Chapter 3 - Who does what? Broker, underwriter and adjuster responsibilities

Question 1

Define broker

Answer 1

A licensed independent person or firm who acts on behalf of an insured in placing business with insurance companies

Question 2

What four ways may a broker prevent insurance fraud?

Answer 2

• Public outreach
• Prescreening & qualifying potential applicants
• Preventing fraud arising from broker operations
• Complying with applicable legislation, codes of conduct and codes of ethics

Question 3

Define book of business

Answer 3

The collection of client business an agent or broker has placed with insurers. Generally, a broker owns her book of business, while the agent’s book of business is owned by the insurer

Question 4

What details may a broker want to note about the source of new business?

Answer 4

• Is it a referral?
• Who is the contact?
• What is the profile of the contact?
• Can the broker “take or leave” the contacts business?

Question 5

Define E&O insurance

Answer 5

Errors and omissions insurance

• An insurance form that protects the insured against liability for committing an error or omission in the performance of professional duties. Generally, such policies are designed to cover financial losses rather than liability for bodily injury or property damage

Question 6

What law must brokers follow?

Answer 6

The Insurance Act

Question 7

What are the common code of conduct themes for brokers?

Answer 7

• Integrity
• Competence
• Conscientious & Quality of Service
• Financial Reliability, safekeeping & preserving clients property
• Privacy

Question 8

Define underwriter

Answer 8

1) The insurance company or group that underwrites or insures a particular risk
2) The individual within an insurance company whose responsibility it is to accept or reject business or modify submissions in the particular line in which he or she specializes and in this way, choose the risks the principals are prepared to underwrite

Question 9

What are the three typical rate falsification techniques?

Answer 9

1) Fronting - False statement of who is the principal driver
2) Garage flipping - Address change for rating purposes of the vehicle
3) Manipulation - Rating factors such as driving distance, age of PD and education levels

Question 10

Define adjuster

Answer 10

One who investigates insurance claims, makes recommendations regarding the payment of benefits from insurance policies and negotiates payments and settlements

Question 11

The choice of term for an “adjuster” differs on what four criteria?

Answer 11

• Corporate environment
• Local usage
• Legislation
• Specific licensing regulations

Question 12

What two key ways can adjusters combat insurance fraud?

Answer 12

• Proper investigation and settlement of claims

- Gathering evidence of fraud or potential fraud

Question 13

What are some examples of an adjusters duties to an insured?

Answer 13

• Properly identify yourself, principal and your role as an adjuster
• Adjust claims promptly and fairly
• Protect the insured’s confidential info
• Fully disclose info material to insured’s coverage, rights and obligations

Question 14

What needs must an adjuster be careful to balance?

Answer 14

Needs of:

• Insurance company
• The insured
• Claims department
• Broker

Question 15

What are the two major kinds of adjusters?

Answer 15

• Company adjuster

- Independent adjuster

Question 16

Which criteria do adjusters need to ensure they understand in regards to their role?

Answer 16

• Understanding the limits to their authority
• Carry suitable proof of identity
• Providing reasons why claims are denied
• Advising third parties of name, insurer, policy number and expiry of claim
• Observe federal & provincial laws and regulations

Question 17

What three items does the claims agreement mention an adjuster must do?

Answer 17

• Diligently seek to exercise skill and care, do not be influence by self interest or opinions of others
• Promptly report violations and cases of fraud
• Co operate with opposing adjusters

Question 18

What six items does the claims agreement mention an adjuster must not do?

Answer 18

• Seek secret profit or acquire financial interest
• Offer inducement to public officials/employees to benefit themselves or company
• Exceed their authority
• Advise claimant to refrain from legal counsel
• Deal directly with a claimant who has legal counsel w/o permission from counsel
• Offer counsel an allowance for a reduced settlement amount

Question 19

Who provides the code of ethics for independent adjusters?

Answer 19

CIAA

Canadian Independent Adjusters Association

Question 20

With respect to policyholders and claimants, what seven conditions must independent adjusters follow?

Answer 20

1) Be courteous, fair and objective at all times
2) Provide prompt and knowledgeable service
3) Written statements may request a copy without charge
4) Do not provide legal advice or suggest not seeking legal advice, do not deal with claimant who has counsel w/o permission
5) Provide explanations with respect to coverage
6) Medical info or records require written consent
7) Identify themself as an insurance adjuster

Question 21

With respect to insurers, what six conditions must independent adjusters follow?

Answer 21

1) All facts relevant to the loss shall be disclosed
2) Must only represent one interest and inform of any potential conflict
3) Have no financial interest or aim to obtain any
4) Accept no form of consideration
5) Information must be treated confidentially
6) Adjusters cannot act together to set prices or wages

Question 22

What are the five purposes of the CIAA?

Answer 22

1) Promote uniform standards of conduct
2) Promote insurance education among its members
3) Distributes publications & programs to enhance professional development
4) Communicates w/ governing bodies, industry and public the ramifications of matters of direct interest
5) Promotes and encourages understanding, cooperation and good relations among members, industry and public

Question 23

What is the primary duty of an underwriter?

Answer 23

To accept or reject business within authority levels