Chapter 9 - Claims notification, investigation and settlement Flashcards
When a potential claim arises, who does the ‘onus of proof’ initially fall on?
The insured
What must the insured prove when they make a claim?
The an insured peril arose
The amount of the loss
Once the insured has proved an insured peril arose and the amount of the loss - what happens next?
The responsibility shifts to the insurers.
If the insurer wants to decline a claim due to a policy exclusion, who does the onus of proof lie with?
The insurer
In proving their loss there are certain legal duties which the insured must comply with. These can be divided into what two catagories?
Implied and express duties
What is an implied duty writen?
no
What is an implied duty?
One which is imposed in common law
Which duty is: acting as though uninsured and taking all reasonable steps to minimise the loss, not hindering the insurer in the claims investigation process, taking all steps to prevent a loss from spreading and advising the appropriate authorities in the event of loss or damage.?
Implied
What is an express duty?
One that is stated in the insured’s policy documents
Where are express duties normally found?
In the general policy conditions under the claims conditions section
Notification to insurers is an express duty, what does it mean?
It usually means the insured needs to notify the insurer as soon as possible of a loss.
How soon does the insured need to notify the insurer of a riot, civil commotion or malicious damage claim?
7 days
Why does the insured need to notify the insurer of a riot, civil commotion or malicious damage claim within 7 days?
The insurer can claim back the losses from the policy but only have 42 days from the riot to do so
How many days does the insurer have to claim back costs following a riot from the policy?
42 days
When must the insurer have proived full loss details to the police following a riot to claim back costs?
90 days
What is the maximum an insurer can claim back from the police following a riot?
£1M
How must an insured claim?
The inital claim can be on the phone but the particulars must be followed up in writing
How long does the insured have to send the particulars of a claim in writing to the insurer?
30 days typically
Is taking all reasonable steps to minimise the loss an implied or express duty?
Implied
Is not hindering the insurer in the claims investigation process an implied or express duty?
Implied
Is taking all steps to prevent a loss from spreading an implied or express duty?
Implied
Is advising the appropriate authorities in the event of loss or damage an implied or express claim?
Implied
Is notification to insurers an implied or express claim?
Express
In notification to other authorities an implied or express claim?
Express
What could notification to other authorities mean?
You must notify the policy of any loss or damage caused by malicious damage or theft
If a loss is caused by malicious damage or theft - who must you notify?
The insurer and the policy
Is passing on information on a third party claim, an implied or express duty?
express
If a third party asks you questions regarding a claim, what must the insured do?
Pass them on unanswered to the insurer
If a third party contacts you regarding the claim and it is your fault, do you tell them?
No you must pass it onto your insurer to settle the claim
If a claim occurs with the third party - who looks after it?
The insurer will deal with it in order to retain control over any liability
Is preventing any further damage an implied or express duty?
Express
Is assisting the claims process and implied or express duty?
Express
What happens if you breach either an implied or express duty?
The insurer can refuse to accept the particular claim
When you make a claim the insurer needs information about the claimant - what is a claimant
Person making a claim
name
address
number
policy number
Why does the insurer need to know an estimate of the loss?
In order to put a reserve on the claim to make sure the funds are avalible
Do insurers use loss adjusters or loss assesors?
Loss adjustors
Why do insurers need to know about any other interested parties?
To take into account there financial interest when settling a claim
Why do insurers need to know about any other insurances when settling a claim?
To identify if anyone else is liable to pay for the loss
Why do insurers need to know of any other party who might be liable for a loss?
So they can pursue any rights of recovery
In addition to a claims form, what else might the insurer need as evidence on a claim?
Receipts of purchases or repairs
Police reports
A copy of the entry to the accident book
When a claims handler recieves a claims form, what is the first thing they should do?
Check the policy was in force at the time of loss
What are the three outcomes of a claim?
Valid and paid in full
Valid and partially met
Invalid and declined
When a claim is valid and partially met - what does this mean?
Paid in full minus the excess
or
the claim exceeds the sum insured so only the insured amount is paid
or
subject to average
What is the role of a loss adjustor?
An independent expert who is paid by the insurer to process a claim from start to finish
Who employs a claims inspector?
Insurer
What does an insuer employ a claims inspector to do?
Assess insurance losses that require further investigation.
When a claims inspector is assigned a case, what will they do?
Often visit the insured to obtain further details of the claim and view the damage. Confirm the circumstances of the loss.
They may visit third parties who were injured or whos property was damaged.
What is a loss adjustors objective?
To achieve a speedy settlement
Who does the final decision on a claim rest with@?
The insurer but if a loss adjustor is being used, they will normally follow there advice.
When would an insurer usually appoint a solicitor in a claim
When it is a liability claim to settle legal costs involved.
What will a solicitor do in a liability claim?
Consider the circumstances and determine who is legally liable.
Ensure correct legal procedures are followed
Represent the insured in court.
If a claimant has hired a solicitor to represent him in a liability dispute, what occurs with the insurers solicitor in this situation?
They negotiate together.
When a personal accident claim comes in who does an insurer normally appoint?
A doctor to assess the damage. If the TP has a doctor, the insurer will often ask there own doctor to have a look.
What are the befits to the insurer/Insured for using authorised repairers and suppliers?
Cheaper
Quicker
Control standards
No need for estimates
When an insured hires someone to assist them in the preparation and negotiation of a claim, who do they hire?
Loss Assessor
An important task for claims handlers at the notification stage of a claim and throughout its life is to estimate, as accurately as possible, how much it will eventually cost to settle. What is this known as?
Reserving
Why is reserving so important?
