Study 1-The Claims Department and the Insurer

Question 1

A mission statement addresses what a company is about and likely incluse the follwoing three things..

Answer 1

Core strengths
Values
Culture

Question 2

A declaration of core values, principles, and philosophy that a company adheres to and promotes in how it deals with its clients and employees,

Answer 2

Mission Statement

Question 3

A contract, expressed or implied, to repay in the event of a loss. The insured neither gains nor loses.

Answer 3

Indemnity

Question 4

One who investigates evaluating insurance claims makes recommendations regarding the payment of benefits from insurance policies and negotiates payments and settlements. strategies and Goals.

Answer 4

Adjuster

Question 5

An inclusive term encompassing the handling of individual claims and the departmental claims process and procedures. It included the individual decisions made on a claim file, such as assisting experts, making offers, and managing litigation. Claims management may also entail other functions in a broader context and can be tailored to meet the needs of the different and unique claims operations.

Answer 5

Claims management

Question 6

A legal principle calling for the highest standards of integrity on the pair to the insured and the insurer.

Answer 6

Utmost good faith

Question 7

Design to deceive or mislead another
Conscious wrongdoing
Constructive fraud

Answer 7

Bad Faith

Question 8

The legal process by which an insurance company, after the payment of a loss, is assigned the rights of the insured to recover the amount of the loss from those who are legally liable for it.

Answer 8

Subrogation

Question 9

Funds that are set aside by an insurance company for the purpose of meeting obligations as they fall due. Such obligations include liability for unearned premiums and the estimated cost of unpaid claims.

Answer 9

Reserves

Question 10

The chance of loss. Specifically, the possible loss or destruction of property or the possible incurring of a liability sometimes referred to as the subject of an insurance contract.

Answer 10

Risk

Question 11

One who adjusted losses on behalf of the insurance companies but is not employed by any one insurance company.

Answer 11

Independent adjuster

Question 12

An independent professional evaluation of the physical condition and or market value of an item of property

Answer 12

Appraisal

Question 13

A person who, because of their special knowledge, is vested with the authority to determine the real value of property or damages.

Answer 13

Appraiser

Question 14

A federal statute that governs the collection and use of personal information. It states that personal information to be collected must be relevant and that all information that is being collected is being collected, or will be collected must be held in the strictest of confidence.

Answer 14

PIPEDA Personal information protection and electronic documents act

Question 15

A person who hears and investigates complaints and acts as an impartial intermediary between the public and government or bureaucracy.

Answer 15

Ombudsperson

Question 16

Insurance purchased by an insurance company from another insurance company to provide it protection against large losses on cases it has already insured.
Essentially, insurance for insurance companies. A transaction in which one party, the reinsurer, in consideration of a premium paid to it, agrees to indemnify another party the insured for part or all of the liability assumed by the reinsured under a policy of insurance that it has insured. The reinsured may also be referred to as the original or primary insurer or the ceding company

Answer 16

Reinsurance

Question 17

An agreement between an insurance company and a reinsurer. The reinsurer automatically accepts a portion of the ceding company’s liability for a specified class or class of business. Terms of the agreement are set forth therein, for example, premium payments, and loss limits. ect.

Answer 17

Treaty

Question 18

An insurance company that reinsured primary insurance companies

Answer 18

Reinsurer

Question 19

Delivering on claim indemnity payments is accomplished to preserve the following for an insurance company.

Answer 19

Reputation
Integrity
Ability to sustain business

Question 20

Claims management on a broader departmental basis includes the following functions.

Answer 20

Establishing procedures for the day-to-day transactions for claims files
providing administrations support
Establishing a system of records-keeping
Ensuring budget compliance
Aligning operations to overall corporate vision and strategy
Ensuring compliance with regulatory and contractual obligations
Staffing and education of the claims department

Question 21

What is the first occasion for a direct relationship between the insurer and the policyholder?

Answer 21

The claims-handling process

Question 22

What does customer service mean?

Answer 22

If excellent customer service in claims handling is a priority, the company’s service structure will help the claims handler support the stated goals.

Question 23

The insured can sue, alleging bad faith on the part of the insurer. the following adjectives have been used by the courts to describe insurers’ conduct that warrants judicial punishment

Answer 23

Harsh
Vindictive
Reprehensible
High-handed
Oppressive
Malicious

Question 24

For successful strategies, goals must demonstrate the following characteristics.

Answer 24

Be specific
Be challenging
Be capable of being measured.

Question 25

The claims department goals might include some of the following

Answer 25

Manage indemnity payments by ensuring that a certain percentage of collision losses are viewed by an automobile appraiser to control damages Reduce the current average allocation loss expense per file in a certain line of business by 10% Leverage the use of suppliers to help manage claims costs Target an acceptable ratio of opened claims to closed claims every month Reach a customer satisfaction level of a certain percentage Target a suitable audit result for the department to achieve.

