Random Mix Flashcards
The IBNER reserve covers
Shortfalls in the provisions in the outstanding claims reserves
Would the arbitration clause of a household policy apply when a policyholder is disputing the amount offered in settlement of a theft claim
Yes
When designing an IT-based claims management system it is important to
review existing claims procedures and practices
One benefit of using an IT-based claims handling system is that it
can help insurers to deal with foreseeable peaks in demand
an insured has comprehensive cover and is involved in an accident caused by a third party which principle applies?
Subrogation
Under the untraced drivers’ agreement, the Motor Insurance Bureau (MIB) will only consider claims for property damage where the vehicle that caused the damage is unidentified and
compensation has been paid for significant personal injury
The insurer’s position at the end of the financial year is shown in the:
Balance Sheet
Which non-adjudicative option of alternative dispute resolution is common place in personal injury cases and is where the parties come together round the table to discuss options to resolve the case?
Joint Settlement
What reserve is required by law and is designed to smooth fluctuations in loss ratios for certain classes of business
Equalisation Reserve
In relation to an insurer’s corporate claims strategy, the claims manager will be responsible for:
day to day implementation
Where would an insurer’s premium reserves, such as outstanding claims and incurred but not reported claims be disclosed?
The balance sheet - liability section.
Management accounts allow an insurance company to
plan, monitor and control the company’s operations.
What is the objective of reserving?
is to estimate the future costs of claims
The source of the largest outflow of money within an insurance company is managed by its:
Claims department
An unexpired risk reserve is ONLY needed where a loss is foreseen in relation to the
Unearned premium reserve
When implementing an insurer’s overall approach to claims management, a claims manager’s key tasks include
Being aware of current underwriting policies
In relation to a motor claim hard leakage can occur where:
salvage is retained by the insured after a total loss payment
Ex gratia payments should NOT be regarded as leakage because
they are authorised by the claims manager.
When setting up a new commercial property claim which of the following CANNOT be obtained from the insurer’s underwriting records?
Estimates & reserves!! ***
One of the disadvantages of using an IT-based claims handling system is
Upgrades may be needed overtime
A potential disadvantage of centralised claim settlement is a lack of
local contact for policyholders
Insurance companies are usually structured by:
function or division or a blend of both
Within a decentralised structure which claims settlements, if any, will have to be reported to the head office?
Very large claims
Brown’s Electricals Ltd is concerned about the impact on the business of a major fire or flood at their premises. They employ the services of ABC Consultants to develop a plan to ensure business continuity. What type of firm are ABC Consultants?
A disaster recovery company
What is the general expectation of the insured when designing an IT-based claims handling system
A quick response and a quick settlement.
One of the less tangible benefits of using IT in respect of claims handling is:
increased customer retention
Who is an independent person appointed by the insured to help them in the preparation and negotiation of their claim
Loss Assessor
Where the claims function is outsourced, how do insurers retain internal responsibility for compliance purposes?
Through regular audits of the outsourced company
The obligations that a motor insurer has under Part VI of the Road Traffic Act are:
statutory obligations
Under the untraced drivers’ agreement, the Motor Insurance Bureau (MIB) will only consider claims for property damage where the vehicle that caused the damage is unidentified and:
compensation has been paid for significant personal injury.
Under what circumstances will a commercial theft claim be only partially met by an insurer?
Where the value at risk exceeds the sum insured
Under what circumstances can an insurer refuse to pay a commercial property damage claim?
Where there has been a breach of a material policy warranty
After an insurer has paid for a total loss claim
the residual value of any property belongs to the insurer
What is the MAIN benefit to insurers of using the replacement option when settling a glass claim?
Glaziers frequently offer discounts to insurers
When checking the data integrity for motor claims, as part of the reserving process, which of the following could cause the final calculation of the claims reserve to be inaccurate?
