Claims Handling Systems and Organisational Structure Flashcards
When choosing or developing a claims system, what should also be considered?.
Customer expectations
What are the two types of ‘customer’ in this respect:
- the insurance company itself, as a customer of the supplier of the system (whether the IT department is internal or not); and
- the general public and the businesses/organisations who are customers of the insurance company.
Who is the ‘ultimate’ customer, who may be attracted to the company because of their state-of-the-art claims service;?
The insured
the business needs and associated expectations of the insurer itself must be analysed??
True
Why the business needs and associated expectations of the insurer itself must be analysed??
to ensure that the information recorded and collated is of a nature and quality to match the needs and expectations of all customers.
When the insurance company itself, as a customer of the supplier of the system (whether the IT department is internal or not); is a type of?
Customer
When the general public and the businesses/organisations who are customers of the insurance company, are a type of?
Customer
What does an insurer expect from a claims management system??
the ability to process large amounts of data;
the ability to process data quickly and accurately;
and the delivery of information in a meaningful manner.
The system should be flexible enough to deal with:
authority levels given to different staff grades, both in terms of reserving and the making of payments claims notification;
correct amount of claim detail appropriate for the class of business written (and the likely types of claim expected);
the involvement of loss adjusters and other experts as appropriate
who has a large influence on the design of the system?
The expectations of the “customer”.
Often customers’ expectations will be surveyed before the design process begins??
True
What will surveying customers’ expectations BEFORE the process begin establish???
Basic quality threshold.
General expectations (for example, a quick response and a quick settlement) can be assumed.
True..
But It is in the MORE specific areas that careful consideration is required.
True
Many companies are reluctant to introduce new, innovative procedures UNTIL accepted by the public at large.
True
New ideas are difficult to evaluate in terms of expectations?
True
However, customers (both personal and commercial) can have sophisticated knowledge of what they want and what is available. As Customers expect innovative, reliable and
cost effective solutions from their insurers.
Cost effective solutions from their insurers, innovative and reliable are a type of?
Customer expectations.
What do customers (both personal and commercial) expect from the system?
cost effective solutions from their insurers, innovative and reliable.
Customers (both personal and commercial) can have sophisticated knowledge of what they want and what is available.?
True
The system should be flexible enough to deal with:
Authority levels given to different staff grades, both in terms of reserving and the making of payments claims notification;
The system should be flexible enough to deal with:
The involvement of loss adjusters and other experts as appropriate,
the ability to process large amounts of data;
the ability to process data quickly and accurately;
and the delivery of information in a meaningful manner.
These are a type of?
Expectations an insurer expect from a claims management system.
The system should be flexible enough to deal with:
Correct amount of claim detail appropriate for the class of business written (and the likely types of claim expected); and
Insurance companies often have a complex structure. , why?
Due to their size and involvement in a varied number of activities.
Activities include of the organisational (complex) structure, include?
underwriting, claims investigation and payment,
marketing, investment.
Every company will require some form of organisational structure. What will this structure enable the company to do?
Meet its stated business objectives in an efficient manner.
How many main ways to structure a company’s departments?
3 main ways:
What are the main ways to structure a company’s departments?
Function e.g. claims, underwriting etc.
Division e.g. product, geographical area etc.
Or a blend of both
What is Functional Structure?
The traditional form of insurance company organisation.
What is best suited to smaller companies with a limited range of products?
A functional structure
CEO
Board of Directors
Operational Head of Department
Human Resources Finance IT Marketing Underwriting Claims
What are the advantages of this type of structure?
Adv.
Employees can specialise in their type of work because
all those involved in the same or a related activity are in the same department.
Adv
Larger units may be more cost effective due to the uniformity of the procedures used.
CEO
Board of Directors
Operational Head of Department
Human Resources Finance IT Marketing Underwriting Claims
What are the Disadvantages of this type of structure?
DisAdv
inflexibility, for example, claims personnel tend to see their role as purely claims handling and may not
recognise the need for them to give feedback and communicate with their underwriting and marketing colleagues.
