Week 5 Essay question Flashcards
What is week 5 and where is it?
The insurance claims process and its at your work (starting from the side part you get dropped of at)
What do you talk about in essay 5?
Intro
What is the insurance process
(spiel)
Steps in insurance claims
(claims prevention, claims handling and claims reserving, also talk about NAMS)
Claims management
(soft fraud, hard fraud and the triangle of pressure and opportunity and rationalisation and what it is)
Big tech in claims process
(Drones, Big data and AI and blockchain
Why it matters
The insurance process, what might you talk about?
This is where the customer/ policy holder contacts insurance to see whether or not they keep true to their policy and payout in the claim, you can talk about N (Notification such as phoning or messaging) A (Whether or not the claim if fraudulent and to see if loss covered in policy) M (management and quantification is after acceptance where the insurer calculate the value of the loss) S (settlement and closure, this is when the claim has been made and has successfully been paid out CRAS (Claims reported and settled)
What will you talk about in the fraud triangle?
The main parts of the fraud triangle are pressure (why did they carry out with the fraud was it financially driven?) Opportunity (This is the attempt to carry out the fraud without being caught, insurers hire fraud handlers to spot these) and Rationalisation (the attempt on behalf of the person committing to fraud and how they try to escape the guilt of fraud)
You could talk about to avoid fraud insurance could teach people the consequences of being caught and inform the public of penalties and the illegality of it.
In the claims process what else could you add to the essay?
The stages of the claim IBNR (Incurred but not reported), RBNS (Reported but not settled) and CRAS (Claims reported and settled)
You could talk about claims conflict that insurance want to minimise fraud, try price and balance risk and keep policy holders and regulators happy
The three ratios: Claims ratio (The premiums in to payouts in claims), The expense ratio (total cost of operating expenses) and combined ratio (overall profitability by combining Claims and expense ratio)
What might you talk about in challenges in claims management?
Soft and hard fraud
what could you talk about in soft and hard fraud?
Soft fraud is not direct deliberate fraud, it is more an exaggeration, a fabrication of the truth in order to receive a larger payout, for example if someone house was robbed, the policy holder may inflate the value of what was stolen rather than true to its value.
Hard fraud is direct and deliberate, it is often done with the intent to profit from insurance, for example paying someone money to steal from you to then report to the insurance or to set your house on fire deliberately.
Soft fraud can be easier to catch as you can find inconsistencies within the stories, however hard fraud may require more experts such as a forensics team which can cost a lot more money and could cause serious claims leakage.
What might you talk about in claims prevention, claims handling and claims reserving?
Claims prevention you can talk about an insurance companies ability to underwrite well can reduce the amount of claims, this could be done for example through using smoke detectors in homes which causes less of a fire risk.
Claims handling to prevent claims leakage, you can use loss adjustors who can asses the cost of a claim, as well as using their expert knowledge and past data to guide the insurance group on what next to do.
Claims reserving an insurance company may put aside large amounts of money, this can be beneficial is the risks are more unknown however this typically will not account for risks where severity is high and frequency is low, the cost is high but past data doesn’t allow for them to value the risk, as well as the risk could arrive sooner than anticipated.
