Chapter 10 Application of property Insurance: Underwriting and claims

Question 1

From an insurance perspective, the majority of large-loss hail events occur in which province?

a. Alberta
b. British Columbia
c. Quebec
d. Nova Scotia

Answer 1

a. Alberta

Question 2

In the common-law provinces and territories, a blank proof of loss form must be provided to an insured within how many days of the notice of loss?

a. 10
b. 20
c. 30
d. 60

Answer 2

In the common-law provinces and territories, a blank proof of loss form must be provided to an insured within how many days of the notice of loss?
Select one:

d. 60

Question 3

The underwriting process involves which three main steps?

a. Evaluating the risk, making the underwriting decision, and pricing the risk
b. Evaluating the risk, making the claims decision, and pricing the risk
c. Interviewing the client, making the underwriting decision, and pricing the risk
d. Running reports, making the underwriting decision, and pricing the risk

Answer 3

a. Evaluating the risk, making the underwriting decision, and pricing the risk

Question 4

What does the acronym COPE stand for?

a. Calculation, occupancy, protection, and exposure
b. Construction, occupancy, protection, and exposure
c. Construction, occupancy, property, and exposure
d. Construction, occupancy, protection, and environmen

Answer 4

b. Construction, occupancy, protection, and exposure

Question 5

Which guide describes the maximum amounts of exposure an insurance company is prepared to accept on various classes of risk?

a. Rating guide
b. Line guide
c. Claims guide
d. Underwriting guide

Answer 5

b. Line guide

Question 6

Which of the following is an example of a critical workplace skill that an adjuster would use?

a. Being patient
b. Being abrupt
c. Being knowledgeable about commercial insurance
d. Being knowledgeable about underwriting

Answer 6

a. Being patient

Question 7

Which of the following is part of the role of a broker or agent in the event of a claim?

a. Investigate the loss.
b. Explain the claims process to the insured, thereby reducing anxiety and setting realistic expectations.
c. Arrive at a settlement.
d. Recommend payment.

Answer 7

b. Explain the claims process to the insured, thereby reducing anxiety and setting realistic expectations.

Question 8

Which of the following outcomes is a result of applying the modified rate for a particular risk to the amount of insurance for that risk?

a. Premium
b. Claims cost
c. Severity of loss
d. Deductible

Answer 8

a. Premium

Question 9

Who is considered the third point of contact in the insurance transaction?

a. Underwriter
b. Broker
c. Agent
d. Claims adjuster

Answer 9

d. Claims adjuster

Question 10

Who is responsible for explaining the claims process to the insured, with the goal of reducing anxiety and setting realistic expectations?

a. Underwriter
b. Broker or Agent
c. Contractor
d. Claims adjuster

Answer 10

b. Broker or Agent

Question 11

Who are the defining specialties in the insurance industry?

Answer 11

Underwriting which determines the risks an insurer will accept.

Claims adjusting which fulfills the insurer’s obligation to the insurer after a loss

Question 12

Brokers and agents are intermediaries between Who

a. underwriter and policy holder
b. Insured and insurer
c. Underwriter and actuary
d. policy holder and claims adjuster

Answer 12

bl insured and insurer

Question 13

An insurance professional who invests the capital of an insurer’s shareholders by accepting or rejecting risk in order to implement the strategic plan of the insurer is

a. Broker
b. Insured
c. Agent
d. Underwriter

Answer 13

d. Underwriter

Question 14

What are the responsibilities of a claims adjuster?

Answer 14

One who investigates insurance claims, makes recommendations regarding the payment of insurance benefits and negotiates settlements
Adjusters are the third point of contact in the insurance transaction and are responsible for fulfilling the insurers obligation to the insured after a loss

Question 15

Brokers and underwriters both underwrite risks but from two different perspectives

Answer 15

The broker underwrites for the insured and the insurer

The underwriter underwrites only for the insurer

Question 16

Who negotiates terms and conditions for new policies, endorsements and renewals

a. Underwriter
b. Broker
c. claims adjuster
d. policy holder

Answer 16

b. Broker

Question 17

What is the role of an Underwriter?