DisAdv
It is difficult to co-ordinate the different functions, e.g. there may be a lack of common interest between the
different functions
What is Divisional Structure? (Home Country, Commercial Division, Home Country, Personal Division, International Division)
A divisional structure is adopted by most large multi-product companies. Each division is partially autonomous to the extent of designing, producing and marketing its own products.
The degree of autonomy that each division is given depends on whether its operations are:
centralised; or
decentralised.
What are Centralised organisations?
Retain authority at the top, with little delegation.
What are Decentralised organisations?
More delegation, with divisional managers making more decisions.
An insurer may have a centralised or decentralised claims settlement policy based on :
The relationship between its head office and its branch offices.
What will the choice of system in a divisional structure (centralised or decentralised) depend on?
the size of the company; and
the type of business being written.
Even with a decentralised structure very large claims settlements will usually be: advised to head office.
True
Why?
There are usually limits to the authority delegated to the branches.
Centralised claims settlement methods have the following advantages and disadvantages:
True
Centralised claims settlement methods advantages?
Adv
The required level of expertise is available (which would not always be the case at every office location)
Adv Accessing records (electronic and paper) and underwriting staff is easier.
Centralised claims settlement methods disadvantages?
DisAdv
There may be a lack of contact between policyholders and local staff, which could have repercussions in respect of customer retention .
DisAdv
There will be an inevitable delay involved in advising head office and waiting for a response in respect of significant underwriting and claims issues.
What are Support services?
The various external services available to an internal claims team, which can assist them in their functions.
Support services are???????
authorised repairers;, loss adjusters, loss assessors outsourcing companies; risk managers solicitors surveyors
What are Authorised repairers?
Insurers will often utilise the services of an authorised repairer to rectify damage caused to the customer’s property, be it insured under any product where damage is covered and repair is an option for indemnity to be provided.
Who are Authorised repairers contracted to?
the insurer, sometime exclusively, but more often as part of a network used by many insurers.
Terms will be agreed with the repairer, which are advantageous, but provides the repairer with a guaranteed source of work.
True (Authorised Repairers)
Insurers will encourage their customers to utilise authorised repair services and will often attach benefits,
True (Authorised Repairers)
Free courtesy car for motor repairs as well as repair guarantees as they can ensure these are provided, through the contractual terms negotiated with the repairer?
True (Authorised Repairers).
What are Loss adjusters?
Experts in processing claims from start to finish.
Small claims are usually negotiated and settled by an insurer’s in-house claims staff.
True (Loss Adjusters)
In the case of larger claims or complex policy wordings, the investigation, negotiation and recommendation for settlement is USUALLY:
delegated to a professional loss adjuster.
The loss adjuster will investigate the cause of the loss and advise the basis for settlement.
True (Loss Adjusters)
If it is a cash settlement, the loss adjuster will recommend the amount payable.
True (Loss Adjusters)
If the insurer is satisfied, it will offer this sum to the insured, usually via the loss adjuster.
True (Loss Adjusters)
Their function is to negotiate a settlement, within the terms of the policy, that is fair to both the insurer and the insured.
True (Loss Adjusters)
Loss adjusters are independent, professionally qualified and their fees are met by the insurers who instruct them.
True (Loss Adjusters)
Some adjusters are delegated to negotiate settlement of claims on behalf of the insurer, without needing to seek specific authority on a case by case basis.
True (Loss Adjusters)
Loss adjusters are instructed by insurers and are independent and professionally qualified
True (Loss Adjusters)
Loss adjuster fees are met by the insurance company or the insurer.
True (Loss Adjusters)
What are Disaster recovery companies?
An organisation that specialises in ensuring business continuity for a company in the event of an interruption to the normal flow of business.
Disaster Recovery Companies are concerned both with the implementation of plans in the event of an interruption, and the analysis before the event of a company’s requirements.
