Finance 431: Property-Liability Insurance Lecture 5: Claims Adjusting - PowerPoint PPT Presentation

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Finance 431: Property-Liability Insurance Lecture 5: Claims Adjusting

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Property-Liability Insurance ... against policyholder A homeowners policyholder ... standards Internal Marketing Underwriting Legal Training ... – PowerPoint PPT presentation

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Title: Finance 431: Property-Liability Insurance Lecture 5: Claims Adjusting


1
Finance 431Property-Liability
InsuranceLecture 5Claims Adjusting
2
Claims Adjusting
  • Objectives
  • Complying with contractual promise
  • Achieving profit objective
  • Collection of information
  • Marketing
  • Underwriting
  • Actuarial
  • Definitions
  • First party claims by policyholder
  • Third party claims against policyholder

3
A homeowners policyholders house burns down when
his furnace overheats. What type of claim does
this represent?
  • A) First party only
  • B) Second party only
  • C) Third party only
  • D) First party and third party
  • E) None of the above

4
An auto insurance policyholder causes an
accident that damages his car and another
drivers car. What type of claim does this
represent?
  • A) First party only
  • B) Second party only
  • C) Third party only
  • D) First party and third party
  • E) None of the above

5
An auto insurance policyholder is in an accident
that is caused by an uninsured driver. This
policyholder has uninsured motorist coverage.
What type of claim does this represent?
  • A) First party only
  • B) Second party only
  • C) Third party only
  • D) First party and third party
  • E) None of the above

6
Claims Environment
  • External
  • General public
  • Plaintiffs attorneys
  • Defense attorneys
  • State regulators
  • Licensing
  • Consumer complaints
  • Market conduct audits
  • Unfair claim settlement practices legislation
  • Documentation
  • Communications
  • Settlement standards
  • Internal
  • Marketing
  • Underwriting
  • Legal
  • Training

7
Organization of Claims FunctionPhysical
Organization
  • Centralized/decentralized
  • By product or line of business
  • Personal/commercial
  • Property/liability

8
Organization of Claims Function Management
Structure
  • Claims managers
  • Examiners
  • Supervisors
  • Adjusters
  • Independent adjusters
  • Producer claim services
  • Public adjusters
  • Other claim personnel
  • Cause and origin experts
  • Appraisers
  • Reconstruction experts
  • Private investigators
  • Rehabilitation experts

9
Which person within the claims department is
responsible for negotiating the value of the
claim with the claimant?
  • A) Claims manager
  • B) Examiner
  • C) Supervisor
  • D) Adjuster
  • E) None of the above

10
Which of the following individuals could a
claimant hire to help negotiate a claim with an
insurance company?
  • A) Examiner
  • B) Independent adjuster
  • C) Producer
  • D) Public adjuster
  • E) None of the above

11
Claim Adjusting Process
  • Three Questions
  • Is the loss covered?
  • Is the policyholder or insurer legally liable?
  • What are the damages?

12
Is the Loss Covered?
  • Insuring agreement
  • Exclusions
  • Conditions
  • Response to coverage issues
  • Reservation of rights letter
  • Filing for declaratory judgment action

13
The State Farm auto insurance policy does not
cover accidents when you are driving in Malaysia
based on which of the following?
  • A) Insuring agreement
  • B) Exclusions
  • C) Conditions
  • D) Reservation of rights
  • E) None of the above

14
Is the Policyholder or Insurer Legally Liable?
  • Sources of liability
  • Statutes
  • Contracts
  • Torts
  • Intentional
  • Negligence
  • Strict or absolute liability
  • Investigation of liability
  • Statements
  • Inspections
  • Document review

15
What are the Damages?
  • Property damage
  • Bodily injury damages
  • Medical
  • Loss of earnings
  • Pain and suffering
  • Consortium
  • (Sex, society and services)
  • Future damages
  • Punitive damages
  • Survival and wrongful death
  • Extra-contractual damages

16
If an insurance company refused to settle a third
party claim within policy limits and the
policyholder were later held liable for more than
the policy covered, which provision might require
the insurer to pay the entire claim?
  • A) Future damages
  • B) Punitive damages
  • C) Survival and wrongful death
  • D) Extra-contractual damages
  • E) None of the above

17
Loss Reserving
  • Case reserves
  • Judgment
  • Average value
  • Tabular
  • IBNR (Incurred But Not Reported)
  • Reserving problems
  • Stair-stepping
  • Inconsistency

18
Claim Settlement
  • Pre-settlement negotiation
  • Persons involved
  • Agent
  • Policyholder
  • Claimant
  • Witnesses
  • Attorneys
  • Negotiation of settlement
  • Denial of claims

19
Settlement Documents
  • Proof of loss
  • General release
  • Joint tortfeasor release
  • Covenant not to sue
  • High/low agreements
  • Release for injury to a minor
  • Parents release and indemnity agreement
  • Nominal releases
  • Release draft
  • Telephone recorded releases

20
Litigation
  • Alternatives to litigation
  • Arbitration
  • Mediation
  • Rent-a-judge
  • Settlement conferences
  • Summary jury trials
  • Selection and direction of outside attorneys
  • Decisions relating to defense
  • Defend or settle
  • Nuisance settlements
  • Subrogation

21
Measuring Claim Performance
  • Financial measures
  • Loss ratio
  • Accuracy
  • Consistency
  • Claim-handling performance
  • Turnover of claims
  • Average cost of settlement
  • Litigation rates
  • Average caseload
  • Staff turnover
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