Valid Claims And Claims Settlement Flashcards
When two insurance policies cover the same risk and they both contain a contribution condition, how would a claim usually be settled?
Both policies would contribute a proportionate amount.
Under the standard fire insurance policy, the pro rata condition of average requires the sum insured, at the date of loss, to be what minimum percentage of the value at risk to obtain full settlement?
100%
A consumer used the services of an intermediary to effect a household insurance policy. In the event of a claim, who is legally responsible for proving the amount of the loss?
The consumer in all cases
What settlement method would normally be used for a valid claim under a business interruption
Payment of money
When a motor insurer takes advantage of contribution rights, from whom can some of its claims settlement costs be recovered?
Another insurer
A specialist motor insurer has recently experienced a high level of fraudulent claims. Which of its policyholders could suffer as a result of this fraud?
All PH
Application of the arbitration clause might occur under a fire insurance policy as a result of a dispute between the insurer and the insured regarding the
Amount of this claim
An insured is subject to implied duties when
Submitting a claim.under insurance policy
Upon becoming aware that a fraudulent claim has been made, what is the earliest point from which an insurer may terminate the insurance policy?
Inception of policy
When is an amount initially reserved in the claims process?
Claim is notified
Why would an insurer register claim details on MIAFTR2?
To help prevent fraud
Which insurance policy condition can an insurer invoke to recover all of its outlay in respect of a claim?
Subrogation
The purpose of the Claims and Underwriting Exchange is to
Hello detect fraud claims
Under an employers’ liability insurance policy, delays often occur between a claim being notified and final settlement. To ensure adequate funds are available to ultimately pay the claim, an insurer will rely on
Reserving
An insurer can terminate an insurance policy without refunding premiums if the policyholder
Fraud claims
The insured has many duties after uninsured loss occurs in connection with property insurance what are some examples
At the insured expense provide all information and assistance to the insurer. Notify the insurer as soon as possible. Take reasonable steps to minimise the loss. Where appropriate notify the police as soon as possible
What is the formula for contribution
Sun insured divide total sum insured = insuers liability
What is the formula for average
Sum insured Devide value at risk = claim payment
When might the average condition apply
In the event of under insurance like property
Who is eligible to claim compensation from the motor insurance bureau
Pedestrians injured by vehicles which failed to stop and I never traced. Hit and run cases
What rights does the insurance act 2015 give an insurer when it receives a claim that turns out to be fraudulent ?
Reject the claim. Recover any payments from the insured it has already made in respect of that claim. Refuse all claims made after the fraud claim. Give notice to the insured that the insurance contract is terminated from the time of the fraud claim. Retained the premium at its discretion if the contract is terminated
What is meant by onus of proof
It is the expression used to describe the duty imposed on an individual to produce evidence to prove what has been stated or affirmed is true
What does the insured have to prove when making a claim
That an insured peril arose. The financial amount of the loss
What facts must an insurer check when establishing whether a claim is valid
The cover was in force at the time of the loss. The insured is named in a policy. The peril is covered. Reasonable steps to minimise the loss. Conditions and warranties have been complied with. The principle of utmost good faith was originally complied with. No exceptions are appropriate. The value of the loss is reasonable
The main imply duties imposed on the insured on the occurrence of the insuered which might give rise to a claim
Act as though uninsured and try to minimise the loss. Advise the appropriate authorities when necessary. Prevent the loss from spreading. Not hinder the insurer in the event of the claims investigation
What is the purpose of the claims form
Establish whether the insured is entitled to indemnity under the policy.
Provide sufficient information to permit the insurer to process the claim. Enable the insurer to assess the potential claim amount. Enable the insurer to consider whether a third-party claim is likely. Enable the insurer to consider whether any rights of subjugation or contribution are likely. In motor insurance it is called a accident report form
What is the definition of contribution and how is it calculated
Contribution is the right of an insurer to recover part of a claim payment where two or more policies cover the same interest the same risk and are in force when the loss occurs.
