IT in claims handling Flashcards
Company’s IT strategy is ONLY limited to claims
FALSE,,,
Company IT strategy will encompass the WHOLE organisation
The role of the organisation other than the insurer, support the handling of claims and must be incorporated into or managed by :
Claims Handling System.
IT relates to the:
storage, production (or processing) and communication of information.
What already plays an important role in the insurance marketplace?
IT
If reflecting on developments in the last few years, the role it plays in the future could make the difference between success and going out of business.
TRUE
A company’s IT strategy will encompass its whole organisation.
TRUE
Underwriting information can and will be used in claims handling (and vice versa).
TRUE
What information can and will be used in claims handling (and vice versa)?
Underwriting
Insurance companies will also have ‘digital’ strategies, why??
for underwriting, selling and marketing products, to meet the ever changing needs of the customer.
How can Insurers benefit from the provision of better quality, faster and more relevant management information in relation to their claims?
Provision will help the insurers to respond to and meet their customers’ expectations.
Corporate claims philosophy and their claims management procedures must be designed, to whom?
With reference to the company’s claim maangement system.
What will depend on information (which is the data, ‘the raw material’) being processed in such a way as to have some meaning to its recipient?
Effective control and planning
A manager can use this information (digital strategies, the provision of relevant management information, effective control and planning) to make informed decisions that are based on their experience and prior knowledge.
True
An insurer’s claims management system must be designed with reference to a company’s:
corporate claims philosophy and their claims management procedures.
IT should be able to record appropriate information and process it in a way that is compatible with:
the company’s overall objectives.
Increasingly, insurers and other technology providers are using online servicing through electronic portals.
For example:
Low Value Personal Injury Pre-action Protocol
Insurers also use technology to share data to aid:
Decision making.
In motor claims, electronic recoveries are possible using an online portal to share information about the claim.
True
IT is merely one element of a much bigger network.
True
Why does IT actually control the technical issues of the system that has been developed:
To meet an all encompassing objective.
Insurance claims characteristics such as the:
Volume and the Complexity of claims
For an individual insurance company there is likely to be a very large number of claims transactions to be processed, including:
claims reserving and estimating;
claims payments; and
recoveries (including reinsurance recoveries).
It is a benefit to an insurer is to have in place systems and controls that take account of foreseeable peaks in demand,
TRUE
Why such a system is necessary?
To allow the insurer to continue to deal with claims promptly even in such circumstances.
The complexity of claims arise with,
claims process, brokers, co insurers involvement, fraudulent claims, reinsurance details, (passed on to the reinsurer)
Claims process could involve:
loss adjusters, witnesses, legal experts, brokers, insurers and insureds.
How do the complexity of claims arise with, the claims process?
the notification agreement and settlement require communication between insurer and insured and if applicable the broker, but
could also involve loss adjusters, witnesses and legal experts.
The complexity of claims arise when great number of co-insurers?
With commercial insurances especially bigger risks , there may be even hundreds on insurers…
Who will handle the flow of and / or/ production of documentation?
Brokers
Almost all UK insurers require reinsurance to reduce their net commitment to an acceptable level,
but where loss is reinsured details of the claim will need to be :
Passed on to the reinsurer.
Some claims may be fraudulent repeated or exaggerated and require detailed investigation.
TRUE
The greater the number of co-insurers, the greater the complexity??
TRUE
Where a loss is reinsured, details of the claim will need to be passed to the :
Reinsurer.
Who other than the insurer handles often the flow and/or production of documentation?
Brokers
With commercial insurances, especially bigger risks, there may even be hundreds of insurers, which can complicate claims handling process.
True
A claim may require more detailed investigation, when :
fraudulent, repeated or exaggerated
A disadvantage of claims handling systems is :
many people can be involved in any one claim, such as in larger, commercial claims.
Complex systems need to be in place to ensure that the information is collated from all the potential sources , such as:
(e.g. witnesses, brokers, other insurers, loss adjusters)
Complex systems need to be in place to ensure that the information is collated from all the potential sources and is analysed and passed on as appropriate to?
(e.g. to the reinsurer, or
the specialist claims investigator).
Who will need to ensure that they are aware at all times of the position of the claim as it passes through the system?
Claims Handler
Processing accurate, large amounts of data, quickly and delivering information in a meaningful manner is the potential capability and desirability of the:
Claims System
The application of IT must be accompanied by a:
review of present claims procedures and practices and the employment of new methods of operation, if appropriate.
A powerful, flexible and adaptable claims system is a substitute for experienced people.
FALSE,,,
A powerful, flexible and adaptable claims system is NOT a substitute for experienced people.
IT systems are only as good as the people who have programmed them.
True
IT systems can be designed to carry out complex and important tasks and decisions, but will have certain limitations.
TRUE
An effective IT strategy balances the efficacy of a comprehensive IT solution with the skills and talents of experienced claims staff.
TRUE
The claims management system chosen by an insurance company will vary according to a number of factors:
Management decisions about the extent to which their computer systems should be developed,
the structure of the company;
the type of business written;
All claims will have certain basic elements recorded, for all claims, regardless of the class of business, certain information is typically recorded. Such as :
Contacts, details of the claim, including dates, name of policyholder, payments, policy number and claims reference, and reserves.
