Chapter 7 Flashcards
What is a corporate claims philosophy?
A) A financial strategy for claims settlement
B) A vision and values statement aligning claims handling with business objectives
C) A legal framework for handling fraudulent claims
D) A policyholder’s perspective on claims
B) A vision and values statement aligning claims handling with business objectives
What is the primary role of a claims department?
A) To maximise claim payments
B) To delay claim settlements
C) To provide a fair and efficient claims service while protecting the insurer’s funds
D) To always side with the policyholder
Answer: C
Which Act introduced a duty on insurers to pay claims promptly?
A) Road Traffic Act 1988
B) Enterprise Act 2015
C) Fraud Act 2006
D) Consumer Rights Act 2015
Answer: B
Why must claims handling align with a company’s overall objectives?
A) To ensure competitive pricing
B) To reduce underwriting losses
C) To support customer satisfaction and financial sustainability
D) To comply with GDPR
C
What is the primary purpose of claims validation?
A) To minimise fraud and ensure claims are legitimate
B) To speed up payments
C) To reduce policyholder complaints
D) To comply with GDPR
A
Which of the following is NOT typically used to validate a motor claim?
A) Police reports
B) Claims and Underwriting Exchange (CUE)
C) Customer testimonials
D) Credit reports
C
What is the purpose of cognitive interviewing in claims validation?
A) To pressure policyholders into admitting fraud
B) To detect inconsistencies in statements
C) To determine the policyholder’s mental health
D) To assess repair costs
B
What role does big data play in claims validation?
A) It automates fraud detection by identifying patterns
B) It replaces claims handlers
C) It reduces the need for customer verification
D) It allows claimants to self-assess their claims
A
Which Act primarily governs insurance fraud in the UK?
A) Insurance Act 2015
B) Fraud Act 2006
C) Data Protection Act 2018
D) Road Traffic Act 1988
B
What is the purpose of the Motor Insurance Anti-Fraud and Theft Register (MIAFTR)?
A) To record stolen and written-off vehicles
B) To store customer complaints
C) To track uninsured drivers
D) To monitor accident blackspots
A
Which database helps insurers detect fraud by sharing policyholder claims history?
A) Motor Insurance Database (MID)
B) Claims and Underwriting Exchange (CUE)
C) Vehicle Registration Database
D) The National Insurance Database
B
A) A claim for minor cosmetic damage
B) A fraudulent claim where injuries are exaggerated
C) A claim for vehicle breakdowns
D) A dispute over liability in a motor accident
B
What does the term ‘market value’ refer to in motor claims?
A) The original purchase price of the vehicle
B) The amount the insurer will pay for a total loss claim
C) The price set by a car dealership
D) The cost of a new replacement vehicle
B
What is the purpose of salvage in a total loss claim?
A) To recover costs by selling damaged vehicles
B) To pay third-party claimants
C) To cover legal expenses
D) To settle disputes with garages
A
Which factor is NOT considered when determining a vehicle’s market value?
A) Mileage
B) Wear and tear
C) Personal attachment to the vehicle
D) Independent vehicle valuation guides
C
What does ‘excess’ refer to in a motor claim?
A) The maximum payout by an insurer
B) The amount the policyholder contributes to the claim
C) A penalty for late claims reporting
D) A premium refund
B
What is the primary purpose of the Civil Procedure Rules (CPR)?
A) To enforce compliance with claims payments
B) To ensure fair and efficient dispute resolution
C) To allow insurers to deny claims more easily
D) To regulate vehicle repairs
B
What is the function of the Official Injury Claim portal?
A) To help claimants pursue whiplash claims
B) To provide a price comparison for insurance
C) To settle property damage claims
D) To manage motor fraud investigations
A
Which principle applies to third-party claims under motor insurance?
A) Contribution
B) Indemnity
C) Subrogation
D) Betterment
B
Why must policyholders not admit liability at the accident scene?
A) It may invalidate their insurance cover
B) It is against the law
C) It allows insurers to deny the claim
D) It increases claim processing time
A
Under the Enterprise Act 2016, what key factor determines if an insurer has breached the duty to pay claims within a reasonable time?
A) The financial strength of the insurer
B) Whether the delay was deliberate or due to a genuine dispute
C) The policyholder’s claim history
D) Whether the claim is above £50,000
B
Which of the following is NOT a valid reason for rejecting a motor claim?
