Study 2 Flashcards
(32 cards)
In a claims operation, why are processes and procedures generally adopted?
a. To measure expenses
b. To promote productivity
c. To develop a good working environment
d. To conform to management’s expectations
b. To promote productivity
Processes and procedures are adopted in a claims operation to promote productivity, reduce the possibility of error, and control expenses
What duty is part of a claims examiner’s responsibilities on a file?
a. Checking with underwriting on the new risks the insurer has accepted
b. Making sure the adjuster assigned to the file is experienced
c. Analyzing all reports generated by the loss adjuster
d. Determining final settlement amounts to be issued to insureds
c. Analyzing all reports generated by the loss adjuster
Examiners are expected to analyze all reports produced, determine further action, ensure the file is well documented, and ensure policy conditions are appropriately applied.
The average adjusting method refers to what type of process?
a. Reserving
b. Adjusting
c. Settling
d. Recovering
a. Reserving
Many insurers use an average adjusting method for simpler claims. Once the claim is recorded on the computer system, a reserve is automatically entered.
Loss adjusters are involved in what activity?
a. Investigating and evaluating a claim
b. Making decisions on risk acceptance
c. Collecting premiums
d. Selling insurance policies
a. Investigating and evaluating a claim
An adjuster is one who investigates insurance claims, makes recommendations regarding the payment of benefits from insurance policies, and negotiates payments and settlements. Claims handling generally includes investigation and evaluation, among other key steps.
What is the effect of appropriate management of claims files?
a. Reduces overpayments per file
b. Decreases insureds’ satisfaction rating
c. Cuts down the number of claims advisors needed
d. Lowers indemnity payments
a. Reduces overpayments per file
Appropriate management of claims files should reduce overpayments per file.
What type of claims merit field investigations?
a. Complex claims
b. Low-value claims
c. Non-injury automobile claims
d. Windstorm claims
a. Complex claims
Situations meriting personal visits may include complex claims that require special attention, severe losses, losses that are probably not covered, when there is a possibility of subrogation, when commitment to a high level of customer service is needed, and cases of potential fraud.
What do service-level agreements between independent adjusters and insurers deal with?
a. List of acceptable personnel and hours of operation
b. Reporting requirements and fee structure
c. Method of writing reports and number of claims handled daily
d. Type of claims management system used and corporate structure
b. Reporting requirements and fee structure
A service-level agreement is likely to cover reporting requirements and agreed fee structures for services.
How often do insurers require reports from independent adjusters?
a. Every month
b. Every 60 days
c. At the adjuster’s discretion
d. As directed by the insurer
d. As directed by the insurer
Insurers outline reporting instructions in the service-level agreement to correspond with their established protocol for receiving reports.
What has the rapid evolution of information technology systems done?
a. Made it possible to integrate the insurance company’s database system with its claims operations
b. Made it possible for insureds to update their own claims
c. Made it difficult to track claims data precisely
d. Made it difficult to find adjusters who are willing to use these new technologies
a. Made it possible to integrate the insurance company’s database system with its claims operations.
The rapid evolution of information technology systems has made it possible to integrate the insurance company’s database system with its claims operations.
What do claims management database reports that generate loss runs or reports identify?
a. Reserves by claims type
b. Adjuster’s payout authority limit
c. Reserves set above the $5,000 threshold
d. Claims with multiple claimants
a.Reserves by claims type
Claims management database reports can generate loss runs or reports to identify claims with negative reserves, reserves by claim type, reserves by division, and duplicate claims and payments.
In claims handling, briefly explain what triaging is and how it works.
Define a modest loss: In establishing the triaging process, the company must define what it considers modest losses.
* Assignment of claims to adjusters: Based on such parameters, claims are assigned to independent or staff adjusters, or handled over the telephone.
* Assignment of claims depends on the insurer: These distinctions differ among the various insurers and depend to some degree on the timing and availability of claims personnel.