True (Disaster Recovery Companies)
The implementation of plans in the event of interruption and the analysis before the event of a company requirements are the CONCERNS of Disaster Recovery Companies.
True (Disaster Recovery Companies)
Disaster Recovery Companies function, would at times overlap with a company’s normal risk management programme.
True (Disaster Recovery Companies)
Disaster recovery companies are often involved in:
actual work done to return business operations to normal, or as close as possible to normal.
addressing specific emergency situations, for example, terrorist attacks, fire, significant escape of water, etc;
compiling recovery strategies.
identifying and evaluating operational risks that may impact operations.
management analysis of the effect and impact of losing resources;
trials to assess the effectiveness of plans.
It should be noted that disaster recovery companies will usually address the complete scenario of disasters,
True (Disaster Recovery Companies)
Such as: from the backing up and retrieval of information technology (IT) systems,
to the cleaning and restoration of individual pieces of paper from files that may have been affected by soot from a fire???
True (Disaster Recovery Companies)
What are Surveyors?
Act as the eyes and ears of the underwriter.
Who can equally be used by the claims department post loss?
True (Surveyor)
The surveyor will prepare a report of a risk that will include:
adequacy of the insurance being requested.
an assessment of the level of risk; and a full description of the risk;
a measure of the maximum probable loss (MPL), i.e. what they consider to be the most that could be lost should the insured event take place;
recommendations on loss prevention.
After a claim, a surveyor may be instructed to undertake a post loss survey, and these aspects will be reviewed and reported on the cause of the loss..
True (Surveyor)
Who will give their view as to the compliance, or otherwise, with any relevant policy conditions or warranties??
Surveyors.
What is ‘Outsourcing’?
Using a skilled resource from outside the company to handle work traditionally performed by in-house staff.
Essentially, a function (or part of a function) is delegated to a third party.
True (Outsourcing)
This can be done by either:
Sending the work out or by bringing the resource into the company.
What are the reasons behind outsourcing are:
to gain access to a wider skills base
to manage a specific issue (for example, a surge event);
the perceived cost benefits (i.e. the belief that the work will be done more cheaply than if carried out in-house);
At the turn of the twenty-first century, many insurance companies started basing their call centres outside of the UK. This is usually called
‘off-shoring’ or ‘near-shoring’.
This action was even more marked than merely outsourcing to another, cheaper part of the UK:
As for the perceived cost benefits.
Labour may be cheap, but allegations of exploitation and questions of language and service levels tended to arise.
True (Offshoring)
it is the method of Outsourcing more specifically (Offshoring).
As a result, customer satisfaction fell markedly, as consumers found the service provided by this method was not good enough.
True (Offshoring)
it is the method of Outsourcing more specifically (Offshoring).
Consequently, most of these services, particularly where there is interaction with customers, have now been returned to UK call centres and this in itself is often used as a marketing benefit to the customer.
True (Onshoring)
it is the method of Outsourcing more specifically (Onshoring).
Let us take the opportunity to remind ourselves of the CLAIMS PROCESS by looking again at the figure we introduced in chapter 4.
This is shown again in this figure: Figure 5.3: Notification Review Response to claimant Claim investigation Claim negotiation Claim settlement Review Recoveries
Any, or all, of the claims functions can be outsourced.
True (Outsourcing)
If a company chose to outsource the whole process, along with the financial reporting and management of the operation, then there would be no need for an internal claims department.
True (Outsourcing)
However, internal responsibility for claims would be retained by the insurer for COMPLIANCE PURPOSES. This is generally satisfied by regular audit activity.
True (Outsourcing)
The outsourcing could be provided by:
brokers; insurance company claims departments (i.e. to non-insureds); loss adjusters. solicitors and third party administrators;
What are the advantages outsourcing in
(Cost, Service, Strategy, Staff) ???
