PC1 - A9-A10 Flashcards
Insurer Risk Control Goals (4)
Earn a profit (reduce E&O, grow policy volume)
Meet customer needs
Comply w/ legal req
Fufill duty to society
Risk Control Services (3 types)
Physical Survey
collect UW info, do walking tour, look at management exp
evaluate fire/wind/burgerly loss, legal liability, employee injuries
look at management commitment to risk control and employee attitudes
Risk Analysis and Improvement
analyze loss history, reduce causes of prior losses
then follow up. Provide training or fire system testing
Develop Safety Management Program
done by senior staff, most important for commercial lines/industrial
Reasons for Premium Auditing
WC, GL, Commercial Auto
Determine correct premium
Collect ratemaking data
Meet regulatory req
Deter fraud
Reinforce confidence with insured
Obtain extra info
Premium Auditing Process (7 steps)
Planning - see what they do and how its structured
Determine employee relationships - sometimes WC doesn’t count people as employees, sometimes excludes sole proprietor
Find/evaluate records (what’s valuable, is there overtime)
Auditing Records - ensure things are classed right
Analyze/verify data - is it reasonable, detailed enough
Report findings
(Test Audit - the bureau does it to check behind you on premium audit)
2 main goals of claims
Comply with contractual promise (must indemnify a covered loss and provide fair, prompt service)
Support financial goals (set appropriate reserves, don’t overpay)
Claims Department People
Senior claim office at the top
Regional offices
Staff claims rep - employee of the insurer usually in a regional office
Independent adjuster - contractor for remote locations of catastrophe. Work for firms sometimes
3rd party admin - if you are self-insured
producers - might let them do small claims, up to $2,500 ish, can write a draft (aka check)
public adjuster - insured might hire one for second opinion to negotiate
Claims performance measures (2)
Loss ratio - percent of premiums consumed by losses
quality measures - best practices, audits, customer surveys
Measures to ensure Claims compliance
Claims guidelines - how claim should be performed, used for training, details timing outline (diary - reminder system for claims reps)
Controls - claims report, security on claims info, reports on reserves
Security - use password, restrict to managers, protect reserve changes
Reviews by managers
Claims audits - can be internal or external
Claim Handling Activities (6)
Acknowledge and Assign (could be several claim reps)
Identify Policy and Set Reserves - if potentially no coverage must sign nonwaiver or reservation of rights
Contact Insured - explain policy and exclusions, describe timeframe, provide proof of loss form
Investigate - take witness accounts, claimant account
Determine Cause, Liability, and Loss Amount
Conclude Claim - settle on an amount, if denied send letter, possible litigation
Methods of reserving (6)
Individual - relies on rep
Roundtable - relies on rep (two people together)
Average Value
Formula
Expert System
Loss Ratio
(rest are statistical)
Stairstepping - bumping up reserve because you set it too low
Framework for Coverage Analysis
Review all parts of policy, read forms and endorsements
Is the person covered? (named insured? friends who take your care are covered. IIN’s not always covered)
Did it occur in the policy term? (one minute after midnight policy starts)
Is cause covered? (named peril coverage? special form (open perils))
Is type of loss covered? direct (rebuilding house) vs indirect (future income, rental cost of hotel) Most property is direct only!
Are amounts covered? property usually Replacement Cost, liability is special (medical, funeral) or general damages. We don’t pay punitive damages
Property Claim Process (6 steps)
1 - Who’s insured, who has insurable interest (generally anyone financially harmed. Creditors. Typically 1st named insured and spouse)
2 - What property is insured and when (real property - land/building/permanent fixture)
3 - what are covered causes of loss?
4 - what’s the amount of loss? (Replacement or ACV) ACV is replacement minus depreciation. Always apply deductible before co-insurance
5 - Insureds duty after a loss - provide notice, protect property, assist w/ adjustment (inventories and proof of loss). Possible exam under oath
6 - what procedures conclude a claim - determine cause, amount. Document them. Determine salvage value and subrogation needs
Ownership in common and tenancy in entirety
Ownership in common - 2 or more owners
tenancy in entirety - owned by married couple
Residential Dwelling Claims
2 keys: address insured concerns and enforce policy provisions
issue additional living expense payment (insured must keep receipts)
get contractor estimates
hire restoration/cleaning service
Residential Personal Prop Claims
hard to get proof sometimes, need an inventory
need to watch sublimits on specific items (guns, jewelry, furs)