A) The policyholder provided false information at inception
B) The insured vehicle was being used for an undeclared purpose
C) The policyholder admitted liability at the accident scene
D) The claim falls outside the policy’s coverage terms
C
How does the 2015 Insurance Act impact motor claims handling?
A) It requires insurers to pay all claims within 30 days
B) It shifts the burden of proof for fraud onto insurers
C) It clarifies the duty of fair presentation by the insured
D) It removes the concept of proximate cause from claims decisions
C
What principle underpins the indemnity provided by motor insurance?
A) The policyholder should always make a financial gain
B) The insured should be restored to the position they were in before the loss
C) The insurer has discretion on whether to pay claims
D) Compensation is based on the original purchase price of the vehicle
B
Which of the following is a red flag indicating a potentially staged motor accident?
A) The incident involved multiple vehicles at a busy intersection
B) The claimant is using a hire vehicle after the accident
C) Witnesses at the scene give conflicting reports
D) The policyholder contacts the insurer immediately after the accident
C
What is ‘opportunistic fraud’ in motor claims?
A) A claim where a minor accident is exaggerated for financial gain
B) A deliberate attempt to stage an accident
C) A policyholder filing multiple claims for the same incident
D) A fraudulent claim involving a stolen vehicle
A
How does the Motor Insurers’ Bureau (MIB) help prevent fraud?
A) It investigates suspected fraudulent claims directly
B) It requires all insurers to report suspicious policyholders
C) It provides compensation to victims of uninsured drivers while maintaining fraud controls
D) It bans fraudulent claimants from future insurance policies
C
Which counter-fraud technique involves insurers pooling data to detect suspicious claims?
A) Artificial intelligence analysis
B) Claims and Underwriting Exchange (CUE)
C) Voice stress analysis
D) Black box telematics
B
Which of these scenarios is most likely to be an induced accident fraud?
A) A driver skidding on ice and colliding with a parked car
B) A vehicle suddenly braking for no reason, causing a rear-end collision
C) A car crash in heavy traffic involving multiple vehicles
D) A theft claim where the policyholder does not have the car keys
B
What is the key difference between ‘ex-gratia’ payments and standard claim settlements?
A) Ex-gratia payments are legally required
B) Ex-gratia payments are made when a claim does not strictly meet policy terms but is paid as a goodwill gesture
C) Ex-gratia payments are only made for fraud cases
D) Ex-gratia payments are always lower than standard settlements
B
Which of the following would typically lead to a ‘betterment’ deduction in a motor insurance settlement?
A) A new vehicle being written off after three months
B) The replacement of worn tyres with brand-new ones
C) A policyholder repairing their own vehicle
D) The insured vehicle being older than five years
B
When handling personal injury claims, why is the Ogden Table used?
A) To calculate future loss of earnings and life expectancy
B) To determine the market value of the damaged vehicle
C) To assess liability for the accident
D) To estimate fraud risk in personal injury claims
A
Under the Uninsured Drivers Agreement, when will the MIB NOT provide compensation?
A) If the claimant was a passenger and knew the driver was uninsured
B) If the claimant suffered serious injuries
C) If the uninsured driver is unknown
D) If the accident was a hit-and-run
A
Which of the following situations is covered under the MIB Untraced Drivers Agreement?
A) A vehicle stolen and involved in an accident before recovery
B) A hit-and-run accident where the driver cannot be identified
C) A policyholder who has misrepresented their insurance history
D) A disputed claim between two insured drivers
B
What is the purpose of an Article 75 Insurer under MIB agreements?
A) To determine who is responsible for an accident
B) To act as the compensating insurer when no other policy applies
C) To investigate all high-value claims
D) To regulate motor insurance fraud databases
B
How does the GTA (General Terms of Agreement) affect credit hire claims?
A) It caps the amount an insurer must pay for a hire vehicle
B) It requires claimants to prove their financial loss
C) It provides a framework for settling credit hire claims fairly
D) It prevents claimants from hiring vehicles after an accident
C
Which legal doctrine applies when two parties share fault for an accident?
A) Volenti non fit injuria
B) Contributory negligence
C) Strict liability
D) Vicarious liability
B
What is the role of an independent motor engineer in a dispute over vehicle damage?
A) To advocate on behalf of the policyholder
B) To provide an impartial assessment of repair costs and vehicle value
C) To negotiate settlements with third parties
D) To determine legal liability
B
Which of the following factors is most important in assessing non-fault liability claims?
A) The claim history of the policyholder
B) The type of vehicle involved
C) Independent witness statements and accident reconstruction evidence
D) The speed at which the claim is submitted
C
