Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

LOMA 301 I*STAR > Chapter 3 > Flashcards

Chapter 3 Flashcards

1
Q

What is the new business process?

A

1) gathers data and enters it into an administration system
2) assesses the data
3) acquires additional data if needed
4) decides whether to accept the risk
5) if the decision is favourable, issues the policy.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

what is field underwriting

A

is the practice of athering initial information about applicants and proposed insureds and screening proposed insureds to detemine if they are likely to be approved for a specific type of coverage.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

what are characteristics of effective field underwriting?

A
  1. reduces the insurer’s cost by eliminating the processing and underwriting of applications that are clearly unacceptable.
  2. helps ensure that underwriters have the info they need to assess risk
  3. set reaistic expectations for applications by helping them apply for an appropriate coverage amount.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Traditional insureers divide application into two parts.

A

Non-medical information
medical information
- but this is changing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is tele-underwriting

A

a method by which someone other than a financial professional gathers information needed for underwriting and insurance application.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are examples of non-medical infomation on insurance applications?

A
  1. name, social security number, DOB, DOB, A, S, L, address, tele number, occupation, emplouer, income,
  2. applicants/ownership details
  3. insurance plance, faceamount, premiums
  4. divident options
  5. bene info
  6. acocations, aviation, residency/travel, driving, SM hx, criminal hx.
  7. insurance hx
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Some application sections contain a section for the advisor to complete. What kind of questions do they ask?

A
  1. how well do u know the insured
  2. what is your impression
  3. was it completed F2F
  4. did you solicit the business
  5. whats the purpose of insurance
  6. is it a replacement policy
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Most insurers have a field underwriting manual. What is this?

A

a paper or online document that 1) presents specific guidance for a financial professionals assessment of the risk that a proposed insureds represent
2) guides the financial professional in assembling and submitting the application and in shjaring any other information needed for the underwriter to evaluate the risl.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is usually included in the insurer’s field underwriting manual?

A
  1. underwriting philosophy - set of g/l for an insurers u/w actions, the stratefic busines goals, and pricing assumptions for products.
  2. age and amount requirements chart -
  3. impairement guide
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Define an impairement

A

a physical or psychological abnormality or loss of funtion.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What are some typical content of a field underwriting manual?

A

underwriting philosophy
A&A reuqirment
impairement g/l
outline of financial responisbilities and compliance issues
speicific guidance on completing applications and changes
brief definitions of common medical terms and common impairments
list of questions related to common impairemetns
criteria for preferrred rating
criteria for qualifying as a NS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What are remote applcations?

A

applications that isnurers accept from financial professionals who meet with clients over the phone or over videoconferencing platforms.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

what is an electronic application system?

A

allows financial professionals to enter application information into a computer rather than on paper and transmit the infomration to the insurer over a company network

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is a reflexive question?

A

question that triggers additional, more probing questions related to the original question.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

those who accept electronic applications also accept electronic signatures. What is this?

A

unique personal identifiers that make legally binding contract using electronic communications media.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Temporary insurance coverage during UW period depends on the premium receipt. define this.

A

the insurers issue to the applicant fo r alife insurance policy in exchange for payment for the first premium. Usually includes a TIA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is a temporary insurance agreement (TIA)?

A

a contract between the insure and ht epaplicant that provides temporary coverage on the proposed insured before a policy is issued and delivered.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is a suitability requirement?

A

a regulatory requirment that imposes a duty on financial professionals and insurers to have a reasonable grounds on which to believe a recommended product is suitable for a customer’s financal situation and to purchase objectives.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

After evaluating the degree of risk represented bya proposed insured, the UW can take what actions?

A
  1. accept the risk and issue as applied for
  2. accept the risk but rate the policy.
  3. accept the risk but offer lower Faceamount
  4. accept the risk, but limit coverage by modifying the terms of the contract.
  5. decline the risk not issue the policy
  6. PP making a decison at this time.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is rating?

A

the process of increasing the premium rate for a higher-than-average risk in order to approve the risk.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is an exclusion

A

a policy provision that describes circumstances under which the insurer will not pay the policy benefit following and otherwise covered loss.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is a policy rider

A

an amendment to an insurance policy that becomes part of the insurance contract and either expands or limits the benefits payable under the contract.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

define policy issue

A

the process of preparing the insurnace contract and delivering the policy to the policyowner.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What happens during policy issue?

A

Staff

  1. enter or confirm the policy rating and other other information in the admin system
  2. notify the financial professional of the UW decision
  3. verify the insurer has received the intial premium payment and all policy requirments have been met
  4. print and bind the policy with any forms required.
  5. mail policy
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

What are insurers regularly monitoring in order to assure performance of the NB and UW area is up to standards.

A

1) performing every step of UW accurately 2) evaluate applications faily and promptly

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

What is an underwriting worksheet?

A

a document that contains records of telephone calls, letters, and other communications; doumentation of request for reinsurance; list of reports and other information requested; and other notations that explain clearly the manner in which the underwriter has handled the case, with submission of the application to the insurer.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Why does u/w documentation need to be complete and accurate?