Also details that were previously recorded at the underwriting stage.
Such as :
a description of the risk;
a description of the cover provided;
supporting risk information; and
whether there is more than one insurer and if so,
(the name of insurer, its share of the risk and respective references).
Information recorded are used in conjunction.
True,,,(Claims basic elements and details recorded at underwriting stage). used in conjunction.
The main aims of using IT in claims handling are :
Improving service provided to the insured and reducing the cost of claims administration.
What are the main benefits of using IT in respect of claims handling?
Electronic authorisation of claim payments, Increase in communication channels, Portals and extranet services, Quicker claims settw, Reduced use of paper files Single data entry
Single data entry, eliminates the duplication of effort and data. so less people involved in the data entry process should mean fewer errors in data inputting?
True
Reduced use of paper files, with the associated benefit of quicker distribution of claims details, especially if there is more than one insurer.
True
Lloyd’s files are often shared among managing agents electronically and in many general insurance claims
departments there is no longer any reliance on paper files at all. This is a benefit.
True
Quicker claims settlement, as the information is distributed faster.
True
Electronic authorisation of claims payments, speeds up the claims settlement process.
True
A reduction of paperwork, minimises bank charges and prevents unnecessary re-entry of data. This is an EXAMPLE of:
Electronic authorisation of payments.
Some systems automatically generate cheques or automatic transfers of money, thereby ensuring that money is NOT paid quickly and in the most efficient manner.
FALSE,,,
(Some systems automatically generate cheques or automatic transfers of money, thereby ensuring that money is paid quickly and in the most efficient manner.)
Increase in communication channels: those such as email, social media and live chat are all enabled by IT. This allows :
Greater customer service, quicker communication and more efficient claims handling.
Portals and extranet services allow customers to self-serve and :
obtain real time updates on the progress of their claim.
Why other less tangible or associated benefits for insurers are considered?
to gain a competitive advantage, in the improved service,
automated payments of loss adjuster fees,
automated checking for fraud,
allocation of appointment based on priority or date of loss notification,
technical assistance can be given to the claims hander via IT.
How does IT systems aim for customer retention?
Through improved service.
How does streamlined administration help insurer to gain competitive advantage through IT systems?
The use of online databases for replacement goods.
Automatic checking for fraudulent, exaggerated or repeat claims is a tangible benefit?
FALSE,,,
automatic checking for fraudulent, exaggerated or repeat claims is a less tangible or associated benefit?
the allocation of appointments by the computer system based on priority and/or the date of loss notification (e.g. loss adjusters, customers etc.) is a main tangible benefit .
FALSE,,,
(the allocation of appointments by the computer system based on priority and/or the date of loss notification (e.g. loss adjusters, customers etc.) is a less tangible or associated benefit .)
Automated payment of loss adjusters’ fees are a way to improve a less tangible or associated benefit that insurers hope to gain competitive advantage from?
TRUE,,,
(Automated payment of loss adjusters’ fees are a way to improve a less tangible benefit that insurers hope to gain competitive advantage from? )
These, then, are some of the benefits.
But what difficulties arise with the use of IT in claims handling?
Delivery of claims,
personal service reduced,
Increase in cost,
adverse cash flow affect as payments can take a while, complex system,
expensive,
demands of system being very flexible,
updates required time consuming and expensive…
How can claims costs increase?
If the emphasis is placed on IT as the only solution to claims handling, there may be an increase in claims costs.
Why would a system may not fit within framework of IT system?
Non-standard, large or more complex claims, a system has to be incredibly flexible to cover all eventualities.
What happens if system more difficult to operate?
Less flexible and more expensive than initially considered.
Why would there be adverse cash flow effects?
The claims payments are speeded up, but premium payment and reinsurance recoveries may not be.
When would claims be delivered by process rather than observation?
The delivery of a claims service arising from a centralised, electronic function.
The use of IT claims handling systems can NEVER reduce personal service and remove flexibility and initiative.
FALSE ,,,
The use of IT claims handling systems can reduce personal service and remove flexibility and initiative.
Productivity may increase, but this may result in contained, rather than reduced, costs.
True
The system will need to be maintained and updated, which can be expensive.
True
Demands of system being very flexible, can be a disadvantage if the IT system is not updated?
True
updates required, which are time consuming and expensive… thus resulting in disadvantage?
True
What are the other less tangible or associated benefits for insurers, hoping to gain a competitive advantage,
the improved service, means more customer retention.
automated payments of loss adjuster fees,
automated checking for fraud,
allocation of appointment based on priority or date of loss notification,
technical assistance can be given to the claims hander via IT.
The improved service, means more customer retention?
True
automated payments of loss adjuster fees, is other less tangible or associated benefits for insurers, hoping to gain a competitive advantage?
True
automated checking for fraud?
is from other less tangible or associated benefits for insurers, hoping to gain a competitive advantage,
allocation of appointment based on priority or date of loss notification??
is from other less tangible or associated benefits for insurers, hoping to gain a competitive advantage,.
Technical assistance can be given to the claims hander via IT.
This is a less tangible or associated benefit to the insurer hoping to gain a competitive advantage?
True