* Telephone adjusters: Minor claims with no coverage issues are often assigned to telephone adjusters.
* Triaging stage referrals: At the triaging stage, before the claim is assigned to a loss adjuster, the policyholder may be referred immediately to a repair facility to get repairs underway without delay, or he or she may be referred to an appropriate appraiser.
Briefly describe why an insurer would outsource claims handling to independent adjusters.
- Location based volume: The insurer doesn’t have a sufficient volume of claims to justify hiring a staff adjuster in some location.
- Employee workload: Incoming claims overwhelm employees during a busy claims period for the insurer.
- Internal resources: Internal resources are insufficient to cope with the volume of claims without outside help during vacation time periods or periods after storms and other such claims emergencies.
- Expert opinion: The insurer requires expert outside assistance for some specialty lines of business.
- Claims department: An insurer who is new to a region or nationally doesn’t have a suitable claims department established and needs to rely on independent adjusters to act as its claims field staff.
Outline the criteria used in determining whether to retain or destroy claims files.
- Permitted by law: Claims files, in most circumstances, are disposed of as soon as the law permits.
- System to delete files: Systems should be in place to identify and cull files ready to be destroyed.
- Set periods of time to retain files: Obligations created by tax laws, laws governing corporate conduct, and insurance litigation dictate that insurers must retain files for certain periods of time.
- Future recovery opportunities: Certain types of claims should be retained to allow insurers to capitalize on possible recoveries sometime in the future.
- Privacy laws: Privacy laws dictate how and when certain types of personal information must be destroyed.
An agreement signed by the policyholder after a loss, agreeing that the investigation and determination of the amount of damage by the insurance company shall not be construed as an admission of liability. It is used when the insured is in violation of a policy condition and there is a question as to whether or not the company is liable for a loss but it wishes to investigate the loss and determine the amount of damage.
non-waiver agreement
An organization of insurers or reinsurers through which particular types of risks are written with the premiums, losses, and expenses shared in agreed-upon amounts among the insurers belonging to the pool.
pool
The remaining value of property after severe damage by fire or other peril. The overall loss is reduced by the salvage value. Undamaged property may be quite saleable, and some property may be only partially damaged, thus repairable and then saleable.
salvage
(1) Loss of all the insured property. (2) A loss involving the maximum amount for which a policy is liable.
total loss
Property damage loss that is treated as a total loss because the cost of repairing the damaged property exceeds the value of the property or the limit of the insurance.
constructive total loss
A legal wrong arising from a duty fixed by law. A breach of this duty that causes injury to persons or property is repressible by legal action for damages. Liability for tort involves a private or civil wrong or injury and is distinct from that under contract in that the duty is owed to people, generally, rather than to a specified individual.
tort
The fair market value of property, taking into account factors that might augment or reduce the value of the property in question. Actual cash value (ACV) is usually calculated in one of three ways: (1) cost to repair or replace less depreciation; (2) fair market value; or (3) consideration of all relevant evidence of the value of the damaged property.
actual cash value (ACV)
A method of resolving disputes between parties whereby impartial, neutral persons are chosen by the parties in dispute to determine their rights and/or obligations. The parties agree in advance to abide by the arbitrament. Each party has a chance to be heard, issues are examined, and a settlement is developed. The settlement can be final and binding.
arbitration
Refers to any situation that results in the overpayment of a loss or in other excessive payments made on a claims file.
file leakage
An insurer’s notification to an insured that coverage for a claim may not apply. Such notification allows an insurer to investigate (or even defend) a claim to determine whether coverage applies (in whole or in part) without waiving its right to later deny coverage based on information revealed by the investigation. In reserving its rights to later deny coverage, the insurer is merely telling the insured of its concerns that the claim, in whole or in part, may not be covered under the policy, pending further investigation.
reservation of rights letter
An oral or written discharge from an obligation, duty, or demand. To let go of, or give up a legal claim or right to one against whom it could be enforced.
release