A

it might be used:

  1. by other company staff
  2. evidence in court proceeding
  3. to explain unusual or exceptional handling of cases to internal auditors.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Insurers often sue audits to monitor the quality of their underwriting activities. whats an audit?

A

an evaluation of a comapny;s records and operations to ensure the accuracy of the records and the effectiveness of operational policies and proceedures.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

What is the purpose of an UW audit

A

1) make sure that appropriate and consistent decisions are being made
2) complying with applicable laws and regulations
3) documenting casses clearly and completely

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

What is the difference between internal audits and external audits?

A

internal: audits performed by a company;s own staff to ensure that they have accurate records and effective procedures and policies - judge quality of work
External: audits conducted by third party that is not employed by the company being audited
- usually reinsures on insurers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Name some examples of time and service metrics

A
  1. time to underwriter
  2. time to underwrite case
  3. total time to issue
  4. time for delivery requirements
  5. total turnaround time.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Define Risk assessment

A

the process of determining the degree of risk represented by each proposed insured using a number of factors established when the insurance product was designed and proced.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Risk assessment is primarily concerned with mortality. Define this.

A

the incidence of death amoung a specified group of people

34
Q

What is mortality rate?

A

the rate at which death occurs amoung a specified group of people during a specific period, typically one year.

35
Q

What is morbidity?

A

the incidence rate of sickness and injuryt amount a specific group of epople

36
Q

what is morbidity rate

A

the rate at which sickness or injury occurs amoung a specified group of people during a specified period.

37
Q

What is risk-factor, in terms of individual insurance UW?

A

any aspect of a proposed insured’s present health, medical hx, fx, pmh, fiancnials, MVVR, criminal, occupaiton and avocations that increase risk.

38
Q

Define medical risk facts

A

pysicial or psychological characteristics that my affect a person’s health and longevity.

39
Q

What is a personal risk factor?

A

lifestyle choices that significantly affect a person’s health of longevity

40
Q

What is a financial risk factors?

A

financial information that an UW considers to determine whether a person is applying for more insurance than reasonably needs/can afford.

41
Q

Define antiselection

A

the tendency of people who believ ehtey have a greater-than-average likelihood of loss to seek insurance protection to a greater extent than do those who beleiv ehtey have an average or less than average likelyhood of a loss.

42
Q

What is a wagering agreement?

A

any agreement under which either party may gain or lose depending on the outcome of an uncertain event.

43
Q

What is an insurable interrest?

A

exists when a person is likely to suffer a genuine financail loss or detriment should the event insured against occur.

44
Q

define misrepresentation

A

An untrue statement in an insurance application.

45
Q

What is material misrepresentation?

A

a misrepresentation that induces the other party, the insurer- to nter into a contract that it would not have entered had it known the truth.

46
Q

What is a rescision?

A

a legal remedy provided to an insurer to avoid a contract when the policy was issued based on a material misrepresentation of a fact contained int the application.

47
Q

Insurers are limited in their right to rescind policies by a policy’s contestable period. what is this?

A

A period in within which the insurer has the right to avoid a life insurance policy on the grounds of a material misreprecentations.

48
Q

what is an incontestability provision?

A

life insurance policy provision that limits the time within which an insurer has the right to avoid a life insurance policy on the basis of material misrepresentation int eh application.

49
Q

What is Moral hazard?

A

a characteristic that exists when the reputation, financial position, or criminal record of an application or proposed insured indicates that the person may act dishonestly in the insurance transaction.

50
Q

When is discreimination among risks considered lawfully?

A
  1. recognized acturial pronciples

2. actual or resonably anticipated experience.

51
Q

U.S. jurisdictions have enacted laws that prohibit hinsurers from using what factors in their UW criteria?

A
  1. gender
  2. material status
  3. sexual orientation
  4. blindless
  5. status as a victim of physical abuse
  6. race.
52
Q

What is a rick cloass?

A

a group of insured in a given age category who represents a similar level of risk to an insurance company.
- charged same premium rate.

53
Q

Most insurers identify risk classes as

  1. preferred
  2. standard
  3. substandard
  4. declined
    - define preferred class
A

person whos motality rates are lower than average and present the lowest degree of mortality risks.
- healthy

54
Q

Most insurers identify risk classes as

  1. preferred
  2. standard
  3. substandard
  4. declined
    - define standard class
A

persons who anticipated mortality rates are average.

55
Q

Most insurers identify risk classes as

  1. preferred
  2. standard
  3. substandard
  4. declined
    - define substadnard
A

persons who anticipated mortality rates are higher than average but still considered insurable
- ++ premiums

56
Q

Most insurers identify risk classes as

  1. preferred
  2. standard
  3. substandard
  4. declined
    - define declined
A

person’s whose anticipated mortality rates are so great the insurer cannot provide coverage at an affordable cost or the mortality risk cannot be predicted

57
Q

UW bear the responsibility of assessing and classifying risks appropriately to ensure what?