Question 26

What does a company's mission statement discuss? a.People and promises b.Values and valuation c.Liability and loss payments d.Core strengths and culture

Answer 26

Mission statements address what a company is about and likely include the following: core strengths, values, and culture. The correct answer is: d. Core strengths and culture

Question 27

What sets one insurance company apart from another? a.Claims philosophy b.Number of managers c.Settlement options d.Balancing strategies

Answer 27

Because policy coverage tends to be similar among insurance companies, what sets one company apart from another is its claims philosophy. The correct answer is: a. Claims philosophy

Question 28

What are funds set aside by an insurance company for the purpose of meeting obligations called? a.Insurance provisions b.Stock c.Capital d.Claims reserves

Answer 28

Claims reserves are monitors of an insurance company's financial strength. They are funds set aside for the purpose of meeting obligations as they fall due. The correct answer is: d. Claims reserves

Question 29

What pair of items are compared to premiums to produce loss ratios? a.Premiums and loss payments b.Capital and indemnity payments c.Indemnity payments and reserves d.Indemnity payments and investments

Answer 29

Indemnity payments and reserves are compared to premiums to produce loss ratios. The correct answer is: c. Indemnity payments and reserves

Question 30

What responsibility does the claims manager have with respect to claims handlers? a.Ensuring they are conducting themselves professionally b.Protecting them from rude customers c.Setting payout authority limits based on their experience d.Overseeing administrative functions

Answer 30

Responsibility for the professional conduct of the claims handlers rests with the claims manager. The correct answer is: a. Ensuring they are conducting themselves professionally

Question 31

Whose primary function is to adjust losses on behalf of the insurance company but is not employed by the insurance company? a.Adjuster b.Direct writer c.Independent adjuster d.Broker

Answer 31

Independent adjusters adjust losses on behalf of the insurance company but is not employed by the insurance company. The correct answer is: c.Independent adjuster

Question 32

What must be taken into consideration when capital purchases are made? a.Efficiency and effectiveness b.Outsourcing expenses c.Amount of income it will generate d.Budget constraints

Answer 32

When capital purchases must be made, price is not the only consideration; it is important to also consider efficiency and effectiveness The correct answer is: a.Efficiency and effectiveness

Question 33

What is the claims department's most valuable resource? a.Computers b.Employees c.Buildings d.Investments

Answer 33

Training and educating employees costs time and money, but it is an investment in an organization's most valuable resource: its employees. The correct answer is: b. Employees

Question 34

Who hears and investigates complaints and acts as an impartial intermediary between the public and government or bureaucracy? a.Umpire b.Government insurance agency c.Ombudsperson d.Insurance magistrate

Answer 34

An ombudsperson is someone who hears and investigates complaints and acts as an impartial intermediary between the public and government or bureaucracy. The correct answer is: c. Ombudsperson

Question 35

What is the name of the protection one insurance company can purchase from another against large losses on cases that the first insurer has already insured? a.Retrocession b.Insurance c.Surety bond d.Reinsurance

Answer 35

Reinsurance is insurance purchased by an insurance company from another insurance company (reinsurer) to provide it protection against large losses on cases it has already insured. The correct answer is: d. Reinsurance

Question 36

Outline typical claims department goals.

Answer 36

Manage indemnity payments: Manage indemnity payments by ensuring that a certain percentage of collision losses are viewed by an automobile appraiser to control damages. Reduce loss expenses: Reduce the current average allocated loss expense per file in a certain line of business by 10 percent. Manage claims costs: Leverage the use of suppliers to assist in managing claims costs. Review ratio of opened to closed claims: Target an acceptable ratio of opened claims to closed claims on a monthly basis. Ensure customer satisfaction: Reach a customer satisfaction level of a certain percentage. Set goals for the department: Target a suitable audit result for the department to achieve.

Question 37

Outline what is taken into account when calculating the average expense per claim for budgeting purposes.

Answer 37

Possible expenses to be included in average claim cost: independent appraisers, engineering and other reports, and independent adjusting fees. Factor in any changes: If changes are foreseen in any category, they are factored into the average cost. Removal of large claims: A very large claim with heavy expenses will be isolated to preserve realistic average expense expectations.

Question 38

Briefly describe the duties of an insurance company's ombudsperson and explain why this person is necessary.

Answer 38

Duties of the ombudsperson: An ombudsperson is a person who hears and investigates complaints. Acts as an intermediary: This person acts as an impartial intermediary between the public and government or bureaucracy. Dispute resolution: This is the person insureds can contact to resolve disputes with the insurer when they believe their claims have not been properly managed or they are unhappy with the outcome of their claims. Provincial regulation: Provincial regulations require insurers to designate someone as a complaints liaison officer or ombudsperson.

