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LOMA 301 I*STAR > Chapter 2 > Flashcards

Chapter 2 Flashcards

1
Q

Define the concept of law.

A

approved by vote of the federal or state legislature and signed by a jurisdicton’s executive.

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2
Q

Define the concept of regulation

A

created by a federal or state body that has the responsibillity to govern a certain area of commerce or society, such as a state’s department of insurance

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3
Q

Who provides guidance to state insurance regulators?

A

NAIC.

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4
Q

What is the primary function of the NAIC?

A

promote uniformity of state regulation by developing model laws and regulations, - which states are encouraged to enact or adopt.

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5
Q

what is a consumer report?

A

any communication of infomration by a consumer reporting agency that

1) bears on an individua’s creditworthiness, credit standing, character, moe of living.
2) is used or collected as a factor in establishing consumers eligibility for insurance or credit

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6
Q

who regulates the reporting and use of consumer information and seeks to ensure that consumer reports contain only accurate, relevant and recent information?

A

the FCRA

Fair credit reporting act

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7
Q

What is an Adverse Action, in terms of a decision following consumer report review.

A

Denial or revocation of insurance coverage, a change in the terms of existing insurance coverage, or a refusal to grant insurance in substantially the amount or on substantiially the terms requested.

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8
Q

What is HIPPA regulation?

A

Health insurance potability and accountability act - legistation that sets forth requirements that employer-sponsored group insurance plans, insurers, and managed care organizations must meet in providing individual and group health insurance.

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9
Q

What is the Act that the US Federal law enacted in 1999, that removed many of the regulatory barriers between insituations in the various segments of the financial service industry and that governs privacy.

A

Gramm-Leach-Bliley (GLB) Act.

- reuqires insurers to disclosre policies for obtaining and sharing customers nonpublic personal information for 1 year.

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10
Q

To protect customers personal information , most states have adopted the privacy of consumer financial and health information model regulation. What is this?

A

a model law created by NAIC in response to GLB act.

- Sets standards insurers must meet to protect pricary and security of individuals nonpublic personal information.

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11
Q

What does the Model Privacy Regulation specifically limit disclosure too?

A
  1. nonpublic personal financial information

3. nonpublic personal health information

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12
Q

Some states have adopted the insurance information and privacy protection model act. What is this?>

A

An NAIC model law that sets standards for the collection, use and disclosure of information gathered in connection with insurance transactions.

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13
Q

What does the Model Privacy Act regulate?

A
  1. governs u/w and claims evaluation practices.
  2. Requires insurers to provide customers with written notice of their information practices in certain situations.
  3. limits an insurer’s right to disclose certain types of customer information to others
  4. specifics how insurer must notify and repsond to a customer when the insurer conducts and prepares a consumer report or an investigative customer report.
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14
Q

What is insurance fraud?

A

a crime that anyone connected to an insurance transation can commit.

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15
Q

In response to fraud prevention, most states have enacted laws based on the insurance fraud prevention model act. What is this?

A

an NAIC model law designated to permit state insurance departments to

  1. investigate and discover fraudulent insurance acts
  2. receive assistance from state, local, and federal law enforcement and regulatory agencies in enforcing laws that prohibit fraudulent insurance acts.
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16
Q

To ensure accurate and complete information about insurance products, states have enacted unfair trade practice laws. What are the laws typically based on?

A

NAIC’s `unfair trade practices act.

  • defines certain practices as unfair and prohibits them when they are commiting
    1) flagrantly in conscious disregard of the law
    2) so frequently as to indicate a general business practice
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17
Q

How does the Unfair trade practices act affect insurance administration activities?

A

1) prohibits unfair discrimination in underwriting and issuing policies
2) prohibits unfair discrimination in setting premium rates
3) requires insurers to keep records avout complaints, claims, ratings, and u/w decisions.

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18
Q

Define Market conduct Laws

A

state insurance laws designed to make sure that inruance companies conduct their business faily and ethically.

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19
Q

What does Market conduct laws prohibit?

A

1) failure to provide adequate disclosure for policy cancellation
2) lengthy delays in processing claims.

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20
Q

Define Quality Control

A

the process of ensuring that a company accomplish its objectives in an effective and efficient way.

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21
Q

Why is quality of administrations important to insurers?