A

1) each insured is placed in the appropriate risk class

2) the insures claim experience is as close as possible tothe assumed loss rate used to establish the premium rates.

58
Q

What are UW guidelines?

A

general standards that UW follows as they established the level of risk presented by a proposed insured or group.

59
Q

Name some examples of medical risk factors

A
  1. age
  2. height and wieght
  3. BP
  4. lipids
  5. specific impairments
  6. medical hx
  7. fx
60
Q

name some examples of personalo risk factors

A
  1. occupation
  2. smoking
  3. substance us
  4. MVR
  5. avocations
61
Q

name some exmaples of financial risk factors

A
  1. financial circumstances
  2. type/amount of coverage
  3. purpose of insurance
62
Q

group life insurance UW focuses on what areas/factors relating to the group ?

A
  1. size
    2 nature of business
  2. employee occupational classes
  3. type and amount of coverage requested.
63
Q

What is industry experience?

A

the collective data about insurance claim experience generated by industry-wide studies?

64
Q

When is a policy considered undeliverable?

A

when an applicant chooses not to accept a policy when a financial professional attempts to deliver it.

65
Q

How do u/w form a productive relationship with financial professions’/.

A
  1. completing work on each application as quickly as possible
  2. assessing each application ina consistent manner
  3. providing updates on progress in cases that are delayed because of requirements for additional information
  4. communicating with financial professionals about raiting, modifying, or declining an application.
  5. educating fiancnail professionals and their staff about the insurer’s underwriting philosophy and g/l.
66
Q

Cheif underwriter is the highest ranking u/w in an insurance company. What are their responsibilities?

A
  1. esablishing the insurer’s u/w philosophy g/l
  2. monitoring the cost and quality of UW
  3. assisting with UW large or unusally difficult cases.
  4. helping to negotiate and administer reinsurance agreements
  5. deciding which products, services, and vendors to use
  6. overseeing the training of all UW
  7. reviewing contestable claims
67
Q

Chief UW also serves as a liaison wiht the insurer’s other operational areas, which include what?

A
  1. legal/compliance staff to create contract wording
  2. information techonolgy staff to develop u/w systems
  3. actuarial staff to establish appropriate pricing, preferred risk criteria and other characteristics.
68
Q

What is an underwriters autority level based on? (2)

A
  1. max coverage amount that the UW can approve

2. degree to which the UW may rate or decline a policy without approval or review by a more experienced UW

69
Q

What is the purpose of a referral person?

A
  1. ensure that appropriateness of the OG decision
  2. ensure the consistency of UW actions
  3. evaluate the UW job performance
  4. train the UW
  5. enhance financial professionals’ confidence in the insurer’s UW practices.
70
Q

What is a case assignment system?

A

method of assigning cases to UW based on characteristics of the case.
- depends on insure’s size, number of apps, and difficulty of cases.

71
Q

Case assignment systems typically assign cases to UW according to one or more characteristics. What are the exmaples?

A
  1. type of application or policy change
  2. geographic origin
  3. financial professional submitting the aplication
72
Q

What is a work division system?

A

a method of assigning cases to UW that divides casses according to the person or group that UW them.

73
Q

What are the examples of work division systems?

A
  1. independent UW
  2. Team UW
  3. committee UW
74
Q

What is automated UW?

A

type of UW in which techonology performs some or all of the steps needed to assess and classify insurance risks.

75
Q

What is STP

A

straight through processing.

All steps from application to policy issue are completed electronically

76
Q

What is an advantage to automated UW?

A
  1. reduce costs by increasing efficiencies
  2. reduce time from receipt of application to policy issue
  3. decreased errors from human mistakes
  4. improve UW consistency and quality
  5. better satisfy fianncial professionals and cutomers with faster service
  6. Allows UW to focus on complex risks.
77
Q

What is application triage?

A

automated UW approach that allows applicants to obtain coverage at the same price they would pay under a standard fully underwritten approach byt in less time.
- rely on predictive analytics.

78
Q

What are two technology systems used to facilitate automated underwriting

A
  1. BRE- business rules engines, automates decision-making process by creating and applying rules to all available situations.
  2. predictive analytics - enables insures to evaluate a wide range of applicant data- and use the data to produce models that better predict a persons mortlaity risk.
79
Q

what is simplified UW?

A

only a few key risk factors are considered in assessing and classifying an insurance risk.

  • typically used for guaranteed issue policies.
  • quick / $$$
80
Q

What do insurers do in simplified uw?

A
  1. ask a small number of risk-related questions
  2. interview applicants by phone for more questions if needed
  3. check external data bases that track potential risk factors.
81
Q

What is real time underwriting?

A

technology performs all the steps needed to assess and classify the insurance risk, and the insurers can make decisions instantly while the applicant waits.
- not offered with every company but becoming more populoar.

LOMA 301 I*STAR (12 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions