Study 10: Claims LO

Question 1

Outline claims reporting procedures and the information needed to complete a first notice of loss.

Answer 1

• Policyholders must report losses promptly
• Losses may be reported to an agent or broker, or directly to insurer
• Online claims reporting has become more prevalent

• Detailed and accurate information must be obtained at the time the report is made
o Aids in determination of coverage
o Helps guide investigation of claim

• If claim is reported by a third party, confirm who they are in relation to the claim and insured and request insured’s instructions

• Intermediaries receiving legal notices of claims must communicate these to the insurer immediately;
there is a limited time within which to respond to such notices

Question 2

Describe the part agents and brokers play in assisting and advocating for their clients during the claims process.

Answer 2

• Providing assistance to clients following a loss demonstrates the value an intermediary adds to the
insurance transaction

• Intermediaries can help their clients by
o Guiding them through the claims process
o Being an advocate on their behalf

• Address clients’ concerns and set expectations for a smooth claims process by explaining
o The duties of each party
o The limitations or conditions that may come into play
o Typical timelines associated with a claim

• Evaluate clients’ post-claim satisfaction with customer satisfaction surveys and inviting feedback regarding the process

Question 3

Outline the roles of various claims handlers in settling insurance claims.

Answer 3

• Claims department administers loss adjustment process

• Insureds may have contact with any of
o Claims manager
o Claims supervisor
o Claims examiner
o Adjuster

• There are various types of adjusters
o Staff
o Independent
o Telephone
o Public

• Public adjusters are hired by an insured to represent their interests in the claims process

Question 4

Describe the progress of a typical claim.

Answer 4

• Brokers tend to be more involved in the claims process than agents
o Some brokers have limited authority to handle claims on behalf of insurers they represent

• Knowledge of typical claim processes help an agent or broker explain them to the insured

• Claims can be declined because the policy does not proved coverage
o Agents and brokers need to understand the basis for the insurer’s decision so as to counsel their clients

Question 5

Explain various legal terms used in insurance claims.

Answer 5

• Insurance claims are influenced by
o Forfeiture (insureds breach a requirement or condition under a policy, causing them to forfeit their right to recover)
o Prescription (the set time within which persons can make a claim under a policy)
o Salvage (the portion of the property not totally destroyed or lost and has some value)
o Subrogation (the legal process by which an insurer is assigned the rights of the insured to recover the amount of the loss from those who are legally liable for it after the insurer has paid the loss)
o Contribution (when multiple insurers cover the same risk, gives the insurer that paid the loss the right to collect from other insurers on a sharing basis)
o Coinsurance (encourages insureds to carry adequate amounts of insurance on their commercial property by requiring them to bear a portion of every loss if underinsurance exists)
o Waiver (the voluntary relinquishment of a known right)
o Estoppel (a bar created when someone, by their action or lack of action, indicates they will not exercise a right they have)