Chapter 10 Application of property Insurance: Underwriting and claims Flashcards
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
a. Alberta
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
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
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
a. Evaluating the risk, making the underwriting decision, and pricing the risk
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
b. Construction, occupancy, protection, and exposure
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
b. Line guide
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
a. Being patient
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.
b. Explain the claims process to the insured, thereby reducing anxiety and setting realistic expectations.
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
a. Premium
Who is considered the third point of contact in the insurance transaction?
a. Underwriter
b. Broker
c. Agent
d. Claims adjuster
d. Claims adjuster
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
b. Broker or Agent
Who are the defining specialties in the insurance industry?
Underwriting which determines the risks an insurer will accept.
Claims adjusting which fulfills the insurer’s obligation to the insurer after a loss
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
bl insured and insurer
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
d. Underwriter
What are the responsibilities of a claims adjuster?
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
Brokers and underwriters both underwrite risks but from two different perspectives
The broker underwrites for the insured and the insurer
The underwriter underwrites only for the insurer
Who negotiates terms and conditions for new policies, endorsements and renewals
a. Underwriter
b. Broker
c. claims adjuster
d. policy holder
b. Broker
What is the role of an Underwriter?
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
A strategic plan is needed for an insurer to build a profitable portfolio his plan will involve?
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
What are the three parts to the underwriting process?
1) Evaluating the risk
2) Making the underwriting decision
3) Pricing the risk
What are Two basic types of loss experience have to be analyzed ?
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
Physical Factors in rating COPE
These are the factors to be assessed in any physical risk:
Construction
Occupancy
Protection
Exposure
There are 3 main reasons why an insurer would be reluctant to insure a heritage or historical building?
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
Usually an underwriter will only reject a risk if they are forced to by one or more of 3 considerations?
) 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
Rate Making
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
Describe Actuary
Describe Ratemaking
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
The brokers role in the event of a claim
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
Role of the claims adjuster
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
When a loss is reported the initial response by the broker and the adjuster needs to acknowledge the insured’s feelings using “soft skills”
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
Most insurers forgo the requirement of a formal sworn proof of loss on certain claims if they meet the following criteria?
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
FOUR STEPS IN THE INVESTIGATION OF A LOSS: WIPE
Obtain a written statement from the insured
Interview the insured
Obtain before and after photos of the damaged property
Arrange emergency services and contractors