Answer 17

To accept or reject a risks on behalf of the insurer underwriters are in effect investing the insurers capital in those risks they accept and declining to invest in those risks they reject

Question 18

A strategic plan is needed for an insurer to build a profitable portfolio his plan will involve?

Answer 18

Identifying the types of risks they want to pursue
Identifying the lines of insurance they want
Identifying the reinsurance they can arrange
The amounts of insurance they will offer for different types/sizes of risk
The approach they will take to pricing

Question 19

What are the three parts to the underwriting process?

Answer 19

1) Evaluating the risk
2) Making the underwriting decision
3) Pricing the risk

Question 20

What are Two basic types of loss experience have to be analyzed ?

Answer 20

Frequency of loss: the ratio of the number of losses to the number of exposure units

Severity of loss: the average size of losses – the larger the average loss the higher the loss severity

Question 21

Physical Factors in rating COPE

Answer 21

These are the factors to be assessed in any physical risk:
Construction
Occupancy
Protection
Exposure

Question 22

There are 3 main reasons why an insurer would be reluctant to insure a heritage or historical building?

Answer 22

higher risk of old wiring, piping and roofs

in the event of a claim it might be too expensive for insurers to replace the materials of designated heritage sites

specific types of repairs with specific types of materials might be required due to various by-laws that apply once a building has been designated a heritage building

Question 23

Usually an underwriter will only reject a risk if they are forced to by one or more of 3 considerations?

Answer 23

) Risk of class isn’t permitted by the line guide or falls short of the minimum specified requirements of the line guide

) Market conditions or competitive considerations – for example if the insurance cycle turns toward a “hard” market after a period of excess capacity – a “soft” market

The risk is just too bad to be accepted and it just isn’t possible to negotiate ANY terms on which it would be acceptable

Question 24

Rate Making

Answer 24

The price of insurance is based on historical data about incurred losses

Statistical techniques are then applied to this data to develop a forecast of the rates that are needed to provide sufficient premium for future losses

Question 25

Describe Actuary
Describe Ratemaking

Answer 25

Actuary: a professional skilled in the application of math to financial problems
Ratemaking: the process of compiling & analyzing data to establish rates for different classes of risk

Question 26

The brokers role in the event of a claim

Answer 26

Help report a loss to the insurer by taking the first notice of loss and transmitting such to the insurer
Explain the claims process to the insured to help reduce their anxiety and set realistic expectations
Monitor the progress of the claim “as necessary”
Advocate on behalf of the insured when they have concerns

Question 27

Role of the claims adjuster

Answer 27

The report of a property claim sets the claim process in motion
Claims professionals promptly:
Communicate with insured
Assess policy coverage
Assess the seriousness of the claim
Determine what must be done immediately
Determine who should be assigned to the claim

Question 28

When a loss is reported the initial response by the broker and the adjuster needs to acknowledge the insured’s feelings using “soft skills”

Answer 28

Use tact & diplomacy to reassure & clam insured
Recognize that everyone reacts differently to a crisis
Acknowledge feelings in a neutral way instead of ignoring them which creates barriers
Be patient
Show respect for the person even when you don’t understand their views & feelings
Be observant
Choose words carefully so you don’t imply coverage

Question 29

Most insurers forgo the requirement of a formal sworn proof of loss on certain claims if they meet the following criteria?

Answer 29

Amount of the loss falls below a specified threshold

No threat of litigation by the insured

There is no suspicion of fraud in the claim

No possibility of subrogation

Question 30

FOUR STEPS IN THE INVESTIGATION OF A LOSS: WIPE

Answer 30

Obtain a written statement from the insured
Interview the insured
Obtain before and after photos of the damaged property
Arrange emergency services and contractors