Processing backlogs
One of the MAIN aims of market agreements is to:
promote good relations between insurers
An ‘ex gratia’ payment is one which is made by:
the insurer, even though there is no policy liability
The term ‘salvage’ means:
damaged property that is left after insurers have paid for a total loss
The claims reserve for each accident year is calculated by:
multiplying the cumulative claims to date for that year by the development factors for the number of years which remain undeveloped
Each of the following is a stated purpose of the ABI’s Personal Effects Contribution Agreement with the exception of?
Avoiding paying out claims under a specified limit
Recovery of payments is most likely for
motor insurance
Which principle of insurance is MOST likely to apply where an insured has comprehensive cover and is involved in an accident caused by a third party?
Subrogation
Special damages are:
losses that can be quantified in monetary terms
For which type of claim is completion of a claim form LEAST likely to be requested by insurers
Extended warranty
The claims conditions in a typical travel policy require the insured to report what claim to another authority in addition to insurers?
Theft for personal belongings
Helplines are often outsourced to specialist providers because:
savings can be made through economies of scale
Which liability policy is USUALLY written on a losses occurring basis?
Public Liability
Which liability policy is USUALLY written on a claims made basis?
Professional Indemnity
For a business interruption claim to be valid, what other type of policy must also be in force?
Property Damage
Which of the following is classified by insurers as a pecuniary class of insurance?
Legal Expenses
The three “tracks” to which a case can be allocated under the Civil Procedure Rules are:
Small claims, fast track and multi- track.
Which non-adjudicative option of alternative dispute resolution is common place in personal injury cases and is where the parties come together round the table to discuss options to resolve the case?
Joint Settlement
A global claims reserve is
a reserve covering the whole book of business
A claims department’s service standards must balance the need to treat the customer fairly, efficiently and sympathetically with the need to:
Only pay claims that are valid
What is the maximum award that the Financial Ombudsman Service (FOS) can make which is binding on an insurer?
£350,000
Under a motor policy, a third party may not be fully compensated for personal injuries where:
there is contributory negligence
Which adjudicative option of alternative dispute resolution is required by statute in all disputes over construction contracts between policyholders and sub-contractors?
Adjudication
All authorised insurers must comply with the claims handling standards set by the:
FCA
Which of the benefits under a personal accident policy is often paid as an annuity?
Permanent Total Disablement
What cover is typically included under a commercial vehicle policy?
Third Party Liability
What is covered by creditor insurance?
The insured’s inability to make repayments due to redundancy
What cover is usually combined with a basic public liability policy?
Product Liability Insurance
What special peril can be added to a fire policy?
sprinkler leakage
Hugh has a comprehensive motor cycle policy. Julie has a comprehensive private car policy. Which of the following is NOT covered by Hugh’s policy but will be covered by Julie’s?
Personal accident cover for the insured
Helen’s car is insured on a third party only basis. What limit of indemnity will apply to any third party property damage claims?
£20,000,000
Which of the following losses is covered by a comprehensive private car policy but NOT a policy arranged on a third party, fire and theft basis?
Theft of personal belongings of the insured
Legal expenses cover is often offered as an optional extension to a:
Household Insurance Policy
What is a deductible?
The insurance deductible is the amount of money you will pay in an insurance claim before the insurance coverage kicks in and the company starts paying you
The term ‘quantum’ means the:
amount of a claim
Thugs break into a factory and, finding nothing worth stealing, start a fire. The fire activates the sprinkler system causing water damage to some unburnt fixtures and fittings. What is the proximate cause of the water damage to the fixtures and fittings?
FIRE
Who is NEVER used by an insurer as part of the claims investigation process for a personal injury claim?
Loss Assessor
When a claim is notified, the insurer may have a responsibility to prove:
that an exclusion applies.
Which of the following does NOT usually form part of claims conditions in a policy?
A requirement to ensure specified standards of security are met.
One of the less tangible benefits of using IT in respect of claims handling is:
increased customer retention
Sally has a comprehensive motor policy, with a £300 excess, for her car which is worth £2,500. Sally paid £6,000 for the car 3 years ago. The car is stolen from outside her house and her insurer offers £6,000 in settlement of her claim which she accepts and the claim file is closed. Calculate how much leakage, if any, has occurred on this claim?
£3800