Question 39

Aliza is the new claims manager of a busy commercial insurer with a department of 30 people. She has 26 direct reports, making it difficult for her to obtain a clear perspective on the department's overall performance and operations. Since staff range from seasoned veterans to new hires, Aliza would like to catalogue their education and training needs but has not been able to allot time to evaluate them.

Question 40

Briefly explain what type of departmental structure Aliza has inherited and the type of structure that would improve her workload. (5 marks) Answer text Question 1

Answer 40

Current department structure with flat configuration: The claims department Aliza has inherited has a flat configuration (like a single-layer cake). Flat configuration with minimal management: Although the department may have many units operating within it, perhaps each with a unit leader, there are fewer designated managers or supervisors. Flat configuration with no middle management: The flat organizing principle cuts out the middle management layer. Department suggestion of hierarchical structure: A hierarchical structure with layers of management, resembling a many-tiered cake, would improve her workload Hierarchical structure with reporting: Groups of claims handlers report to their respective supervisors, who then report to their managers, who report to a more senior manager or perhaps a director or vice-president. Benefit of hierarchical structure to Aliza: This would reduce the number of staff reporting directly to Aliza.

Question 41

Briefly explain why Aliza wants to evaluate her staff's education and training. Outline the type of training that may be required.

Answer 41

Current skill and knowledge level: Aliza needs to be familiar with the staff's existing skills and knowledge base to identify where enhancement is required. Additional skills: An inventory of the skills and talent of existing staff members provides the basis to determine what other skills should be taught. Education programs: Education programs are focused on needed knowledge and skills. Possible training areas: Aliza may identify areas of need for training in people skills, insurance practices, or updates necessitated by technological or societal changes.

Question 42

Outline the education and training options that Aliza could make available to the claims staff.

Answer 42

Software or online programs: Employees might use interactive software programs or online resources at their leisure. In-class programs: In-class programs and seminars for staff development may be available from both in-house and independent sources. Distance learning programs: Distance learning programs are used to fill a gap when resources are not available in the area or when people need the flexibility of studying on their own time.

Question 43

claims handling generally includes the following key steps:

Answer 43

Coverage analysis Loss reserving process Reporting to others Investigation Evaluation Negotiation and settlement Pursuing closure

Question 44

Processes and procedures are generally adopted in a claims operation to

Answer 44

promote productivity and efficiencies; promote a consistent approach to claims handling encourage a fair and even-handed approach to all claims; reduce the possibility of error; and control expenses.

Question 45

Customer service issues revolve around ensuring that

Answer 45

policyholders are treated with courtesy and respect; policyholders receive help during a time of crisis; claims are resolved as efficiently as possible; and payments are made speedily.

Question 46

The choice of adjuster depends on the following factors:

Answer 46

Complexity Location of loss Specialized knowledge required Certain type of damage Extent of damage

Question 47

Although specific guidelines vary, claims handling generally includes the following key steps:

Answer 47

Coverage analysis Loss reserving process Reporting to others Investigation Evaluation Negotiation and settlement Pursuing closure

Question 49

What is saved on expenses may be lost when

Answer 49

claims are overpaid; exaggerated claims are not controlled; or fraudulent claims are not identified.

Question 50

The reasons for personal visits vary, and some are derived from the company’s claims philosophy. Situations meriting personal visits may include the following:

Answer 50

Complex claims that require special attention Severe losses Losses that are probably not covered under the policy Losses where there is a possibility of subrogation A commitment to a high level of customer service Potential fraud

Question 51

Generally, systems of organization can be classified as

Answer 51

centralized claims operations; decentralized claims operations; or hybrid claims operations combining both centralized and decentralized systems or having other unique features.

Question 52

Determining staffing requirements involves reviewing the following:

Answer 52

Book of business written Type of claims anticipated Number of claims anticipated Level of customer service

Question 53

Budgets must consider the following:

Answer 53

anticipated rise in claims frequency; locations at which claims are taking place; jurisdictional considerations; legislative changes; and other relevant information.

Question 54

There is a range of learning and knowledge management approaches available, including the following:

Answer 54

Learning by doing Self-paced learning Interactive elearning Online video tutorials Coaching and mentoring Classroom instruction Case study approach

Question 55

Learning by doing Self-paced learning Interactive elearning Online video tutorials Coaching and mentoring Classroom instruction Case study approach

Answer 55

Customer service Communication Listening Empathy Diversity and inclusion Management systems Computer software Problem solving Time management

Question 56

Education programs are focused on needed knowledge and skills. Among insurance-related issues, the topics include the following:

Answer 56

Policy contract analysis Insurance law Knowledge of the insurance industry More generic topics of interest include the following skills: Customer service Communication Listening Empathy Diversity and inclusion Management systems Computer software Problem solving Time management