Overview of the Claim Function Flashcards
Third-party administrator (TPA)
An organization that provides administrative services associated with risk financing and insurance
Independent adjuster
An independent claim representative who handles claims for insurers for a fee
Loss ratio
A ratio that measures losses and loss adjustment expenses against earned premiums and that reflects the percentage of premiums being consumed by losses
Incurred losses
The losses that have occurred during a specific period, no matter when claims resulting from the losses are paid
Earned premiums
The portion of written premiums that corresponds to coverage that has already been provided
Expense ratio
An insurer’s incurred underwriting expenses for a given period divided by its written premiums for the same period
Nonwaiver agreement
A signed agreement indicating that during the course of investigation, neither the insurer nor the insured waives rights under the policy
Reservation of rights letter
An insurer’s letter that specifies coverage issues and informs the insured that the insurer is handling a claim with the understanding that the insurer may later deny coverage should the facts warrant it
Individual case method
A method of setting reserves based on the claim’s circumstances and the claim representative’s experience in handling similar claims
Roundtable method
A method of setting reserves by using the consensus of two or more claim personnel who have independently evaluated the claim file
Average value method
A case reserving meted that establishes a predetermined dollar amount of reserve for each claim as it is reporte
Formula method
A method of setting claim reserves by using a mathematical formula
Expert system method
A method of setting reserves with a software application that estimates losses and loss adjustment expenses
Loss ratio method
A loss reserving method that establishes aggregate reserves for all claims for a type of insurance
Stairstepping
Incremental increases in claim reserves by the claim representative without any significant change in the facts of the claim
Subrogation
The process by which an insurer can, after it has paid a loss under the policy, recover the amount paid from any party (other than the insured) who caused the loss or is otherwise legally liable for the loss
Mediation
An alternative dispute resolution (ADR) method by which disputing parties use a neutral outside party to examine the issues and develop a mutually agreeable settlement
Arbitration
An alternative dispute resolution (ADR) method by which disputing parties use a neutral outside party to examine the issues and develop a settlement, which can be final and binding
Mini-trial
An alternative dispute resolution method by which a case undergoes an abbreviated version of a trial before a panel or adviser who poses questions and offers opinions on the outcome of a trial, based on the evidence presented
Summary jury trial
An alternative dispute resolution method by which disputing parties participate in an abbreviated trial, presenting the evidence of a few witnesses to a panel of mock jurors who decide the case
Breach of contract
The failure, without legal excuse, to fulfill a contractual promise
