10 Claims Handlingn Flashcards

Question

Process of claims handling - Step 2 Advising Insurers (ECF)

Answer 1

Can either submit paper or electronically. Still now, not all claims can be handled electronically ie. 'out of scope list' Electronic Claims File (ECF) - broker can submit claim to insurers internationally. Happens prior to XCS submission. Two parts of ECF: 1. CLASS - data messaging system / database 2. Document repository To use ECF Broker creates a Unique Claims Reference UCR which links to the UMR. Broker sets up claims data using UCR and UMR as references and adds information about the claim. Then the broker adds documents in the Document Repository. The CLASS system automatically sends to leaders (Lloyds and company) first. Leaders can see each others comments on the system and view the documents. Leaders then either agree or query it. Broker can see responses. The agreement parties can also request more information, appointment of an expert, note the info shared, etc. For company markets, once the leader releases the message it sends to all company markets. No involvement of XCS. For Lloyds, sometimes a second syndicate sees first, prior to it going to XCS XCS then take the file and inputs data into its system, and sends to syndicates overnight The Electronic Claims System has the ability to change agreement parties if there is a conflict of interest

Answer 2

Once broker identifies which insurers it needs to notify, it creates a paper file with information - copy of MRC, endorsements, binding authority if relevant For company market agreement parties, broker contacts them. They should've already sent an electronic message For Lloyds syndicates, sometimes no electronic message will be sent. Leader considers file, asks questions, appoints experts if required, may decline claim Here, Lloyds leader does not need to enter claims data in system yet, but can if it wants to. Broker then sends file to XCS who enters data for Lloyds markets. All agreement parties consider conflict of interests

Answer 3

Organisational conflict - pass agreement rights onto next insurer. Broker makes note and sends requests to new combination of agreement parties Individual conflict - Chinese Walls/Ethical Walls. Seek to manage conflict internally for eg have separate files and separate authority for who can look at what

Answer 4

Broker still uses an electronic message for company markets, supported by paper file Once approved by company market leader, data submitted by broker is converted onto electronic message which is sent to company markets system overnight For Lloyds', broker does not have to send electronic message. Instead, when XCS receives the file, they input the claims data and sent to Lloyds syndicates overnight

Answer 5

For paper/email, broker creates file and carries/sends around insurers. If outside of London, must be via email. For paper, Insurers wait turn to see paper file. For email/electronic, this is simultaneous. For electronic, all data/docs are held electronically and can be accessed simultaneously if using CLASS system - no-one needs to be in London. For paper, file is taken around during work house. For email, can be looked at any time. For electronic, available almost always. For paper, files can get lost. Not an issue with email/electronic files. For electronic, once uploaded to the system, cannot be deleted. For paper, there might be several claims files going around. For email, this is centralised in insurers own systems. For electronic, also centralised. For paper, broker has to physically transport file around. For email, much easier to send to next agreement party. For electronic, this is automatic. For paper, insurers may want to keep file for a while to review. For email, information can be sent over and then discussed once reviewed. For electronic, similar to email, broker can attend meeting knowing insurer has already seen the file. For paper, a frequent medium for reading information. For email/electronic, scanned documents usually take longer to read

Answer 6

Broker uploads documents for all insurers to see Sometimes insurer has documents from their experts which they can upload but brokers cannot see

Answer 7

Claim payment - can have interim payment of indemnity Fees - expert fees paid throughout the claim process

Answer 8

14 For USD, claims can only be paid in USD if premium was paid in USD

Answer 9

Only be paid after receiving a receipt or similar document. Stops repeat claims being paid.

Answer 10

"Claims will be settled in a reasonable time" now subject to English Law. Insured able to pursue insurers for damage for late claims payment any time up to 12 months after claim was partially/fully paid.

Answer 11

Company - agreement automatically triggers movement from their account Lloyds - XCS triggers movement of money

Answer 12

Not all policies are policies of indemnity eg personal accident concept of indemnity - putting insured back to same position as before loss betterment - putting insured in better position than before loss (eg replacing an old machine with a brand new one) if no language included that deals with betterment, standard principle of indemnity applies and negotiation will have to take place Policy features which reduce claim payment: policy limits, sublimits on perils, deductibles/excess also consider underinsurance - claim payment reduced by equivalent proportion

Answer 13

Insurer stepping into shoes of insured's shoes POST payment of a claim to go against a third party

Answer 14

Failure to obtain a recovery where one was potentially available. HARD - forgetting to apply a deductible SOFT - failing to obtain a recovery where one was available / paying more in experts fees than necessary because of poor management, Fraud! Failure to manage leakage = impact on profits

Answer 15

Insurers covering same subject-matter & same risk Use 'independent liability' method to calculate liability - work out what each insurer would have been liable for if one risk

Answer 16

Most dominant cause of loss If policy covers one cause, but silent on another, claim would be paid. If second excluded, not covered.

