Chapter 10 - Claims Handling Flashcards
What is claims handling also known as for an insurer?
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How would claims interact with Underwriting, Reinsurance and Complaints?
UW - Wording disputes, claim scope coverage, commercial pressures
Outwards RI - Aggregate losses, accurate reserving
Complaints - Regulatory info
What does first notice / first advice mean in claims?
When the claim is first notified to the broker
What is the broker’s role in claims?
Keep client updated, negotiate and hold funds
How does IUA settle non marine claims?
Each company pays its own share.
What are the 3 conditions which influence how the IUA handle marine and aviation claims?
Settlement / Advice
Any Lloyds involvement
Direct or Re XOL
How do advices and settlements differ in claims handling for IUA?
Advices - can be agreed by lead IUA UW
Settlements -requires combination of requirements
What is the settlement conditions for Marine, non XOL
if Lloyds involved - only 1 company can bind the rest to IUA
else - both companies must agree
What is the settlement condition for Aviation, non XOL
If direct, first two companies must agree, if fac reinsurance, lead company only
What is the settlement condition for re XOL
First two companies must agree
How does the underwriting stamp differ for non marine and marine - aviation companies?
Non marine - Letter + Numbers (A1234)
Marine - Numbers only + slash (1111/01)
What is a singleton business?
Business written by 1 syndicate
How many leaders are required for a complex claim?
2
What is a financial complex claim? (3 conditions) and how does lloyds use to denote it?
If net claim on a single lloyds risk share is more than:
1.5m on third party biz
2m on first party biz
5m on XOL reinsurance
They use risk codes
What is a potentially complex claim trigger?
If handler believes that there is more than a 50% chance that limit will be exceeded
What is a non financially complex risk?
Any claim with disputes, exceeding policy limits and non compliance allegations
What is dynamic triage?
Assessing complexity of claim as more facts flow through
What is the Claims Lead Arrangement?
Bylaws for claims in Lloyds market
What is SCAP?
What are its restrictions and exceptions for LMA 9150
Single claims agreement party, aim to streamline small, simple claims within London market
Not to be used on proportional treaty reinsurance or binding authorities.
Open markets can be used if binding coverholder stipulates in contract
In SCAP, what happens if Lloyds leader allows the clause? How does this differ to IUA?
All Lloyds participants must follow. IUA can settle independently
In SCAP, what are the limits on using this clause and what does the slip leader do?
250k, not complex. slip leader decides whether to handle claims under SCAP. Binds all other insurers onto the process if other insurers agreed to SCAP
In DXC XCS what is technical processing?
Entering data, sending overnight messages and moving funds from syndicate to insurer
Who would experts in claims report to?
The insurer
How does loss adjustors and loss assessors differ?
Adjustor = insurer
Assessor = insured
What are the 4 key steps to claims handling?
- Broker finds insurers liable
- Broker submits ECF and agreement parties respond
- Lloyds XCS enters data onto system to circulates to syndicates
- Money moved
Under what types of claims would pre-agreed experts be required and why?
Prof. Indem
Cargo
Damage type claims can occur at any time
Provide an example of where an insurer can also have conflict of interest for claims?
PI: 2 people being sued for the same underlying cause
What would an insurer do if it can’t resolve the conflict of interest?
Declare organisational conflict, broker finds alternative
What are the two components of the ECF?
CLASS (messaging), document repository
What types of information would be in the claims file for first advice?
MRC
Any claim details
What are the first steps in the ECF process?
Load documents to repository, set up electronic messages
What is Lloyds restriction on currencies and settlements?
14 currencies can be used. If USD: Settlement can be in USD if premium was in USD
What concludes the broker’s final role?
Final and full payment into insured accounts
Under the enterprise act 2016, what time frame can the insured sue for late claim payments?
12 months
How does money movement differ in IUA and Lloyds?
IUA - once all parties agree, money moved automatically
Lloyds, XCS enters claim info and triggers movement
How does claims handling occur for binding authorities?
Send bordereaux monthly, insurers provide binding authority with Loss fund
What does average mean in marine and non marine?
Marine = loss
non marine = underinsurance
What is a key regulation in ICOBS 8.1.2?
Rejection of consumer claims is unreasonable unless there is evidence of fraud
What are the 4 items of ICOBS?
- Insured treated fairly
- Consumer claims should be accepted unless there is evidence of fraud
- Conflict of interest
- Immediate notification of insurer if broker cannot handle claims
What is special about California’s laws on claims handling?
Timeline of acknowledging claim
Timeline for updating insured on claim investigation
Sufficient info provided for claims denied so that they can follow up
What are the practical problems with sanctions and how do insurers find out about sanctions?
OFAC, Crystal (lloyds)
You don’t know the true receiver of funds
What is the FOS and what are the limits?
Final arbiter of claims disputes.
Only applies for:
Enterprises with: 2M turnover / 10 employees. Or 6.5M / 50 employees and BS of less than 5M
Time limits:
6 months after final decision
6 years after event was complained about
3 years that complaintant knew
What are the limits and interests on payout for fos?
415 if complaint after 01/04/2019
190 if before
8% interest per year
What is a directions award?
Additional actions that the insurer must do for the consumer
How is the FOS funded?
Levy and case fees against complained firm
What is the purpose of the FSCS and what are the limits on payout?
Pay if firm has defaulted
100% on compulsory, life, PI
90% on everything else
How are non marine risk claims settled in IUA?
All insurers must agree
What is the most likely outcome for a careless consumer motor claim?
Claim will be settled
Under the Lloyds Claims Scheme, what types of claims are handled by the first two syndicates only?
Complex claims
In Cargo, who is usually first notified?
Surveyor
When a broker becomes notified of a claim, what is this called?
First advice
What are the regs for handling overseas claims?
FCA + Overseas regs must be met
When is an expert likely to be appointed by an insurer?
When advice is needed
