Claims Management Flashcards
6 cards from real PGI practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Claims Management flashcards as text
What is 'large loss management' in commercial insurance claims?
Answer: A structured approach to handling significant claims involving early notification, dedicated claims handlers, expert appointments, and proactive communication
Large loss management involves a structured protocol for significant claims: immediate notification up the chain, appointment of dedicated claims professionals, early engagement of forensic accountants or adjusters, proactive communication, and coordination with reinsurers.
What is the role of a 'forensic accountant' in major commercial insurance claims?
Answer: A specialist appointed to quantify business interruption losses, verify financial records, and calculate complex financial aspects of commercial claims
Forensic accountants are appointed in complex commercial claims to independently assess and quantify financial losses — particularly business interruption claims — examining financial records, projecting lost profits, and verifying claimed amounts.
What is 'claims leakage' in insurance claims management?
Answer: Overpayment of claims due to poor processes, fraud, inadequate reserving, or failures in claims handling, representing value lost from the claims fund
Claims leakage is the difference between what was actually paid and what should have been paid — resulting from overpayment, fraud, inadequate controls, poor reserving, or process failures. Reducing leakage improves profitability without raising premiums.
What is 'incurred but not reported' (IBNR) reserves and why are they important?
Answer: Reserves set aside for losses that have already occurred but not yet been reported to the insurer — essential for accurate financial reporting
IBNR reserves account for losses that have already happened but have not yet been reported to the insurer. Without adequate IBNR reserves, an insurer's financial statements will understate liabilities, potentially threatening solvency.
What is 'subrogation recovery management' and why is it important for insurers?
Answer: Actively pursuing recovery from third parties responsible for losses after paying claims, to reduce the net cost of claims
Subrogation recovery management involves proactively identifying opportunities to recover claim payments from responsible third parties, pursuing legal action where justified, and managing the recovery process to maximize returns and reduce the net cost of claims.
What is the purpose of 'claims audits' in insurance company governance?
Answer: To independently assess the adequacy, consistency, and accuracy of claims handling processes, reserves, and payments against policy terms and best practice
Claims audits independently review the insurer's claims handling processes, checking that claims are assessed correctly against policy terms, reserves are adequate, payments are accurate, and handling meets regulatory and best practice standards.