Texas Insurance License- Claims Agents and Their Role in Insurance
Terms in this set (23)
People who handle claims might be staff claim representatives, independent adjusters, employees of third-party administrators, or producers who sell policies to insured's.
handle claims for insurers on a case by case basis for fee, not employees of insurers
Third party administrators (TPAs)
handle claims, keep claim records, and perform statistical analyzes for businesses that self-insure their risk
can give agents draft authority up to a certain amount, such as $2,000, to settle claims.
can issue drafts directly to insured's for covered claims, thus reducing the time necessary to pay insured's.
Departments that rely on information from the claim department include underwriting, loss controls, special investigation units (SIUs), marketing, and actuarial.
Paying fair amounts for legitimate claims and by providing accurate, reliable, and consistent data for rate making
plays crucial role by paying fair amounts for legitimate claims and by providing accurate, reliable, and consistent data for rate making
measurement of profitability:
(Incurred losses divided by Earned premium) x 100 = Pure loss ratio
The loss ratio adds loss adjustment expenses to incurred losses: (Incurred losses + Loss adjustments expenses) divided by Earned premium)x 100% = Loss ratio
Loss adjustment expenses include the following:
Salaries and expenses for an insurer's claim staff, Costs of hiring lawyers to defend insured's in lawsuits , Fees charged by service providers, Costs of obtaining medical, police, and other types of reports;
are estimates of the amount of money that the insurer expects to pay in the future for a loss that has already occurred.
Loss ratio + Expense ratio = Combined ratio
- expenses other than underwriting and claim expenses. Insurers spend more in claims and other expenses then they collect in premiums
if the ratio is greater than 100% then UW loss
if ratio is less than 100% then UW profit
Insurance works if the UWs accept risks that will experience no more than the types and amounts of losses anticipated in the rates. Consistency and efficiency in claim handling allows UW to evaluate, select and price risks appropriately.
Provided insight into risks because of their initial involvement in the coverage. They also wanted to know how policies are being interprets so they can assess coverage forms and endorsements as necessary.
Representatives who asses the risks for the underwriters. They make a recommendation for preventing losses and for reducing the severity of losses that do occur. Which can provide loss control reports and can trigger a reassessment of the risk
Special Investigation Units (SIUs)
Unit that investigates suspicious claims
Claims by referral
Marketing reputation for providing superior claim service and paying claims promptly and fairly is an advantage that helps insurers attract new customers and keep existing insured's. Provides ideas for new coverage's.
Predict the number of losses that will occur and the amount of money that insurers will pay in claims to develop rates for insurance.
which provides guidance on specific losses and legal issues. Training department provides educational and training materials and facilities that new claim personnel can use to learn about claims.