Brainscape's Knowledge GenomeTM

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


See full index

IF4 - Claims Handling > Chapter 3 - Claims Considerations and Administration > Flashcards

Chapter 3 - Claims Considerations and Administration Flashcards

1
Q

Role of claims handler?

A
  • deal with claims submitted quickly/fairly
  • settle claims with minimum wastage/overpayment
  • estimate cosy of claims
  • decide if claims are genuine/fraud
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Reasons why customer service has become more of an issue?

A

Customer awareness - increased knowledge of rights and louder voice with social media

Expectation- high!

Competition- insurers struggle to compete with their providing better customer service (disruptors enter the marker using new tech etc which shakes things up)

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

What is meant by service standards?

A

How a company deals with claims

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

Benefits of good customer service?

A
  • encourages customer loyalty with existing customers
  • attracts new customers
  • maintains/attracts good employees
  • distinguishes company from its competitors
  • improves profitability, productivity and working environment
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Parties to a claim:

A

First party - policyholder

Second party - insurer

Third party - anyone else involved in the claim

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

Third parties have contractual relationship with insurer - true or false?

A

False - no contractual relationship

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Consequences of there not being a contractual relationship between the insurer and a potential third party?

A
  • legally the third party must pursue their claim against the insured not the insurance company
  • third parties expectations of claims service may be greater than the insured because they are hostile (I.e. victim in a motor accident)
  • third party may be prone to exaggerate
  • third party won’t be fully compensated if they’ve contributed to the accident
  • third parties aren’t liable for any XS’s
  • recovery of legal costs is common as third party is more likely to use a solicitor
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is reserving?

A

Assessing level of funds required to meet current and future claims (it’s a key indicator of whether a company is solvent)

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

What is reserving used to assess?

A
  • overall financial performance
  • how profitable different classes of business are
  • adequacy of premium rates
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Who is involved in reserving reviews?

A

UW, actuaries and claims managers

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

What is an outstanding claims reserve?

A

All the reserves allocated to individual claims added together and covers the cost of claims that have been incurred and reported to the insurer

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

What is an incurred but not reported reserve?

A

Claims incurred by the insured but not yet reported to the insurer (basically the insurer obviously doesn’t know the exact cost of claims unreported so it uses stats on past claims etc to make an educated guess)

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

What is an incurred but not enough reported reserve?

A

Covers any shortfalls with the outstanding claims reserves (could happen if amounts are understated or if the insurer has insufficient info when estimating adequate reserves)

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

Name some other types of reserve

A
  • equalisation (required by law, designed to smooth fluctuations in loss ratios)
  • catastrophe (set up to cover large numbers of related losses I.e hurricane)
  • unearned premium reserve and unexpired risk reserve
  • reserve for claim handling expenses (office fees and loss adjuster fees)
  • re-opened claims reserves - Common with PI claims
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Name the 4 main examples of insurance fraud

A

Inventing something that never took place
Exaggerating
Deliberately creating an insured event (paint on carpet)

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

Who are the IFB and what do they do?

A

Insurance fraud bureau lead industry’s collective fight against fraud.

  • Help insurers avoid financial consequences of fraud
  • Support police in finding fraudsters
  • Manage insurance fraud cheat line
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Who are the IFED?

A

Insurance fraud enforcement department (part of London police). Specialist unit in dealing with fraud.

18
Q

What databases are used to help detect fraud?

A
  • insurance fraud register, industry wide and used to prevent fraud being committed
  • IFB intelligence hub - intelligence about fraudsters can be shared in real time

Motor insurance anti-fraud and theft register- holds details of all total loss and theft claims so insurers can check if vehicle is being claimed for more than once

Motor insurance database - contains details of all UK registered vehicles, helps police identify uninsured drivers

CUE - shared database for personal lines claims from the previous 3 years, aims to prevent multiple claims on a number of policies held by 1 customer

Art loss register

19
Q

What are some common indicators of fraud?

A
  • claims near inception
  • frequent change of insurer
  • request to add AD cover midway through policy
  • financial difficulties come to light
  • pressure to settle
  • poor/missing documents
20
Q

How have insurers tried to combat fraud?

A
  • completing claims forms over the phone (harder to lie)
  • claims settlement via replacement rather than cash
  • use of cognitive behaviour tools
21
Q

What are the consequences of fraud for the insurer, customer and fraudulent customer?

A
  • the insurer - cost, light touch rep
  • customers - increase in premiums for genuine customers
  • fraud customers- temptation to carry on
22
Q

What did the case of Konstantinos Agapitos v. Ian Charles Agnew state?

A

Judge decided that not only would a fraudulent claim fail completely, but if a customer submitted a genuine claim and then exaggerated it this would also fail completely.

23
Q

What did the case of Versloot Dredging v HDI industrie state?

A

Overuled the Konstantinos case, stating that where the fraudulent act/omission makes no difference to the insurers liability it cannot reject the claim.

24
Q

What does the insurance act state around fraud?

A

If a fraudulent claim is made, the insurer can treat the contact as terminated from the time of the fraudulent act.

The insurer will remain liable for any prior legitimate claims before the fraudulent act, all claims after that will be invalid. The insurer is entitled to keep the premium.

