CHAPTER 10 - C

Question 1

What must a broker do once notified of a loss?

Answer 1

Work out the right combination of insurers for instructions

Question 2

How does a broker submit information to chosen agreement parties?

Answer 2

Either on paper file or via an Electronic Claims File (ECF)

Question 3

What should an insurer consider regarding conflicts of interest?

Answer 3

Whether they can manage the conflict internally or need to hand over their role to another insurer

Question 4

What system does Velonetic/XCS use in Lloyd’s claims handling?

Answer 4

Enters claims data onto the Velonetic/XCS claims system

Question 5

How do agreement parties communicate their comments to the broker?

Answer 5

Through electronic messages or written notes on paper files

Question 6

What happens if agreement parties agree to a payment for settlement?

Answer 6

Funds are debited from their accounts to that of the broker

Question 7

Where does the first notification of loss typically go?

Answer 7

To the broker

Question 8

What types of insurance might require the insured to notify named experts?

Answer 8

Professional indemnity and cargo

Question 9

Why might immediate action be required after a loss occurs?

Answer 9

Losses can happen at any time, including when brokers or insurers are unavailable

Question 10

What must a broker consider upon receiving information about a loss?

Answer 10

Whether any individual within their firm is precluded from handling the claim due to conflict of interest

Question 11

What is an example of a practical conflict of interest for an insurer?

Answer 11

Handling claims for both vessels in a collision situation

Question 12

What is the process for electronic claims handling?

Answer 12

Broker submits data and documents electronically via ECF

Question 13

What components comprise the Electronic Claims File (ECF)?

Answer 13

• Data messaging system/database called CLASS
• Document repository

Question 14

What is the Unique Claims Reference (UCR)?

Answer 14

A unique reference created by the broker for their claim

Question 15

What is the Unique Market Reference (UMR)?

Answer 15

Essentially a policy number identifying it within the premium database

Question 16

What happens when the leader considers the broker’s electronic presentation?

Answer 16

They can agree, query it, or provide comments

Question 17

What is the role of Velonetic in Lloyd’s claims processing?

Answer 17

Inputs claims data into its claims database and sends messages to syndicates

Question 18

What is an organizational conflict in claims handling?

Answer 18

When an insurer decides it cannot be an agreement party and passes the role to another insurer

Question 19

What is an individual conflict management method used by insurers?

Answer 19

Chinese Walls or Ethical Walls

Question 20

What information must be included in the broker’s paper file for first advice?

Answer 20

• Full copy of the MRC/slip
• Any endorsements
• Information received about the loss

Question 21

What does the broker do if using a paper file with Lloyd’s agreement parties?

Answer 21

They contact the required insurers to obtain instructions

Question 22

What is one disadvantage of using a paper file compared to electronic systems?

Answer 22

Paper can get lost from a file

Question 23

What is a key advantage of electronic claims handling?

Answer 23

All data and documents are held centrally and can be accessed simultaneously

Question 24

What happens to documents once loaded onto the electronic system?

Answer 24

They cannot be deleted

Question 25

What is the primary function of the CLASS system?

Answer 25

To handle claims electronically, enabling access to data and documents by insurers.

Question 26

What happens to documents once loaded onto the CLASS system?

Answer 26

Documents cannot be deleted.

Question 27

How does the CLASS system facilitate communication between brokers and insurers?

Answer 27

It allows brokers to discuss claims with insurers who have already reviewed relevant documents.

Question 28

What is the significance of interim payments in claims handling?

Answer 28

Interim payments can be made at any time during the claim lifecycle.

Question 29

What should be considered when requesting a claims payment?

Answer 29

The request must be reasonable and supported by evidence.

Question 30

What is the 'loss payee' clause?

Answer 30

It requires insurers to seek permission from specified parties before making indemnity payments.

Question 31

In what currency can claims be settled by Lloyd's?

Answer 31

Claims can only be settled in 14 specific currencies.

Question 32

What is required when making indemnity payments?