A
  • keeps cx policies in force and buy additional products from the insurer
  • make +ve/-ve comments about the insurer to other people
  • file complaints about hte insurer
  • Bring legal action against the insurer.
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22
Q

Insurers evaluate the quality of their administration activities by measuring results and then comparing actual performance to set standards. What is performance measurement

A

Process through which a company decides what activities are key to the achievement of the companys goals and objectives, how to measure performance those activities and what performance standards it hopes to acheive, gathers the measurements and communicates the results.

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23
Q

Insurers evaluate the quality of their administration activities by measuring results and then comparing actual performance to set standards. What is performance standard?

A

established level of perforamnce agaisnt which a company or an individual compares actual performance.

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24
Q

What are benchmarks?

A

performance standards, often based on standards achieved by leading companies, that represent a companys goals for performance.

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25
Q

Insurers use qualitative and quantitative methods to evaluate performance. What is Qualitative performance measurement

A

focuses on behaviours, attitude, or opinions to determine the quality of an activity.
- they are difficult to administer and interpret

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26
Q

Insurers use qualitative and quantitative methods to evaluate performance. What is quantitative performance measurements

A

uses numerical measures to track and report objective results.

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27
Q

What is a commonly used quantitative method?

A

metric

- numerical measure that quantifies the performance of a specific

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28
Q

how can companies focus on the most impotant aspects of preformance standards/measurements?

A

Identify specific metrics known as Key Performance Indications- servce as quantitative measures that indicate the performance level of an acitvity that is critial to an organization’s success.

29
Q

What are some examples of KPIs that are commonly used by life insueres to measure overall company performance?

A

revenue per policy holder

expense ratio

30
Q

What are some examples of KPIs that are commonly used by life insueres to measure specific insurance admin activities?

A
  1. time to u/w
  2. average hold time
  3. claim turnaround time
31
Q

How do companies provide all employer access to the KPIs?

A

uding data visualization tools.

this is a tech-driven graphical display of an organization’s metrics and KP indicators.

32
Q

What is the main purpose of data visualiation tools?

A

make complex data more accessible, understandable, and usable.

33
Q

What are two examples of Data visualization tools?

A

Dashboards and score cards

34
Q

define dashboards

A

an information system application that combines information from multiple business intelligence sources into a single, easy-to-read electronic format that identifies positive and negative trends for an individual business process or for the whole company.

35
Q

Define scorcards

A

shows progress over time toward a specific goal.
Allow high-lvl mg and execs to graphically see how the company;s KPIs are performing agasint their target goals.
- may have trend lines
- updated 1/12 or 1/4,

36
Q

What are administrative systems?

A

interactive combinations of technology, people, and process that collect manipulATE AND DISTRIBUTE INFORMATION ABOUT insurance policies and customers.

37
Q

what is the purpose of adminstration systems?

A

to provide employee with information they need to do their jobs effectively and efficiently.

38
Q

Employees access administration systems through computer networks. What is a computer network?

A

form from two or more computers linked together to provide a platform for electronic communication and information sharing.

39
Q

There are two types of computer networks. What are they?

A

Internel Network- computer network that a company creates to lnk its people and equipment to each-other.

External Network- network that links a company to people and computers outside the company.
- share info with other organizations.

40
Q

Some companies may share infromation and company publications through intranets and extranets. Define these.

A

1) intranet is an internal network thats similar to the internet but is accessible to company employees only
2) extranet is a portion of an organization’s internal network that is accessible to people within the organization and to select external parties.

41
Q

Insurers work to improve insurance administration through business process management. What is BPM?

A

a strategy that combines proven management practices with technology to automate and optimize business processes or adept them to meet changing needs.
- helps create efficient and agile admin processes.

42
Q

what is a BMP technology suite?

A

a collection of technology tools that support and mantage the design, modeling, construction and monitoring and refinement of business processes.

43
Q

Another way for insurers to optimize administration processes is by contracting out specific functions or processes to another company known as Business process outsourcing (BPO). define this

A

allows insures to offload to an outside organization functions that must be done but not directly to the company’s growth and profitability

44
Q

imaged documents can be indexed and stored in the insurer’s document management system. What is that?

A

a type of technology that stores, organizes, and retrieves documents that have been converted to digital images.

45
Q

MOST DOCUMENT management software uses data capture techonogloies such as optical character recohnition (OCR) and intelligent character recognition (ICR). Why?

A

OCR can recognize printed text characters in a document, convert them into electronic form, and save them in a dynamic file from which the insurer cna exyta data. ICR can recognize and convert handwritten characters.

