C3 Flashcards
What does a Claims Handler do?
Deals quickly & fairly with all claims submitted
Settles claims w/ minimum wastage or avoidable overpayment
Estimate accurately the final cost of outstanding claims & to distinguish between genuine & fraudulent claims
What are the 3 areas of Customer Service?
1) Consumer awareness – increased rights & social media to write bad reviews = damaging
2) Expectation of service
3) Competition
What do all claims department have?
A philosophy that will embrace its service standards
Definition of Service Standards
how it intends to deal with the claims presented to it by its customers
What is included in the General Section as part of Service Standards?
The quality of service aimed for & how valid claims will be handled
What are some further developments that could be part of Service Standards?
Nature of claims at each stage of the process
Speed of claims service
Economic efficiency of the claims service
What are the benefits of good customer service for the insurer?
Encourages customer loyalty
Attracts new customers
Makes the company’s unique
Increases productivity
Who is First Party?
The person or company insured by a particular insurance company ie policyholder
Who is the Second Party?
Can be viewed as the insurance company insuring the first party
Who is the Third Party?
Refers to anyone else involved in a loss event e.g. motor accident – 3rd party could be another vehicle, property owner, passenger etc
What does the 3rd party not have?
A contractual relationship with the insurer
What is claims reserving?
It’s the process that a company carries out in order to assess the level of funds that are required to meet current & future claims liabilities
What does claims reserving show?
Whether or not a company is solvent
What is claims reserving used for?
Used to assess the: overall financial performance of the company; relative profitability of the various classes of business & the adequacy of premium rates
How do insurers estimate the future costs of claims?
They produce a global claims reserve
How is a global figure produced?
Various methods are used to establish the global reserve with individual estimates usually carried out on a case=by-case basis
How is the size of the reserve established?
To establish the size of reserve required, a value is applied to each claim and an allowance is added for direct claims expenses
Why are reserves regularly renewed?
To ensure they’re reflective of potential liabilities & costs
Why is it difficult to quantify insurance fraud?
Because it can go undetected
What is the IFB and when was it established?
Insurance Fraud Bureau & 2006
What does the IFB act as?
it acts as a central hub for sharing insurance fraud data and intelligence, using its position at the centre of the industry & access to data to detect & disrupt organised fraud networks
What does the IFB do?
IFB helps insurers identify fraud & avoid financial consequences & supports police, regulators
What is being used now in the drive to prevent fraud?
Technology
Insurance Fraud Register
Administered by the IFB on behalf of ABI members – holds details of proven fraudsters
MIAFTR 2
Details of all total loss & theft claims – can check if theft / vehicle are being claimed more than once
MID
contains details of all registered vehicles in UK
Claims & Underwriting Exchange CUE
It is a database shared by insurers across the country & contains information on persona line claims from the past 3 years
What are the consequences of fraud for the insurer?
GI claims fraud exceeds £2.1bn per year
What are the consequences of fraud for the insureds?
Genuine policyholders will be affected by the increase in premiums
What are the consequences of fraud for the fraudulent claimants?
More likely to do it again
What does the IA 2015 do?
The Insurance Act 2015 allows insurers to terminate the contract of insurance from the date of the fraudulent act. It’s not always possible to fully repudiate a claim should fraud be established & proved
What do regulated firms have to do?
Regulated firms are required to nominate a senior individual to have responsibility for the complaints handling function within the firm
When do FOS deal with disputes?
Where the insured is a micro-enterprise which employs fewer than 10 persons & has a turnover or annual balance sheet that doesn’t exceed £2million; charity with a annual income of less than £1 million
What is the maximum award the FOS can make?
£150,000 – the insured can accept or reject this & can still make legal action
What is an arbitration clause?
If the customer feels that the amount offered in settlement of their claim is incorrect or unjust, they have the option of referring their dispute to arbitration
Why do people not like arbitration?
Because it’s more expensive than litigation (courts)
How many arbitrators can be appointed?
Usually One but up to Three
What is involved in the arbitration? (aka the tribunal)
it allows each side to present its case & respond to its opponent’s case; they’ll act fairly & impartially at all times
Third Party disputes ADR (alternative dispute resolution)
Offers another way of settling disputes without resorting to litigation
What 2 main methods of ADR are there?
1) Adjudicative options – parties determine the choice of process (ie arbitration; adjudicated expert determination) but lose control of the outcomes, as determination of the dispute rests with an individual neutral to the parties & the dispute
2) Non-adjudicative options - parties retain control of the process and the outcome of the resolution (negotiation; joint settlement; mediation; early neutral evaluation; conciliation)
What pre-action protocols are there?
3 tracks 1) small claims 2) fast tract 3) multi track
What is a personal injury pre-action protocol?
All personal injury claims are managed by the protocol – sets out the rules that the parties must adhere to in order to present & negotiate the claim
Who are the two regulation financial institutions?
PRA & FCA
How does the IA amend insurance law?
1) Pre-contractual duty of disclosure & effect of misrepresentations at that stage
2) effect of warranties contained in the policy
3) insurers’ remedies for fraudulent claims
Warranties
Case law has established that a breach of warranty automatically terminates cover from the date or breach & effectively cancels the insurance, regardless of whether the breach was material or related to the loss
Breach of warranty
A breach of warranty simply suspends the insurer’s liability under the contract until such time as the breach is remedied
Treating Customer’s Fairly
All regulated firms are expected to treat customers fairly
Firms must focus on six customer outcomes in order to demonstrate they’re treating their customers fairly
For claims handling the fair treatment of customers means that all claims must be handled properly and fairly