Answer 17

First amounts of loss paid by insured Must monitor this to avoid claims leakage

Answer 18

If insurer is seeking advice on claim coverage, this is called Reservation of Rights ROR. Should be transparent with insured. ROR is issued due to legal issue of estoppel - an insurer might be estopped from paying a claim if they lead the insured to believe there's no problem

Answer 19

Excessively documented claims file Pressure to settle Reluctance to answer questions Nonsense Example of claims leakage!

Answer 20

FCA handbook - article re claims handling. Distinctions between consumer vs commercial clients 8.1.1. Insurers must handle claims fairly, promptly, provide guidance on claims submission, not unreasonably reject claims 8.1.2 rejection of a CONSUMER claim is unreasonable, except for fraud, if: non disclosure of a fact that was material was not reasonable to disclose, non-negligent misrepresentation of a risk, breach of warranty/condition unless claims are connected insurers subject to stricter rules when dealing with consumer insureds - less ability to invoke non disclosure/misrepresentation 8.8.3 Conflicts of interests Insurers must make effort to identify and manage conflicts of interests fairly. Disclose any potential conflicts of interest to insured at beginning Would declining to act be better than acting? 8.3.4 If firm cannot deal with claim, should forward notification to insurer asap or inform insured immediately it cannot deal with notification (ie this is normal circumstance.. inform insurers asap of any claims!)

Answer 21

Insurers taking into account sophistication of their clients

Answer 22

Uk regulation requires firms to have adequate processes in place to minimise financial crime

Answer 23

Regulated differently depending on State In california, claims handlers have to be aware on: timelines for acknowledging receipts of claims/updating insureds. Must provide info if claim is denied. Annually, claim handlers have to be certified on this

Answer 24

prohibiting transfers to countries freezing assets of a company / individual / government

Answer 25

HM Treasury / US Department of Treasury / Office of Foreign Assets Control OFAC / Crystal

Answer 26

Final point in complaints for an insured against insurer. If insured unhappy with their decision, can go to litigation/arbitration. All other legal proceedings must be withdrawn prior to approaching Free, independent service. Membership compulsory for all authorised firms including intermediaries Operation of FOS found in FCA handbook under Disputes Resolution Complaints Sourcebook DISP

Answer 27

FCA requires all insurers to have a well documented complaints process which must clearly tell insureds: - where they should complain to - timescales a complaint will be handled - about the existence of the FOS - reminding that referral to FOS does not remove their legal rights

Answer 28

Consumer Microenterprise (fewer than 10 employees and turnover of EUR 2m) - EU defined term Charities with annual income under GBP6.5m Trustees of trusts up to GBP 5m Small businesses with annual turnover less than GBP 6.5m and fewer than 50 employees OR balance sheet of less than GBP 5m Guarantors

Answer 29

earliest of 6 months of date firm's letter advising final decision six years after event claimed about three years after complainant knew or should have known they had reason to complain if later, firm can object and say it is 'time-barred'

Answer 30

All authorised firms must comply with FOS FOS requests all information Aims to reach conclusion within three months Both parties have right to appeal initial outcome. If so, one panel member will make a final decision FOS acts fair and reasonable, following FCA guidelines and good practice.

Answer 31

Money award - maximum is GBP375k for complaints referred to FOS about things that happened after 1 April 2019. GBP 170k to complaints referred to FOS about things that happened before 1 April 2019 FOS can recommend other figures but not binding on firms. If referral before April 2022, figures can be lower Directions Award - telling firm what they need to do to make things right for customer. either pay claim, apologise to customer etc. If complainant accepts, it is binding on respondent. if they reject it, they are not bound and can pursue matter in court.If not respond to letter it is treated as a rejection.

Answer 32

General levy paid by all firms case fee payable by firm to which complainant relates

Answer 33

own department, acts as interface between FOS and MGAs. Only handles complaints by those eligible for FOS. Works to resolve complaints prior to FOS.

Answer 34

Lloyds is a member of the FSCS. Levy is paid out of central fund. Protects insureds against insurers who cannot pay valid claims General rules - 100% protection for compulsory insurances, indemnity insurances, long term insurance (pension/life), and certain injury/sickness claims - 90% protection for other types of insurance

10 Claims Handlingn Flashcards

(60 cards)