chapter 5 Flashcards
What are the main aspects of IT in claims handling
IT relates to the storage, processing, and communication of information, which helps streamline the claims process and meet customer expectations.
What are the key benefits of using IT in claims handling?
Single data entry reduces errors and duplication.
Reduced use of paper for faster information distribution.
Quicker claims settlement due to faster information flow.
Electronic authorisation speeds up payments.
Increased communication channels (e.g., email, social media).
Portals for self-service give customers real-time updates.
What are some challenges associated with using IT in claims handling?
Over-reliance on IT may increase claims costs.
Non-standard or complex claims may not fit IT frameworks.
Systems might be more expensive and less flexible than expected.
Centralised IT systems could reduce personal service.
Increased productivity might not reduce costs.
Ongoing maintenance and updates are costly.
What factors increase complexity in claims handling?
Multiple parties involved (insurer, insured, broker, etc.).
Numerous co-insurers increase complexity.
Broker involvement in documentation flow.
Reinsurance requires passing details to reinsurers.
Investigations for fraudulent or exaggerated claims.
What are the major components of a general insurance claims system?
Policyholder information: Name,
policy number, claim reference.
Claim details: Dates, contacts, payments, reserves.
Underwriting details: Risk description, cover provided, insurer share.
What should be considered when designing an insurer’s claims management system?
Align with the company’s corporate claims philosophy.
Process information that supports the company’s objectives.
Balance IT capabilities with the skills of experienced claims staff.
What does the DPA 2018 regulate in the UK?
The DPA 2018, aligned with the UK GDPR, sets out the framework for data protection, ensuring sensitive data processing, restricting access where needed, and empowering the ICO to enforce data protection laws.
To whom does the UK GDPR apply?
The UK GDPR applies to data controllers and processors in the UK, placing legal obligations on them to maintain records of personal data and comply with data protection regulations
What constitutes personal data under the UK GDPR?
Personal data refers to any information related to an identified or identifiable living individual, including online identifiers like IP addresses. It applies to both automated and manually processed data.
What are ‘special categories of personal data’ under the UK GDPR?
Sensitive personal data includes data revealing racial or ethnic origin, political opinions, religious beliefs, health information, etc., requiring more stringent protection measures.
What are the six lawful bases for processing data under the UK GDPR?
Consent: Freely given and informed consent.
Contract: Necessary for a contract with the individual.
Legal Obligation: Necessary to comply with the law.
Vital Interests: Necessary to protect someone’s life.
Public Task: Necessary for performing a task in the public interest.
Legitimate Interests: Necessary for legitimate interests, unless overridden by individual rights.
How does IT provide competitive advantages for insurers?
IT enhances customer retention through improved service, offers technical assistance to claims handlers, streamlines administration, automates fraud detection, and facilitates efficient payment processing.
why must an IT system in claims handling be flexible?
It needs to accommodate non-standard, large, or complex claims that may not fit within standard processes, ensuring all eventualities are covered.
What are the benefits of electronic claims processing?
Faster claims settlement.
Reduced paperwork.
Automated cheque or money transfer.
Enhanced fraud detection and appointment allocation.
How does IT help in reducing errors in claims handling?
IT reduces errors by minimizing human involvement in data entry, ensuring single data entry, and automating repetitive tasks, leading to more accurate and consistent data management.
What are the potential cost implications of implementing IT in claims handling?
While IT can improve productivity, it may also lead to higher claims costs, expensive system maintenance, and the need for significant initial investment.
ABC Insurance has outsourced its claims function to Trust Us Claims. From a compliance perspective:
ABC Insurance remains responsible for meeting the FCA rules.
An insurance company has a business structure that is described as ‘divisional’ but where all claims are handled centrally. A disadvantage of having a centralised claims settlement method in this structure is that:
it is likely to reduce the contact between policyholders and local staff, which could impact negatively on customer retention.
In what way may the use of Information Technology [IT] cause a possible adverse cash flow effect?
Reinsurance recoveries may not be as fast as claims payments.
What structure is best suited to smaller companies with a limited range of products?
functional
Specialists that ensure business continuity in the event of an interruption to the normal flow of business are called:
disaster recovery companies.
In the event of a business interruption claim, who may be appointed to ensure business continuity?
A disaster recovery company.
Part of a surveyor’s role is to advise the insurer on what they consider to be the ‘worse case scenario’ loss. What is this known as?
Maximum probable loss.
An insurer outsources the rehabilitation services that it provides to some claimants. What is most likely to be its reason for doing so?
Enables it to access specialist services and reduces claim costs.