Sum insured Devide by all policies X Loss = the insurers liability 
Contribution gives an issue about the right to approach of their insurers simile liable for their share of the claim
What is the formula used when calculating average
Sum insured Devide Value at risk X loss = claim payment
Under which two agreements does the motor insurance bureau operate
Uninsured drivers agreement. The untraced drivers agreement
What are the five possible ways a claim may be settled
Payment of money. Paying for repairs. Replacement. Reinstatement. Payment to a third-party
Why are claim reserves important
Financial statements must be submitted to the appropriate regulator. They impact on premium rates
What are the three main facilities available for fraud detection in the insurance industry
Claims and underwriting exchange. Art loss register. Motor insurance Aunty Fraud and theft register MIATFR2
Valid, invalid and partially met claims
The insured responsibility to prove that they have a valid claim by proving that an insured peril arose and the amount of the loss
Valid, invalid and partially met claims
The insurer has its own responsibilities to ensure that cover applies, the one making the claim is entitled to indemnity, to establish that all conditions have been complied with
Valid, invalid and partially met claims
A valid claim may only be partially Met if the sum insured limit of liability is less than the claim, an average clause operates or if an excess applies
Implied duties insured
Acting as if uninsured, notifying appropriate authorities, taking steps to prevent a loss from spreading, not hindering the insurer in investigating claim.
On being advised by the insured of an incident, the insurer usually issues a claim form for completion this includes…
A number of questions, the nature of which will depend on the class of insurance and is a fairly lengthy document. In addition certain supporting evidence is required like a doctor certificate for a sickness claim
The claims form
 The insurer must check the completed claim form against to cover provided by the policy and is satisfied they must and check that the value claimed is reasonable
Contribution
Contribution is the right of an insurer to call on other insurers similar but not necessarily equally liable to the same insured to share the loss of an indemnity payment.
The principal is always modified by contribution condition which in effect requires a short clip proportionately from each insurer
The application of average
In cases of under insurance the insurer will only pay a proportion of the loss based on the relationship between the sum insured and the full value of the risk insured. Sum insured Devide full amount at risk X Loss
The subrogation condition
Modify the common law right of the insured to recover against a liable third-party allowing the insurer to assume those rights.
Subrogation gives the insurer the right to pursue recovery from a third-party or more often their insurers
The arbitration clause
Provided that liability is admitted under the policy this clause allows any dispute over the amount to be referred to arbitration
Alternative dispute resolution
Under the civil procedure rules, courts have a duty to encourage the parties to a dispute to use alternative dispute resolution ADR
What is a mediator
Facilitate discussion between the parties with the aims of aiding understanding and reaching an agreement
What is a consolidator
They make recommendations as they lead the parties to a settlement
ABI memorandum of understanding
Subrogated motor claims certain insurers have agreed not to ask for contribution from other liable insurers in certain circumstances like personal effects damaged in a motor accident
Motor insurance bureau uninsured drivers agreement
Is designed to settle court judgement awarding damage for third-party personal injury unlimited and all third-party property damage up to £1 million where there is no insurance policy in force
Motor insurance bureau untraced drivers agreement
To provide compensation to an accident victim in respect of death or injury where the driver is on traced, provided it can be established that the untraced motorist would be liable to pay damages
What is a common way to settle a claim to the insured or third party in liability claims
Payment of money
In motor insurance what is the common way to settle a claim
Cost of repairs
Damaged or lost goods what is the claim settlement
Replacement option
In the case of extensive damage or complete destruction, insurers can arrange to reinstate by taking control of the repair building themselves
In liability cases the payment is not paid to the insured but to the third-party
Third parties right against insurance act
Gives a third-party rights against an insolvent insured insurer where they have a claim against that insured
When the insurer pays for the total loss of an item under a property or motor policy they acquire recovery rights arising out of the subject matter of insurance they become entitled to receive the benefit of salvage
Reserving process
On receipt of a claim the insurer will endeavour to place a realistic estimate on it to ensure that sufficient funds are reserved to meet the expected claims costs. This is important for accounting purposes and premium setting
Methods of claims recovery
Subrogation and contribution. Where an insurer has settled a claim and then the lost or stolen item is recovered the insurer has the right to the property although they were often give the insured first refusal on it in return for the payment of the claim settlement
Who deals with fraud prevention
Fraud bureau, the insurance fraud investigations group, the insurance fraud register
IFB IFIG IFR
What is the claims and underwriting exchange
It is a database containing information on personal lines claims enabling subscribing insurers to check the true claims history of individuals
What is the Art loss register
Is a collaboration between insurers and the art world designed to increase their recovery rate of stolen art and antiques and to make the resale more difficult
The motor insurance Anti Fraud and theft register contains details of…
MIAFTR2
All total loss and theft claims helping insurers spots Duplicut claims on the same loss
The motor insurance database contains details of…
MID
All registered vehicles in the UK and their insurance details
The claims handler has a role to play in identifying Fraud bye…
Bringing their experience to bear in considering unusual aspects of a claim or in spotting inconsistencies. Increasing use of technology and artificial intelligence in particular in assessing and processing claims
Paying fraudulent claims impacts
The insurer raising premiums for all policyholders and temps the fraudulent claims to make a claim again in the future