Advantages
Costs::
Often results in cost savings
Service::
Through access to a wider skill base and/or improved technology
Staff::
Reduces the requirement for staff and
Avoids the peaks and troughs of workflow and the loss of expertise ,
Strategy::
Better capacity to cope with an increase in workload,
Concentration on core activities,
What are the disadvantages of Outsourcing in (Cost, Service, Strategy, Staff) ?
Disadvantages :
Costs::
Extra co-ordination and audit costs
Unforeseen problems
Services::
May be a problem, especially in respect of customer retention
Staff::
Loss of the opportunity to retain and develop in house expertise.
Strategy::
Dependence on provider
Loss of control
There are then potential gains and potential pitfalls in using an external skilled resource, what is needed then??
Both need to be analysed before any decision is made.
Internal responsibility for claims would be retained by the insurer for COMPLIANCE PURPOSES. This is generally satisfied by which activity??
Regular audit activity.
What are the two main ways
a firm of solicitors can be used for?
As a pre-litigation advice facility.
(It may also supply specialised services, such as the negotiation of complex injury claims).
A firm of solicitors is OFTEN used to either issue court proceedings where negotiations have reached an impasse, or to defend the claims where proceedings have been issued against an insurer’s customer.
What can solicitors also be used for?
They may also be used for legal advice services, including policy wording interpretation and reinsurance disputes.
Why do some insurers employ in-house solicitors and barristers or have a financial interest in a firm of solicitors?
For cost reasons.
Insurers utilise external solicitors where there would be a conflict of interest or for matters that their in-house team is unable to deal with.
True (Solicitors)
Who are Risk managers?
Insurance risk managers are utilised by policyholders (usually commercial customers) to scrutinise insurance claims and factors that can contribute to claims.
What is the objective of the risk manager?
To find ways to reduce the likelihood of an insurance claim by taking such actions as improving safety protocols or installing new equipment that has better safety features.
How can risk managers reduce the costs of their insurance policies?
By determining how a company can reduce their potential risks, .
How can risk managers do their work effectively?
They must be able to:
gather data,
identify ways to reduce risk and develop a strategy for implementing changes in the workplace,
review procedures,
What are the Other duties insurance risk managers?
Training staff about risk awareness.
What are Experts used in the valuation of third party claims?
Medical reporting experts
What happens in Medical reporting experts?
In fast track claims medical evidence is obtained at court direction, jointly for the insurer and claimant’s solicitor.
Who are the experts appointed by?
In large and complicated multi-track claims, insurers and third- party solicitors will often appoint their own experts to assist with the valuation of the injured party’s claim.
These opinions will be exchanged and compared, and the experts will be asked to consider any area of disagreement,
True in (Medical Reporting Experts)
What type of meeting are usually arranged by Experts used in the valuation of third party claims?
Joint Expert Meeting..
When/IF the experts cannot agree, and the claim cannot be settled out of court, who will decide which two opinions is the most persuasive??
The judge
There are other experts such as????
Accommodation experts Accountants Care experts Life expectancy experts Medical experts Surveillance
Accommodation experts?
To comment on suitability of housing needs for claimants requiring alternative or adapted accommodation after an accident.
Accountants?
They review future lost wage claims
Care experts?
Typically former nurses commenting on hours and nature of care requirements.
Life expectancy experts??
Experts who will be responsible to see how much life is left…
Medical experts?
Specific to the type of injury and include neurosurgeons, psychiatrists and other specialists.
Surveillance??
To verify claimant’s injuries and claims concerning wage, loss are genuine.
What are Loss assessors?
As with loss adjusters, loss assessors are experts in dealing with insurance claims.
Who are loss assessors appointed by?
Appointed by the insured to prepare and negotiate a claim on the insured’s behalf.
Who pays The loss assessor’s fees?
By the insured themselves.
the loss assessor’s fees do not form part of the insured’s claim and that loss assessors are not impartial:
True ( Loss Assessors)
they represent the insured in order to maximise their recovery from the insurer.
True ( Loss Assessors)
‘A loss adjuster is paid by the insurance company and works for it to manage the cost of the claim down.’
False (Question 5.2)
