chap 8- claims

Question 1

a brokers duty in respect of claims
brokerage or comm received then legally they are responsible for handling claims
problems arise after the policy was arranged eg

if paid by fee, then broker is only responsible if it is cleary stated in their service agreement
two potential problems

Answer 1

1. claims under liab policies written on an occurrence basis or causation in relation to industrial deafness, polution, asbestos etc
2. more recently if the injury does not manifest itself until years after it was caused

fees- 2 problems

1. clients expectations if service agreement is unclear
2. brokers desire to protect their position if policy is unclear and any suggestion of an e&o claim

Question 2

brokers activities when dealing with claims are;

–

large brokers may also provide additional services such as
carrying out post loss surveys
helping client prepare claim documentation for an adjustor
make experienced staff available for complex claims eg bi, and assist with negotiations with the insurer

Answer 2

1. advising the client on whether the loss is insured or not
2. giving immediate notification of losses to insurers
3. advising the client of their rights and obligations under the policy
4. arranging completion of claim forms
5. ensure adjustor appointed if necessary and briefing insured on role of adjustor
6. collecting claims payments from insurers

Question 3

icobs and claims handling
* broker must not put itself in a position where its in conflicts of interest with the customer- unless it has disclosed the conflict of interest and the customer has confirmed acceptance of this

more..

Answer 3

1. if the broker is acting under a DA it must inform the client that its the case and that they are not acting for the client. the broker can only act for the client where arrangements are in place to seperate it from the insurer activity from activity on the behalf of a client

broker receives claim- no authority- must pass notification to the insurer promptly & inform the client that they cannot deal with claim.
broker does not act for customer- then they must act with due care skil and diligence in line with fca rules

Question 4

methods in dealing with claims
brokers only deal with claim advocacy - eg if probs or issues arise
2 main reasons for this approach
1. questionable value
2. civil justice reforms

Answer 4

1. questionable value
   brokers not perceived to add value to the process- another link in the chain slowing things down
2. civil justice reforms
   3rd party legal claims- dialogue is between claimant and insurer as encouraged by the protocols - no place for the broker

Question 5

domestic claims- brokers overriding role is to help clients the client should be advised on special documentation eg

commercial insurance - client informed to forward any 3rd party comm direct to ins-without any acknowledgement on their part- if 3rd party responsble broker may help with recovering uninsured losses such as the excess or cost of hiring a vehicle
the client may have purchased a ulr - uninsured loss recovery- seperate company- broker would forward details to the company and monitor progress

Answer 5

1. in the event of death - death cert is required
2. in event of personal accident or sickness -med certs to be obtained
3. in the event of theft- must give immediate notification to the police

broker must carefully inform all of the action the client needs to take eg hse riddor reporting

civil justice reforms reiterate that the broker will take no part in negotiations with 3rd parties- would only get involved if it was a small property claim, the broker can only ever provide guidance

Question 6

liability and specialist risks- negotiations not from the broker but commonly with legal people- broker will just look for updates

major property losses - will require appointment of an adjustor- reports confidential to insurer but broker may be asked to circulate report, broker may accompany adjustor on visits. if more than one insurer the report will be sent to all of them and costs proportioned- any related consequential loss claim will have its own seperate report

Answer 6

claims notified direct to insurer- broker only responsible for claims advocacy and preparing claims stats
claims log- broker will maintain a log- helpful for future when rating etc
lloyds and london - electronic claims file - claims analysis

Question 7

claims analysis

Answer 7

premium- to detemine loss ratio over time
rating base - ir turnover, no. of vehicles, si
previous loss estimates -triangulations- past experience of liability and el risks, for large risks- triangulations essential to remain competitive
client structure- eg claims by unit, risk, location, products ect
type of loss- eg high prop claims due to theft-
time- to identify trends- decreasing - increasing, ermerging claims

Question 8

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insurance fraud- 11 % of claims involve fraud
1opportunistic fraud - 2organised fraud
3retail fraud -4 commercial fraud

Answer 8

1opportunistic fraud - firms exagerate or inflate claims- fabricate entire claim.
2 organised gangs take out insurance delibereately to do a fraud

3 - average fraudulent claim £800- exaggerating more common than inventing. homeowners less likely to commit fraud
4.9% of busineses received a false personal injury claim- 2% had false compensation claims made by an employee- icorrect supplier invoices