Chapter 7 Management of expenses Flashcards Preview

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Flashcards in Chapter 7 Management of expenses Deck (26)
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1

Identify five elements of an insurers claim strategy

•Corporate claims philosophy

•Clear claims procedures including reserving practices

•Quality management system

•Efficient use of information technology

•Outsourcing if appropriate

2

Identify eight key tasks of a claims manager

•Ensure strategic direction followed

•Set business plans and objectives

•Sufficiently senior

•Get resources for department

•Links with other departments

•Implement appropriate computer systems

•Maintain best practices

•Aware of underwriting practice and reserving

3

Identify three internal claims costs that need too be controlled

•Staff salaries

•Outsourcing costs

•IT provision

4

Identify three elements of the costs of claims which must be managed

•Payment of claims

•Subrogated recovery

•Reinsurance recoveries

5

Identify five ways a claims manager manages and motivates staff

•Planning tasks and responsibilities

•Senior point of referral 

•Provide leadership

•Control and monitor progress

•Coordinating stand training

6

What is claims leakage?

The amount by which actual settlement exceeds the amount that would have been required to make an acceptable settlement under the policy

7

Two principal ways claims leakage occurs

•Pay claim that not valid

•Over payvalid claim

8

Three reasons why an insurer might make an ex gratia payment

•EXCLUSION IS BORDER LINE

•HARDSHIP WOULD BE CREATED

•PRESERVE GOOD BUSINESS RELATIONSHIPS

9

14 items that should be checked to identify whether claims are being over paid

•Cause of loss within policy

•Date of loss in policy dates

•Claim notified within time limit

•Sufficientproof of loss

•Correct excess applied

•Under insurance applied

•All recoveries made

•Subrogation has taken place

•Contribution taken into account

•Fees paid reasonable

•Depreciation accounted for

•Repeat claim?

•Insured damage expected

•Settlement appropriate

10

What is the difference between soft and hard claims leakage

Soft leakage is hard to identify e.g. fail to adjust for wear and tear

Hard leakage is easier to ientify e.g failure to deduct an excess 

11

How do you calculate claims leakage

What was actually paid

minus

 what should have been paid

12

Six ways of reducing claims leakage

•MORE SENIOR MANAGEMENT FOCUS

•EHNANCE EMPLOYEE SKILLS

•IMPROVE SUPERVISION OF STAFF

•QUALITY MANAGEMENT

•IT CHECKS

•IMPROVE CULTURE

13

Three reaons why an insurer monitors their financial performance

•REGULATOR NEEDS TO ENSURE INSURER SOLVENT

•HAVE TO PREPARE ANNUAL REPORT AND ACCOUNTS

•MAINTAIN MANAGEMENT CONTROL

14

Regulator that monitors financial status of insurer to ensure policyholders are proteted

Prudential Regulation Authority

15

Regulator who monitors insurance market to ensure market functions well and consumers are treated fairly

Financial Conduct Authority

16

Three operational objectives of FCA

•Consumer protection

•Integrity

•Competition

17

Three pillars of FCA system

Firm Systematic Framework

     -Assess firm's conduct risks

Event-driven work

-  Impact of emerging issues 

Issues and products 

=   Thematic review of certain product eg PPI

18

Two reasons why insurers need to reserve for claims as they do not know what they will be?

•There is a time lag between the incident occurring and it being notified to the insurer

•There is a time lag between notification and settlement

19

A reserve allocated to an individual claims that has been incurred and reported to insurers is known as?

An outstanding claims reserve

20

A reserve estimated by actuaries which is put aside in insurer's account to cater for the costs of paying claims that have been incurred but not reported to insurers is known as?

IBNR (Incurred But Not Reported)

21

A reserve estimated by actuaries which is designed to cover potential shortfalls in outstanding claims reserves is known as>

IBNER (Incurred But Not Enough Reported)

22

A reserve required by law to smooth fluctuations in loss ratios is known as?

Equalisation reserves

23

A reserve to cover large losses from a catastrophe such as an earthquake is known as?

Catastrophe reserve

24

An additional reserve to cover the risk that a loss exceeds the uneraned premium reserve is known as?

Unexpired risk reserve

25

A reserve set on a claim which had been closed but has now been reopened as the circumstances of a personal injury claimant have changed is known as?

Reopned claims reserve

26