46
Q

digital files become part of an insurer’s automated workflow system-what does it do?

A

coordinates the flow of documents and work tasks associated with a business process.

47
Q

Automated workflow system use business rules engines (BREs) - what is this?

A

software that automates the decision-making process by creating and applying rules to all available information.

48
Q

By using BREs insurers can engage in exception-based underwriting. What is this?

A

UW in which rules are applied to process all applications eletronically, except the most difficult ones that requre and u/w to apply human judgement in the decision-making process.

49
Q

An automated workflow system can use BREs to do what two process’?

A

1) gauge the priority of a work item and place high-priority items in the front of queues.
2) determine what skill set is needed for a certian task and route the worek to an employee with those skills

50
Q

What is straight-through processing?

A

the electronic processing of every step of a transaction without manual intervention.

51
Q

what is a knowledge management system?

A

system that gathers, evaluates and shares a company’s information assets used to apply knowledge to business activities.
- makes it easier/quicker for employees to find information

52
Q

What drives an insurer’s administration system and processes?

A

Data.

53
Q

what do insurers typically use to keep track of all the data they collect and stone?

A

databases.

54
Q

How can insurer may also store a huge amount of data in one location?

A

data warehouse.
- a system that consolidates data from various organizational databases and external sources and houses it in a centralized lcoation on the company’s server.

55
Q

Insurance compaany employees can search and manipulate collected data by using a database manhement system . What is this?

A

a database management sytem (DBMS)- software application that organizes the data in one or more databases or data warehouses logically and allowes users to access, update and analyze data while ensuring the integrity and security of the system.

56
Q

Insurer can analzye its data through data mining. What is this”

A

which is the analysis of large amount of data discover previously inknown trends, patterns, and relationships.

57
Q

What is Information security?

A

encompasses the physical, technical and procedural steps a company takes to prevent the loss/theif of information.

58
Q

What is Data Governance?

A

the process of establishing organizational ownership and accountability for data so that business processes are optimized and data secure and protected.

59
Q

what is the purpose of cybersecurity

A

encompasses measures undertaken to protect a company’s computer network, system, and data form unautorized access.

60
Q

NAICs cybersecurity task force has developed the Insurance Data Security Model Law to create standards. what does it include?

A
  1. conducting annual risk assessments to identify internal and external threats to data security
  2. developing, implementing and maintaining an information secyurity program with safeguard to protect nonpublic information
  3. creating a written incident respnse plan for responding to cybersecurity breaches.
  4. notifying state regulators of a cybersecurity incident within 72 hours of the event.
61
Q

How can insurance companies manage the risk of cyberattacks’?

A
  1. limiting access to IT assets and associated facilities to authorized users, processes and devices.
  2. Coordinating reponse activities with internal and external stakeholders and law enforcement agencies
  3. reviewing the cyber risk management practices of any 3rd-party vendors the insurers uses. .
  4. developing a compregensive cybersecurity strategy addressing governance, risk identification, implementation of controls, recovery options and learning from cyber incidents.
62
Q

What is Business continuity planing?

A

process of developing arrangements and procedures to be used if events occur that would prevent or hamper normal business activities.

63
Q

What is business intelligence?

A

the combination of techonolgy, processes, tools and techniques a comapny uses to analyze data and present it as a meaningful and useful information to decision makers at all levels.

64
Q

BI allows the ability to interpret big data- define this

A

large amount of data gathered from various sources, in various formats and at a rapid speed, aming it complex and difficult to manage with traditional technology.

65
Q

What can BI do for insures?

A
  1. improve risk management and underwriting.
  2. direct and prevent fraud
  3. gain valuable insight into customer behaviour
  4. comply with regulatory reporting requirements .
66
Q

Define data analytics

A

the process of examining data to draw conclusions about it.

67
Q

Data analytics can be categorized into 3-types. Name them

A
  1. descriptive analytics- summarizes or describes, raw data to show how past behavors might influence future outcomes.
  2. predictive analytics- data analytics that determines the probably future outcome of an event or the liklihood of a situation occuring,
  3. prescriptive analytics- makes predictions, suggests decision options based on those predictions and shows the possible implication of each decision.
68
Q

What is a data scientists?

A

person who uses techniques from statistics and computer programing to
1- identify patterns and trends in data
2- create mathematical models that forecast business oucomes.

LOMA 301 I*STAR (12 decks)

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