25
Q

According to the insurance act, what is the difference between a fraudulent act and a fraudulent claim?

A

Fraudulent act = behaviour that makes the claim fraudulent

Important distinction as insurer is entitle to terminate cover from the date of the fraudulent act (not discovery of it) which may be different from when the claim was submitted.

26
Q

How does the criminal justice and courts act impact PI claims?

A

Defendants cab request a claim to be struck out where part of a PI claim is fundamentally dishonest. (Basically where people exaggerate)

27
Q

Who are the 2 main regulators of claims handling?

A

PRA- part of bank of England, responsible for supervision of systematically important firms

FCA - regulation of smaller firms such as insurance brokers and business conduct for all firms

28
Q

ICOBS considers it to be unreasonable for claims to be refused for?

A

Misrepresentation which is not a qualifying isrepresentation under CIDRA (consumers)

Breach of warranty/condition unless the circumstances of the claim are connected with the breach (General Insurance contact)

Only exception to this is fraud

29
Q

CIDRA

A

Before CIDRA the key insurance legislation was the marine insurance act which said all sellers/buyers of insurance must act with utmost good faith and disclose all material facts.

CIDRA removed the burden off the customer to disclose all material facts and replaced this with the requirement to take reasonable care to not misrepresent.

CIDRA categorised PH’s as consumers or commercial customers.

Act set out qualifying misrepresentations as either deliberate/reckless OR careless. If deliberate/reckless the insurer can avoid the contract. If careless there are 3 remedies based on what the insurer would have done had the consumer taken care.

30
Q

Insurance Act

A

Act amended insurance law on remedies for fraudulent claims, warranties and pre-contractual duty of disclosure.

Act retains the duty of commercial customers to volunteer info to the insurer and introduced the concept of making fair presentation of risk to the insurer.

Act sets out remedies for non disclosure, either deliberate/reckless OR innocent/negligent. Insurer can only repudiate a claim and avoid the policy entirely where they can show they wouldn’t have written the policy at all (deliberate/reckless). If non-disclosure was innocent/negligent insurer must reflect what they would have done before taking on the contract.

Under insurance act consequences of breach of warranty are less severe (under marine insurance a breach used to automatically terminate the contract). Now a breach suspends the insurers liability until the breach is remedied.

Act prohibits basis of contract clauses and states insurers are not entitled to avoid a claim where the customers breach did not relate to the loss.

31
Q

What is the impact of the enterprise act?

A

Insurers must pay customers in reasonable time.

32
Q

What does DISP stand for?

A

Dispute resolution complaints sourcebook

33
Q

According to the FOS who are eligible complainants?

A

Consumer
Micro enterprise (EU term)
Charities (less than 6.5 million annual income)
Trustees (less then 5 mill)
Consumer buy to let consumer
Smal business (annual turnover less than 6.5 million and fewer than 50 employees)
Guarantors

34
Q

When can the complainant refer their complaint to the FOS?

A

Within 6 months of the firms FDL

Within 6 years after the event complained about

Within 3 years after the complainant knew they had cause for complaint

35
Q

FOS is not bound by law or legal precedent - true or false?

A

True

36
Q

What 2 ways can redress be awarded to a customer?

A

Money award - max amount is £355,000

Direction award - FOS tell firm what actions need to be taken to put things right

37
Q

How is the FOS funded?

A

General levy paid by all firms and a case fee (fee we pay when a customer takes their complaint to the FOS)

38
Q

What is an arbitration clause?

A

Clause insurers include which means a customer can refer their dispute if they feel the claim settlement is unjust.

Insurers prefer it as it’s less public than court

Can have more than one arbitrator but usually just 1 - arbitrator has Sam’s powers as court to order someone to do something

39
Q

What is an alternative dispute resolution? (Third party disputes)

A

Another way to settle a dispute without litigation. Used most commonly for third party disputes before legal action. 2 different options - adjudicative options or non-adjudicative options.

40
Q

What adjudicative options are there for resolving disputes?

A

An independent TP considers both sides of the dispute and makes a decesion.

Parties choose the process but have less control of the outcome.

Examples include:

  • Arbitration - parties need to agree the terms of the agreement in writing, less flexible approach
  • Adjudication - legal requirement for disputes relating to construction contracts, a determination is made by an imdependent person within 28 days
  • Expert determination - suitable for technical disputes such as valuation of shares, decision is legally binding on all parties
41
Q

What non-adjudicative options are there for resolving disputes?

A

Parties keep control of the process and the outcome of the resolution.

Examples include:

  • negotiation
  • joint settlement/round table meetings - common with PI claims or quantum disputes
  • mediation - parties don’t meet but the dispute is heard by the mediator who goes between the parties
  • Evaluation - used to provide an early review on a case, this is voluntary and not binding on either party
  • conciliation - often used in employment cases and is compulsory for employment tribunal’s
42
Q

What are the 6 outcomes firms must deliver on to be TCF?

A

1 - customers have confidence firms support TCF

2 - products/services sold are designed to meet the needs of customers

3 - firms give customers clear advice and are informed

4 - advice is suitable and takes into account customers circumstances

5 - customers expectations are managed

6 - customers aren’t faced with unreasonable post-sale barriers

IF4 - Claims Handling (2 decks)

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