-answer period will likely not establish the proper rapport to encourage or elicit a frank exchange of information
The Property Claims Process
- Investigation of loss
3. Photographs
-photos and videos are used to document evidence and remind all parties of what the affected area looked like directly after the loss occurred
-the adjuster should also ask the insured for any recent photos of the property before it was damaged
-photos help to quantify the claim
-important to ensure that clear, consistent resolution be maintained in every photograph taken in order for it to provide any value
The Property Claims Process
- Investigation of loss
4. Emergency Services
-property claims adjuster assigned to a larger loss will attend the site with the emergency contractor as soon as possible after the loss - on the same day or within 24 hours of assignment
-a detailed scope of emergency repairs should be agreed to by the insured, the emergency contractor, and the adjuster within 48 hours of the loss
-the agreed plan of action will provide the adjuster, the emergency contractor, and, most important, the client a detailed description of the agreed emergency repairs
The Property Claims Process
- Settlement of loss
-settlement stage represents the resolution of a claim with the claimant, an insured, or a third party
-after negotiations are complete and settlement amount has been agreed to, the claims adjuster sends the cheque, accompanied by a covering letter, to the claimant
-alternatively, a denial of coverage will be communicated in writing, which could lead to litigation or an alternative dispute resolution process
-once claim is settled, the claimant has no right to reopen it
-the insurer retains the salvage value of the damaged item, for example, TV damaged by lightning becomes the property of the insurer
The Property Claims Process
- Underwriting after a Claim
-adjusters and underwriters may be in contact throughout the claims process, or the adjuster may find a problem with the loss or the risk and notify the underwriter
-underwriting after a claim may occur in two distinct ways
1. when the adjuster finds that there is substantial change to the risk as presented to the insurer. When the UW is notified of a change, risk will be underwritten to determine if it is still a risk the insurer wants to keep in its book of business or whether the premium needs to be increased to account for the increased fire risk
-EX. fire loss in home kitchen, adjuster sees that the insured is doing welding in an OB which was never previously advised
2. when the UW works with the Broker to determine what the insured has done to prevent the loss from happening again, which may include the implementation of a safeguard or process as a result of the loss
-EX. heavy storm causes sewers to back up, insured must now install preventative measure such as a backflow water valve
