Flashcards in Study 5: First Notice of Loss Deck (19)
Describe the relationships between the loss adjuster, the insured and the insurer in the loss adjustment process. (1)
-The first notice of loss inserts the loss adjuster into a web of insurance relationships that begin with the two parties to the insurance contract. (Insured and insurer)
Define Third party (1) and Intermediary. (1)
Third party - A party outside the contract who claims the insured is liable for their loss.
Intermediary - Agent/broker negotiating insurance or reinsurance contracts for another
What are the steps in the claims process? (6)
-Insured party reports the loss to broker, agent, or insurer call centre or via website/mobile app.
-Claims handler records preliminary info and ask for details, or insured may complete questionnaire on website or mobile app.
-Claims info is reviewed by claims handler or A.I for the following:
---Which policy or policies apply to the property?
---Does policy period cover loss?
---Is cause of loss potentially covered?
-Claims handler identifies any possible coverage issues that require further investigation and notify insurer.
-If broker is involved, they may accept loss report and pass it along to insurer.
-A loss adjuster is assigned to claim and they proceed to next steps.
What are the steps in the claims process once a loss adjuster is assigned? (7)
-Verify the policy coverage
-Investigate the loss
-Evaluate and assess damage
-Negotiates as necessary or denies claim
-Arrives at settlement
-Pays the claim
What are the key functions within the claims process? (4)
Key functions within the claims process do not necessarily occur at separate steps and tend to overlap; an example is the policy contract analysis. Other examples include:
-Investigate to gather required info and document loss
-Evaluate the amount of the damage
-Negotiate and agree upon value of insured damage
-Settle the loss
Loss reporting process - what happens when a policyholder reports a loss (1) and what is the general process an insurer/claims handler should follow when receiving a first notice of loss? (5)
-Sets in motion a chain of activities that involve communicating with the insured promptly, determining whether the loss is covered under the policy,and initiating the claims process.
-Consumers demand quick and efficient ways to report claims, some insurers use A.I to speed claims resolution.
-Some insurance companies operate call centres to rake the FNOL directly from the insured, eliminating the need fir the broker.
-The insured may not be the one who reports the loss, instead it may be someone else who will benefit from the policy. The initial loss report should record who actually reported the claim along with their relationship to the insured.
-An insured may have several policies, the claims handler must ensure they choose the relevant one for the loss, and that the loss falls withing policy period and insuring agreements.
-The initial loss report must reach the insurer as soon as possible. it must contain details of the loss and the report itself so the insurer can quickly assess seriousness of loss.
Loss reporting process - In what ways may an insured report a claim? (4)
-Call or visit the offices of the insurer, agent or broker to report the loss.
-Email the broker, agent, or insured with details of loss.
-Use a web-based form provided by insurer or broker.
-Use an app on the insureds smartphone, tablet, or computer.
Loss reporting process - What is the brokers role when receiving a first notice of loss? (2)
-Brokers who take FNOL must know the loss procedures for all the insurance companies they do business with.
-There role is to monitor the progress of the claim and to advocate on the insured's behalf when the insured may have questions about the claim.
Loss reporting process - What happens once the claim is assigned to an in house adjuster or independent adjuster? (4)
-The date of assignment must be recorded.
-If assigned to independent adjuster, they submit a acknowledgement of claim to confirm the assignment has been received.
-The independent adjuster then sends a prelim report as required by the insured, usually within 48 hours.
-A reserve amount is recommended as soon as there is sufficient info, and not later than the 1st report, which is typically due within 7 days.
Loss reporting process- Why do insurance companies use service providers such as appraisers, estimators, lawyers, etc. when investigating a loss? (5)
May be involved to accomplish the following:
-Assess the damage
-Determine the cause of the loss
-Estimate the cost of repairs and carry them out
-Supply products or services
-Assist in resolving claim disputes.
Elements of a sound response to a loss - How should a claims handler respond to the insured when a loss is reported? (5)
-The initial response must acknowledge the insureds feelings. Most people need to feel they have been heard, and that they are not alone.
-Relationships can be enhanced with a sincere desire to resolve claims promptly and professionally.
-A professional response requires soft skills to be tempered with knowledge of the contract terms and a focus on the facts
-Should avoid all casual remarks that imply coverage for the loss and nothing must be done to waive any policy provisions.
-Best to manage insureds expectations by explaining claims process in a straight forward way. Trying to generalise or assume timelines could potentially set unreasonable expectations for the insured.
What are some typical questions an insured may ask following a loss? (4))
-Is the loss insured under the policy?
-Do i have a deductible? and if so, how much is it?
-What do i do next?
-When do i get paid?
Elements of a sound response to a loss - How do claims handlers determine who to forward a loss to once its been reported? (3)
- Depends on the nature of the claim.
-Claims handlers must assess the policy coverage, the seriousness of the claims, what must be done immediately, and who should be assigned to handle the loss.
-All losses must be acted on promptly, but for some high priority losses, response time is critical.
Elements of a sound response to a loss - How can a claims handler manage the expectations of an insured? (4)
-Convey a realistic timeline to insured when possible (when can things be expected to happen? How long claim will take to resolve?)
-If there is coverage issue or deductible to be applied, make sure insured is aware of it ASAP.
-Point out policy conditions and limitations relevant to the claim to the insured when the claim is reported.
-Write a detailed letter to summarize above points and regularly send further letters confirming updates to the claim status, as well as speaking with the insured.
What are the obligations an insured has following a loss? (6)
-The insured must report the loss to the insurer as soon as possible. Either once it occurs, or once they become aware of it or are given notice such as in a liability claim. (Requirement to report loss in writing is generally not enforced)
-Insured must protect property from further damage and must take all steps to minimize the loss. Any additional damage that occurs will most likely not be covered.
-Circumstances surrounding the loss -including its probable cause,, the nature and extend of damage, as well as location of insured property must be provided by insured.
-Any other applicable policy in effect must be disclosed.
-Insured has a duty to cooperate with the insurer as stated in the statutory conditions.
-Many policies contain a provision obliging insureds to report certain losses to the police.
How may a delay in reporting a loss affect the insureds ability to be indemnified by that loss? (1)
If a delay in reporting affects the insurers ability to properly assess the damage and conduct its investigation to confirm the facts of the claims, then the late reporting has prejudiced the insurer - that is deprived it of a legal right without just cause, which may cause the insured their right to be indemnified by the loss
Obligations of the insured - What types of info must the insured provide in writing if requested by the insurer? (10)
-How and why did loss originate?
-Did insured intentionally cause the loss?
-Where was property at the time of the loss?
-What are the damaged items and the details of purchase, age,and value?
-Is there another policy that provides coverage for the loss?
-What are details of any such policy?
-Who owns or has interest on the property?
-Supply a detailed inventory of undamaged property
-Complete a proof of loss form, and if requested, have it notarized
-Submit documentary evidence such as invoices, receipts, etc.
Material changes -What are an insurers options when presented with a material change in the risk? (2)
-All material changes to a risk must be reported promptly by the insured to the insurer.
-The insurer upon receiving the material changes, may accept the changes, advise the insured of an increased premium, or decline to continue to insure the risk.