To ensure adequate funds are avalible to meet claims
To allow underwriter to set accurate premiums
To ensure the insurer is profitable at any given stage
It is a requirement for insurers to submit financial statements every year to the Prudential Regulation Authority (PRA) - what must this include in relation to claims?
The reserve
For PA claims, what must be included in the reserve?
The current level of interest rates as they are used to adjust compensation payable so that inflation and interest rates are accounted for.
How does an insurer make reserving as accurate as possible?
Examination of past data
Adjusting past data with current laws, inflation ect
IBNR claims estimates
What is IBNR estimates?
Incurred but not reported claims estimates
If a claim is paid in stages what happens to the reserve?
It is adjusted as paid
What is a central reserve and what is it for?
It is a pot of money set aside for unknown exposures/losses which could arise in the future
Claims must be handled in accordance with what?
FCA handbook under ICOBS
What is the final stage in the claims process?
Settlement
What are the four ways insurers settle claims?
Cash Payment
Repair
Replacement
Reinstatement
When is a cash payment always used when settling a claim?
In a liability claim
When a cash payment is made for a claim, what does the insurer use to avoid the claim being re-opend later?
A form of discharge
When is a repair method used for settling a claim?
When there is a partial damage claim made for something material such a paint stilled on a carpet.
When is a replacement method used for settling a claim?
When an item is fully lost or badly damaged
When is reinstatement used for settling a claim?
Where there is sever damage to a property, the insurer may wish to take in the responsibility for rebuilding it. Also used if fraud is suspected as the insured gains nothing.
Following a claim settlement the salvage belongs to who?
The insurer
If the insured wishes to retain the salvage what happens?
They have to negotiate with the insurer and a reduction in the total loss settlement will take this into account.
What are the three methods of claim recovery an insurer has once a claim is settled?
Contribution
Subrogation
Rights of recovery
What is contribution?
The right of an insurer who has paid a claim in full to claim back what they can from any other insurers who insure the risk and a jointly liable.
What process does an insurer used when trying to get contribution for a jointly liable insurer?
write to the other insurers setting out all the particulars of the claim. They will usually include copies of the claim form and relevant paperwork such as invoices.
What is subrogation?
Similar to contribution however it is the insurers right to make recovery for any TP who caused or contributed to the loss or damage
When a third party is though to have caused damage, what will our insurer usually do?
Write to the third party regarding the incident and advice the to pass it onto there insurer.
If there is a dispute between the insurer and the insured, what policy in the clause usually related to this.
arbitration as it is preferential to ££ and time consuming legal proceedings.
What is the arbitration clause is intended to deal with?
Any disputes between the insurer and the insured relating to the amount of a claim.
What is Arbitration?
A legal process, provided liability is admitted then any dispute about money is referred to an arbitrator who is appointed why the two parties and there judgment is binding.
Who apoints an arbitrator?
Both parties
Who decides to agree with the arbitrator?
Irrelevant - there decision is binding
What does ADR stand for?
Alternative dispute resolution
What does CPR stand for?
Civil Procedure Rules
What is the beenfits of using ADR?
Cheaper than court
Timed to suit both parties
Settlements are confidential
Speed
What are the two main ways of resolving a dispute with ADR?
Mediation and conciliation
What is the definition of mediation?
A neutral party is appointed and discusses the dispute with both parties but makes no decisions. Get to the heart of the issues and help them to work out something they are both happy with.
What is the definition of a conciliator?
A party is chosen for their particular area of expertise and they bring this to the dispute situation
Are the insurer and insured bound by the mediators decision?
no
Are the insurer and the insured bound by the conciliation?
They decided in advance whether to be bound by there recommendation or not
If a dispute remains unresolved after the insurer’s normal complaints procedure has been exhausted, what is the next step for the insured?
They have 6 months to refer it to the FOS
The FOS only deals with eligible compliant’s from consumers?
True
What is a micro enterprise?
micro-enterprise with fewer than 10 employees and a turnover or balance sheet total of no more than €2m;
What makes a charity eligible?
If there income is less than 6.5M
What makes a trustee of a trust eligible?
Net asset value of less than 5M
Is a consumer buy to let consumer eligible?
Yes
Is a small buisness with an annual turnover of less that £6.5M and less than 50 staff eligible?
Yes
Is a guarantor eligible?
Yes
Is a consumer eligible?
Yes
What is the maximum binding award the FOS can make?
£355,000 plus interest, costs and interest on costs.
Is the insurer bound by the FOS decision?
Yes
Is the insured bound by the FOS decision?
No they can accept or reject it and take further legal action
How does specialist software help with fraud?
Alerts them to suspicious claims and identifies patterns of losses
What does the insurance fraud bureau do?
Analyses data from various industry databases and the staff with alert insurers if the believe an organised fraud is taking place
What does the insurance fraud register do?
Encourages firms to share information so stop fraudsters from moving from insurer to insure.
What is an example of a shared database for fraud?
CUE Claims and underwriting Exchange
What dose the insurance fraud investigators group do?
Dedicated in the detection adn prevention of insurance fraud. not for profit whos memebers include insurers, lawyers loss adjusters ect
What is cognitive interviewing and conversation mangmnet?
A technique that has a structures approached to interactions when a claim is being reported.
~What is a voice stress analyser?
Similar to a lie detector, is helps to tell if a caller is being truthfull.
How does the internet and social media play a part in detecting fraud?
There may be photos or posts providing evidence of fraud.
What does the fraud condition in policys allow insurers to do?
Void the claim and policy from the date of the fraud with no RP
