Chapter 2 The Claims Environment Flashcards
What happens under the Canadian Inter-Company Arbitration Agreement?
a. Witnesses can be called to testify at the arbitration
b. The insured person is involved in the arbitration
c. Only the interests of the insurers are arbitrated and not the interests of the insured
d. There is no statute of limitations on when a claim can be submitted for arbitration.
c. Only the interests of the insurers are arbitrated and not the interests of the insured
When loss adjusters open a particular file, the average cost of reserving is what?
a. Reserves are set up automatically
b. Set up manually
c. Highly unpredictable
d. Produced based on unreliable statistics
a. Reserves are set up automatically
What provides that insurance companies must set aside funds to pay future obligations?
a. Statutes
b. Accounting principles
c. Investigation
d. Disclosure
a. Statutes
As a representative of the insurance company, what must the loss adjuster be very familiar with?
a. Company protocol for handling claims
b. Competitor’s service standards
c. Underwriter’s experience in writing the policy
d. Company protocol for setting up accounts
a. Company protocol for handling claims
Which entity provides cooperation and assistance to Canadian insurers in the detection, investigation, and prevention of insurance fraud?
a. The Insurance Institute of Canada
b. Chartered Insurance Professionals’ Society
c. Équité Association
d. Canadian Insurance Claims Managers Association
c. Équité Association
The Intercompany Settlement Chart applies to what types of damage?
a. Third-party non-vehicle property damage
b. First-party bodily injury that does not exceed a threshold
c. Vehicle damage that does not exceed a specified dollar amount
d. Bodily injury, where coordination of benefits is required
c. Vehicle damage that does not exceed a specified dollar amount
What correctly describes special investigations units (SIUs) within an insurance company?
a. Prosecute and convict individuals who have defrauded an insurance company
b. Provide training for claimants in relation to their claims
c. Provide training for adjusters and others, and to raise fraud awareness
d. Are paid for by the Insurance Bureau of Canada
c. Provide training for adjusters and others, and to raise fraud awareness
What does the CIAA provide leadership through?
a. Due diligence, education, and codes of conduct
b. Advocacy, education, and recognized professional standards
c. Following HR protocol, education, and advocacy
d. Education, due diligence, and government regulation
b. Advocacy, education, and recognized professional standards
What program protects policyholders from the financial collapse of an insurer?
a. Personal and Commercial Insurance Company Compensation
b. Property and Casualty Insurance Compensation Company
c. Property and Casualty Insurance Compensation Corporation
d. Property and Claims Insurance Compensation Corporation
c. Property and Casualty Insurance Compensation Corporation
Traditionally, for which claims is individual reserving used?
a .Windshield claims
b. Those claims in a particular line of business have produced reliable statistics
c .All claims
d. Individual claims a loss adjuster cannot assess carefully to estimate how much should be put in a reserve
c .All claims
Used when only the loss adjuster can effectively estimate a reserve. The loss adjuster assesses each claim carefully in order to estimate how much should be put in reserve.
individual reserving
(1) Methods used to deceive to cause an unwarranted favourable decision for one’s own benefit. (2) Deliberate misrepresentation or misstatement. (3) Concealment of facts that should at the time be made known.
fraud
A vehicle that does not exist or is already wrecked.
phantom vehicle
An amount carried as a liability in an insurer’s balance sheet representing, in respect of each claim, an amount equal to the estimated final settlement cost less any amounts already paid.
loss reserve
A federal statute that governs the collection and use of personal information. It states that personal information to be collected must be relevant, and that all information that has been collected, is being collected, or will be collected must be held in the strictest of confidence.
Personal Information Protection and Electronic Documents Act (PIPEDA)
One who specializes in the mathematics of insurance, mortality rates, and the like.
actuary
The process of compiling and analyzing data to establish rates that accurately reflect the level of risk. Usually performed by actuaries.
ratemaking
Set up automatically when loss adjusters open a particular file. Actuaries predetermine a reserve amount for the particular type of claim by using historical data from a large sample of similar claims, noting their settlement amounts, and considering any inflation factors. Also known as a volume reserve.
average cost reserving
How do the federal and provincial and territorial governments monitor and regulate the insurance industry?
OSFI Office of superintendent of financial Institution
Statutes provided that insurance companies set aside funds to pay future obligations
PACICC Property and Casualty Insurance Compensation Corporation
Provincial and territorial Insurances act
Privity laws PIPEDA
Briefly explain individual reserving and how loss adjusters estimate the amount to be put in reserve. Provide ONE (1) example to illustrate your answer.
Individual reserving is used when only the loss adjuster can effectively estimate a reserve
This has been a traditional method used for preserving all claims
Many insured still reserve on a case-by-case basis for property, liability, and injury claims
To estimate how much should be put in reserve, the loss adjuster carefully assessed each claim and examined each type of coverage under a policy separately
What is the purpose of the Canadian Inter-Company Arbitration Agreement?
CICMA developed an arbitration mechanism for settling disputes between insurers efficiently and cost-effectively.
The CICMA makes rules and regulations concerning how claims are presented and determined under the CICAA. Members appointed serve without compensation
The claims department contributes to the company’s financial reporting process by posting a loss reserve for each claim. Loss reserves give management and regulators information on a company’s financial status. Management relies on reserves to predict business trends, costs, and expenses. Furthermore, actuaries rely on loss reserves to predict future claims costs and provide accurate average reserves.
Loss Reserves
List the two main methods used to set up resources for a claim
Average cost reserving
Individual reserving
In what provinces are you required to licensed as an adjuster
Quebec, New Brunswick, Newfoundland and Labrador, and Prince Edward Island.
