Chapter 6 Flashcards
ways claims reps maintain insurer’s underwriting profit
- Managing all claim function expenses
- Setting appropriate spending policies
- Using appropriately priced providers and services
Claims Dept. Structure
- Senior Claim Officer (Dept. Head) reports to CEO, CFO, or CUO)
- Home office claims dept.
- -Regional/divisional offices
Third party admin:
an org. that provided admin. services associated with risk financing and insurance
Claims rep:
generic title that refers to all who adjust claims, except for public adjusters; fulfills the promise to pay the insured or to pay on behalf of the insured by handling a claim when a loss occurs
People who handle claims:
- Staff claim reps
- independent adjusters
- employees of TPAs
- producers
Staff claim reps
employees of an insurer; handle most claims
Field claims reps
investigate the scene of the loss, meet with insureds, claimants, lawyer, etc., and inspect damage
Independent adjusters
- ind. claim rep. who handles claims for insurers for a fee
- Use these when not economically feasible to have claims offices in every state
Employees of TPAs
often associated with large ind. adjusting firms or subsidiaries of insurances co.s
Public adjuster
rep the interests of insured to the insurer
quality performance measures
- best practices
- claim audits
- customer satisfaction
Best practices
a system of identified internal practices that produce superior performance
Claim audits
used to ensure compliance with best practices and to gather stats info on claims
Guidelines
specify how certain claims handling tasks should be performed by setting policies and procedures for claim handling
Diary or suspense
a system (used by managers) to remind claims personnel to perform a particular task on a claim
Activity log
a record of all the activities and analyses that occur while handling a claim
Access security
a security setting (control) that controls an ind. computer user’s ability to review, enter, and change info in a claims info system
Authority level
a designated dollar amt. assigned to claims personnel to limit the reserve amounts they can set and the payment amounts the can make (control)
Claims audits
a review of claim files to examine the technical details of claim settlements, ensure that claims procedures are followed, and verify that appropriate thorough documentation is included
Internal claims audit
a review of claims files conducted by an insurer’s staff to examine the technical details of claim settlements, ensure that claims procedures are followed, and verify that appropriate, thorough documentation is included
External claims audit
a review conducted by orgs other than the insurer that involves reviewing overall practices, reserves, and other technical details, investigating consumer complaints, etc.
compliance measures
- claims guidelines, policies, and procedures
- controls
- supervisor and manager reviews
- claims audits
process of dealing with a claim
- acknowledge and assign the claim
- identify the policy and settle reserves
- contact the insured
- investigate and document the claim
- determine the cause of loss, liability and loss amount
Nonwaiver agreement
a signed agreement indicating that during the course of investigation neither the insurer nor the insured waives rights under the policy
Reservation of rights letter
an insurer’s letter that specifies coverage issues and informs the insured that the insurer is handling a claim with the understanding that the insurer may later deny coverage should the facts warrant it
Loss reserve
an estimate of the amount of money the insurer expects to pay in the future for losses that have already occurred and been reported but are not yet settled
Average value
establish a predetermined dollar amt to reserve for each claim as its reported
Roundtable
use the consensus of two or more claims personnel who have independently evaluated the claims file
Individual case
based on the claim’s circumstances and the claims reps experience handling similar claims
Expert system
a software application that estimates losses and loss adjustment expenses
Formula method
use a mathematical formula
Loss ratio
establishes aggregate reserves for all claims for a type of insurance
reserving methods
- average value
- roundtable
- individual case
- expert system
- loss ratio
Good faith
require by law; the manner of handling claims that requires an insurer to give consideration to the insured’s interests that is at least equal to the consideration it gives its own interests
Subrogation
the process by which an insurer can, after it has paid a loss under the policy, recover the amount paid from any party (other than the insured) who caused the loss or is otherwise legally liable for the loss
Coinsurance
an insurance-to-value provision in many property insurance policies providing that if the property is underinsured, the amount that an insurer will pay for covered loss is reduced
Alternative dispute resolution
procedures to help settle disputes without litigation, including arbitration, mediation, and negotiation