Answer 32

A receipt or similar document confirming the acceptance of the payment.

Question 33

What does the Enterprise Act 2016 imply regarding claims settlement?

Answer 33

Claims must be settled in a reasonable time, allowing insured parties to seek damages for late payments.

Question 34

How does the Company Market handle the movement of money for claims?

Answer 34

It triggers movement from accounts based on settlement agreements via the electronic messaging system.

Question 35

What are binding authorities in claims handling?

Answer 35

They allow insurers to delegate claims handling authority to coverholders or third-party administrators.

Question 36

What is the term used for third-party administrators in the Lloyd's market?

Answer 36

Delegated Claims Administrators (DCA).

Question 37

What is a 'bordereau' in the context of claims handling?

Answer 37

A report sent by coverholders/TPAs to insurers detailing claims activity.

Question 38

What is a 'loss fund' in claims handling?

Answer 38

An upfront amount provided to coverholders/TPAs to settle claims swiftly.

Question 39

What is the difference between indemnity and betterment?

Answer 39

Indemnity aims to restore the insured to their pre-loss position, while betterment refers to an improvement in their situation post-loss.

Question 40

What is subrogation?

Answer 40

The right of an insurer to pursue third parties after indemnifying the insured.

Question 41

What does contribution refer to in insurance?

Answer 41

The shared responsibility of multiple insurers covering the same risk.

Question 42

What is proximate cause?

Answer 42

The dominant cause of a loss that determines coverage under an insurance policy.

Question 43

What are deductibles/excesses?

Answer 43

The amounts that the insured must pay before the insurer covers the remaining loss.

Question 44

What do exclusions in an insurance policy signify?

Answer 44

Conditions under which the insurer will not pay a claim.

Question 45

What is a 'Reservation of Rights' (ROR)?

Answer 45

A notice from an insurer indicating potential issues with a claim while further investigation occurs.

Question 46

What is a 'Reservation of Rights' (ROR) in insurance?

Answer 46

It is a warning from the insurer to the insured that there might be a problem with the claim while further investigation is conducted. ## Footnote ROR indicates that the insurer is reserving rights regarding aspects of the claim, such as application of a policy exclusion.

Question 47

What legal issue can arise if an insurer leads the insured to believe there are no queries about a claim?

Answer 47

The legal issue is called 'estoppel'. ## Footnote Estoppel can prevent the insurer from declining a claim based on their previous behavior.

Question 48

What should an insurer do after issuing a Reservation of Rights?

Answer 48

The insurer should attempt to resolve the query as soon as possible to either lift the reservation or deny the claim. ## Footnote Timely resolution is important to avoid misunderstandings about the claim status.

Question 49

Why is it important for insurers and claims personnel to understand the legal impact of using RORs?

Answer 49

Given the volume of business written out of the USA, understanding the legal impact is crucial for proper claims handling and compliance. ## Footnote Appropriate legal advice should be sought regarding RORs.

Question 50

What is one aim of digitizing insurance contracts in the London Market?

Answer 50

To enable the first notice of loss process to be partially automated. ## Footnote This involves comparing key details about the claim with key policy details.

Question 51

How can technology assist in the claims environment beyond automation?

Answer 51

By looking for patterns in fraud detection and identifying potential claims earlier in the process. ## Footnote Technology provides analytical capabilities to improve claims management.

Question 52

What is a major problem that prevails throughout the insurance market, including the London Market?

Answer 52

Insurance fraud. ## Footnote Fraud can be more prominent in the London Market due to the prevalence of larger claims.

Question 53

What are some key fraud triggers that claims personnel should watch for?

Answer 53

* Excessively documented claims file * Pressure to settle * Reluctance to answer questions * Stories that do not add up ## Footnote Identifying these triggers can help prevent fraudulent claims.

Question 54

What happens if fraudulent claims are not spotted and prevented?

Answer 54

It results in claims leakage, which needs to be identified and prevented as much as possible. ## Footnote Claims leakage refers to losses from claims that should not have been paid.