Insurance Claims Handling (non UK) 2025: Flashcards from Notes & Text Book Condensed (AI Generated)

What is a claim?

A request made by the insured for payment or service under an insurance policy.

Who handles insurance claims?

The claims department of an insurance company.

What is the main goal of claims handling?

To fulfill the insurer’s promise to pay valid claims.

When does the claims process begin?

When the insured notifies the insurer of a loss.

What is a claims handler?

An employee responsible for managing claims from notification to settlement.

What is indemnity in insurance?

Restoring the insured to their financial position before the loss.

What is proximate cause?

The active, efficient cause that sets in motion a chain of events leading to the loss.

What is the onus of proof?

The insured’s responsibility to prove a valid claim exists.

What is quantum in insurance?

The amount of the claim.

Who is the proposer?

The person applying for insurance.

Who is the insured?

The person covered by the insurance policy.

Who is the claimant?

The person making a claim, usually the insured.

What are express conditions?

Conditions stated directly in the policy.

What are implied conditions?

Conditions not stated but accepted as applying to the contract.

What is a condition precedent to liability?

A condition that must be met for a claim to be paid.

What is a condition precedent to the contract?

A condition that must be satisfied before the policy is formed.

What is a condition subsequent?

A condition that must be complied with once the policy is in force.

What is an exclusion?

A peril or event not covered by the policy.

What is a deductible?

The amount the insured must pay before the insurer pays a claim.

What is an excess?

The first part of any claim borne by the insured.

What is an average clause?

Reduces the claim payment if property is underinsured.

What are unfair terms?

Contract terms not transparent or clearly communicated.

What is the duty of disclosure?

The insured’s obligation to reveal all material facts.

What is the purpose of documentary evidence?

To prove the occurrence and amount of loss.

What is first notification of loss (FNOL)?

The first report of a claim made by the insured.

Why is FNOL important?

It initiates the claim process and provides key loss details.

What is the role of a claim form?

To provide detailed information for the insurer to assess the claim.

What is utmost good faith?

Both parties must act honestly and disclose all material facts.

What is supporting evidence in claims?

Documents like medical reports or police reports supporting a claim.

What is subrogation?

The insurer’s right to recover from the party responsible for a loss.

What is salvage?

Damaged property that still has residual value after a loss.

What is contribution?

When multiple insurers share the payment of the same claim.

What is the purpose of claims reserving?

To set aside funds for expected claim payments.

What is claims leakage?

Paying more than necessary due to error or inefficiency.

What is a repudiated claim?

A claim the insurer denies.

What is ex-gratia payment?

A payment made as a goodwill gesture, not required by the policy.

What is reinsurance?

Insurance purchased by insurers to spread risk.

What is an adjuster?

An expert who investigates and assesses insurance claims.

What is a loss assessor?

An expert representing the insured in claim negotiations.

What is an insurer’s responsibility during a claim?

To confirm cover, assess validity, and ensure compliance with policy conditions.

What is the purpose of the claims philosophy?

To define how an insurer manages claims and customer service.

What is the insured’s duty after a loss?

Notify insurer promptly and take steps to minimize loss.

What is third-party liability insurance?

Covers legal liability for injury or damage to others.

What is third-party property damage?

Loss or damage to another person’s property caused by the insured.

What is third-party bodily injury?

Physical injury to another person caused by the insured.

What is personal accident insurance?

Pays a lump sum for injury or death.

What is sickness insurance?

Provides weekly benefits if the insured cannot work due to illness.

What is medical expense insurance?

Covers costs of medical treatment and hospitalization.

What is business interruption insurance?

Covers loss of profits due to insured damage to property.

What is fire insurance?

Covers loss or damage caused by fire.

What is theft insurance?

Covers property stolen by forcible entry or exit.

What is motor insurance?

Covers loss, damage, and liability arising from motor vehicles.

What is comprehensive motor insurance?

Covers accidental damage, fire, theft, and third-party liability.

What is third-party only insurance?

Covers third-party injury and property damage only.

What is third-party fire and theft insurance?

Covers third-party liability plus fire and theft of the insured vehicle.

What is public liability insurance?

Covers legal liability to third parties for injury or property damage.

What is employer’s liability insurance?

Covers liability for employee injury or disease in the course of employment.

What is professional indemnity insurance?

Covers liability from negligent professional acts or omissions.

What is product liability insurance?

Covers liability for injury or damage caused by defective products.

What is travel insurance?

Covers loss or costs during travel such as baggage loss or medical emergencies.

What is household insurance?

Covers buildings and contents against insured perils.

What is contents insurance?

Covers household goods and personal belongings inside the home.

What is building insurance?

Covers the physical structure and fixtures of the home.

What is pecuniary insurance?

Covers financial losses such as legal expenses or creditor insurance.

What is creditor insurance?

Covers payments when the insured is unable to meet financial obligations.

What is extended warranty insurance?

Extends manufacturer’s product coverage for repairs.

What is the role of the claims handler?

To assess and settle claims efficiently and fairly.

What is a claims reserve?

An amount set aside to meet future claim payments.

What is a surge event?

A period of unusually high claims volume, e.g. due to a natural disaster.

What is fraud in claims?

Intentional deception to obtain a payment.

What is the insurer’s response to fraud?

Investigate and deny fraudulent claims.

What is arbitration?

A private dispute resolution process used to settle claim disagreements.

What is mediation?

A non-binding process to help parties reach a mutual agreement.

What is adjudication?

A process where a neutral individual gives a decision on a dispute.

What is expert determination?

A binding decision made by an agreed expert on technical issues.

What is negotiation in claims?

The process of settling claims by discussion and agreement.

What is the role of the ombudsman?

To resolve disputes between insurers and policyholders impartially.

What is fair treatment of customers?

Ensuring claims are handled fairly and customers’ interests are prioritized.

What is vulnerable customer?

A person who may need extra care due to circumstances like health or financial issues.

What are the FCA’s four drivers of vulnerability?

Health, life events, resilience, and capability.

What is reinsurance recovery?

When an insurer claims reimbursement from its reinsurer.

What is the role of IT in claims handling?

To improve efficiency, reduce costs, and manage large claim volumes.

What are the benefits of using IT in claims?

Faster settlements, improved accuracy, and better communication.

What are the risks of overreliance on IT?

Loss of flexibility, reduced personal service, and potential higher costs.

What is outsourcing in insurance?

Using external companies to perform functions like claims handling.

What are advantages of outsourcing?

Cost savings, flexibility, and access to specialized skills.

What are disadvantages of outsourcing?

Loss of control, dependency, and potential quality issues.

What is the function of a loss adjuster?

Investigate, assess, and recommend settlement of claims.

What is the role of a surveyor?

Provide risk assessment reports and loss prevention advice.

What do solicitors do for insurers?

Provide legal advice and represent insurers in disputes.

What is the role of a claims manager?

Oversee claims strategy, cost, staffing, and performance.

What is leakage prevention?

Steps taken to minimize overpayment or errors in claim settlements.

What are financial reserves?

Funds set aside to cover claim liabilities.

What is IBNR?

Incurred But Not Reported reserve for unknown or unreported claims.

What is IBNER?

Incurred But Not Enough Reserve for underreported claims.

What are catastrophe reserves?

Funds set aside for major loss events.

What is an equalization reserve?

A reserve used to smooth out loss ratio fluctuations.

What is a solvency margin?

The minimum financial buffer insurers must maintain.

What is a profit and loss account?

Shows income and expenses during a financial year.

What is a balance sheet?

Shows company assets, liabilities, and reserves.