Study 10 - Applications of Property Insurance (Underwriting and Claims): Summary Flashcards

1
Q

Role of brokers and agents in the underwriting process

A
  • Brokers or agents must do a form of underwriting
  • Broker or agent underwrites for the insured and the insurer
  • Underwriter underwrites for the insurer
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2
Q

Role of underwriters in the underwriting process

A
  • Insurer must incur less in losses than they collect in premiums
  • Underwriters identify insureds that pose acceptable risks of loss
  • Accepting risk is investment of the insurer’s capital in those risks
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3
Q

Underwriting strategy includes…

A
  • Types of risk
  • Lines of insurance
  • Reinsurance
  • Amounts of insurance
  • Approach to pricing
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4
Q

The Underwriting Process

A
  1. Evaluating the risk
  2. Making the underwriting decision
  3. Pricing the risk (ratemaking and rating)
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5
Q

Evaluating the risk

A
  • Acceptable and unacceptable risks
  • Claims history
  • Financial factors
  • Physical factors (COPE - construction, occupancy, protection, and exposure)
  • COPE and a single-family dwelling
  • Heritage and historic dwellings
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6
Q

Making the underwriting decision

A

Risk only rejected if:

  • Class not permitted by guidelines
  • Market conditions or competitive considerations
  • Risk on its own merits is too flawed to be accepted
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7
Q

Pricing the risk (ratemaking and rating)

A

Ratemaking:

  • Historical data about incurred losses
  • Actuaries use statistical techniques to develop a forecast
  • COPE factors, perils and hazards considered

Rating:

  • Underwriter applies the actuarial rate to a risk within a class
  • Determines whether a particular risk is better or worse than average
  • Coinsurance and appraisal helps ensure insurance to value
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8
Q

Role of brokers and agents in the claims process

A

Brokers and agents are intermediaries between insurers and insureds. In the event of a claim:

  • Help report a loss to the insurer
  • Explain the claims process to the insured
  • Monitor the progress of the claim
  • Advocate on the insured’s behalf
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9
Q

Role of the claims adjuster in the claims process

A
  • Investigate insurance claims
  • Makes recommendations regarding the payment
  • Negotiate payments and settlements
  • Expert in interpretation of policy language; consult with underwriter
  • Must have communication skills, and knowledge in construction and civil law
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10
Q

Claims service

A
  • Service is critical to success of any business entity
  • Understand reactions to crisis differ
  • Use tact and diplomacy
  • Acknowledge feelings in a neutral way
  • Be patient and respectful
  • Be observant
  • Choose words carefully
  • Listen actively
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11
Q

Property claims process (10 steps)

A
  • Policy period
  • Insuring agreement
  • Exclusions
  • Endorsements
  • Conditions
  • Deductible
  • Payment amount
  • Reasons to deny
  • Make payment
  • Update underwriter
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12
Q

Proof of loss form

A
  • Blank proof of loss form goes to an insured within 60 days
  • Agent of the insured or beneficiary of insurance may give notice or proof
  • Form is not admission that a policy is in force
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13
Q

Formal, sworn, completed proof of loss is NOT needed if…

A
  • The amount of the loss falls below a specified threshold
  • There is no suspicion of fraud in the claim
  • There is no possibility of subrogation
  • There is no threat of litigation by the insured
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14
Q

Confirmation of coverage (claims process)

A
  • A claims adjuster must develop information to determine coverage and value
  • Circumstances of the claim and type of property must be examined
  • Adjuster must also investigate the possibility of subrogation
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15
Q

Investigation of loss

A
  • Obtain a written statement from the insured
  • Interviewing the insured
  • Obtaining photographs of the damaged property from before and after the loss
  • Arranging emergency services and assigning a contractor
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16
Q

Settlement of loss

A
  • Represents the resolution of a claim with the claimant, an insured, or a third party
  • After negotiations, claims adjuster sends the cheque
  • Denial of coverage communicated in writing
  • Once settled, the claimant has no right to reopen it
  • Insurer retains the salvage value of the damaged item
17
Q

Underwriting after a claim

A
  • Adjuster finds if there is substantial change to the risk as presented to the insurer
  • Underwriter works with the broker to determine insured prevention of repeat loss
18
Q

Why historic buildings may be difficult to insure

A
  • Higher risks due to age
  • Higher costs of repair materials
  • The bylaw requirement for a heritage designation
19
Q

Line guide

A

Describes the maximum amounts of exposure an insurance company is prepared to accept on various classes of risk