Chapter 7: Related Services

Question 1

What is a helpline?

Answer 1

An extra service provided by an insurer in which the insured can phone a freephone number 24/7 for emergency assistance and/or expert advice

Question 2

What are some of the main examples of when a helpline may be offered by an insurer?

Answer 2

Private motor insurance for breakdown services

Household insurance providing emergency assistance or legal advice

Travel insurance to assist in a medical emergency by arranging treatment or repatriation or providing advice

Question 3

What is an authorised repairer?

Answer 3

Contracted repairers that are preferred/recommended by the insurer

Question 4

What are the main benefits of authorised repairers?

Answer 4

Competence - The insurer can guarantee the quality of the repair as sub-standard repairers would not be recommended

Cost - The insurer can usually negotiate reduced rates which lowers costs. These can be passed on to the consumer in lowered premiums

Convenience - It is convenient for both insurer and insured as the repair can begin more quickly

Question 5

What line of business are authorised repairers most commonly used in?

Answer 5

Motor insurance

Question 6

What is risk management?

Answer 6

The identification, analysis, and control of risks which could threaten the earning potential or assets of a company

Question 7

What are the three steps of risk management?

Answer 7

Identification
Analysis
Control

Question 8

In risk identification what is meant by the upside and downside of risk?

Answer 8

Upside is the failure to maximise opportunities

Downside is identifying currently existing threats and what threats may potentially exist in the future

Question 9

What may assist with risk identification?

Answer 9

A survey

Question 10

What is risk analysis?

Answer 10

Analysing past data in order to quantify and evaluate risk

Question 11

What is risk control?

Answer 11

Attempting to reduce or possibly even eliminate the risk via action plans

Question 12

What are the two types of risk control measures?

Answer 12

Physical controls

Financial controls

Question 13

What risk control measures may insurers take?

Answer 13

Physical controls such as requiring the insured to have certain controls in place (eg a certain standard of lock or burglar alarm or sprinkler system)

Financial controls such as reinsurance and imposing an excess/deductible

Question 14

What is the role of a risk surveyor?

Answer 14

Identify risks in order to make recommendations and provide advice to underwriters and insureds about what risks are involved and control measures to implement

Question 15

What is an uninsured loss?

Answer 15

A loss which is not covered by an insurance policy

Question 16

What is a no claims discount?

Answer 16

When an insured has not made a claim on their policy they may be given a discount to reflect this. Often the discount will increase with the number of claim free years

Question 17

A policyholder is involved in a motor collision with a third party and makes a claim under his policy. He pays his £500 excess and his insurer pays him £2000 for his claim, but as a result he loses his no claims discount. His insurer later successfully subrogates against the third party’s insurance and recovers £2500. What is owed to the policyholder?

Answer 17

The insurer would reimburse the policyholder for his £500 excess

They would also reinstate his no claims discount and reimburse him any increased premium paid for the initial loss of his no claims discount

Question 18

Who may assist in recovering uninsured losses?

Answer 18

Solicitors or specialist loss recovery firms

Sometimes insurance intermediaries may be involved

Question 19

How would a legal expenses policy assist with uninsured losses?

Answer 19

They would indemnify the insured for any legal expenses incurred in trying to recover their uninsured losses

Question 20

Who may an insured hire to help assist with presenting a claim?

Answer 20

A claims management company

Question 21

What is a claims management company?

Answer 21

Specialist companies that help an insured pursue claims, acting as an intermediary on the insured’s behalf. Usually for personal injury

Question 22

How are claims management companies reimbursed?

Answer 22

Usually on a no-win-no-fee basis

If the case is won the fee will usually be either a percentage of the settlement, a flat lump sum, or sometimes both

Question 23

Who may an insurer appoint to help their insured with risk management?

Answer 23

A risk surveyor (also called loss control engineer)

Question 24

What must the insured’s risk control measures be?

Answer 24

Economic

Question 25

If an insurer agrees to take liability for a damage to a third party’s vehicle which has left it undriveable, what short term remedy will they usually take whilst the vehicle is being repaired?

Answer 25

Provide the third party with a suitable replacement at no cost

Question 26

How are legal expenses policies normally sold?

Answer 26

In conjunction with another policy, normally motor

Question 27

What must be true for a legal expenses policy to cover a claim for pursuing an uninsured loss?

Answer 27

There is a reasonable prospect of recovery

Question 28

What is the usual limit of indemnity for a legal expenses policy that has been purchased in conjunction with a motor policy?

Answer 28

£50,000 - £100,000