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
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
3
Q
Underwriting strategy includes…
A
- Types of risk
- Lines of insurance
- Reinsurance
- Amounts of insurance
- Approach to pricing
4
Q
The Underwriting Process
A
- Evaluating the risk
- Making the underwriting decision
- Pricing the risk (ratemaking and rating)
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
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
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
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
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
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
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
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
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
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
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
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
