NAME COURSE

: CHONG KIM FOONG : CLAIMS MANAGEMENT

ASSIGNMENT 1

1. Briefly explain the roles of the claims department. Answer The claims department has many roles :1) Strategic Role to provide the insurance / reinsurance company with a high quality of sevice so that it can differentiate itself from its competitors (or even to outsource this function if it is unattainable inhouse) 2) Cost-monitoring role to ensure that the amount paid on any claim is contained within the parameters of the contractual relationship as far as possible. 3) Service to meet or exceed customers expectations regarding the quality of service, with particular regard to the speed, manner and economic efficiency of the service. 4) Management to meet or exceed the standards of service set and to operate within budget.

2.

Explain the difference between insurance claims handling and reinsurance claims handling. Answer The phrase claims handling was the traditional term for insurance companies handling the various stages of the claim process. Critically, however, it encompasses none of the risk management issues instead emphasizes the functions of claim review, claim investigation and claim negotiation arguably the most problematical elements of claims work Reinsurance claims handling involves negotiation between two insurance specialists in a business environment where a continuing business relationship may exist. Insurance claims handling, in comparison, often involves an insurance specialist negotiating with a member of the public where a continued relationship is unlikely if the claim settlement fails to meet the insureds expectations.

Date submitted : 14/5/2007

NAME COURSE

: CHONG KIM FOONG : CLAIMS MANAGEMENT

3.

State two reasons why reinsurance companies have started to develop corporate claims philosophies. Answer The larger Reinsurance Companies are now marketing themselves as global asset managers. As such, they are using modern management techniques to define their key objectives over the next five to ten years. As a part of this strategy they are developing integrated claims philosophies. Many reinsurance companies forced into run-off by the recent spate of mergers and acquisitions, emergence of latent claims, unprecedented sequence of natural catastrophes have led to development of internal claims philosophies.

4.

Give a definition of claim philosophy.

Answer A claims philosophy can be defined as a specified approach to key claim issues. A written philosophy is designed to strategically position the organization among the best in its field externally.

5.

What are the external and internal benefits of a corporate claims philosophy? Discuss these benefits under the following categories.

Strategic Cost Service, and Personal

Answer The benefits of a corporate claims philosophy can be divided between :1) external benefits i.e. benefits to external customers 2) Internal benefits i.e. benefits accruing within the organizations We can categorise the external benefits as strategic, costs, service and personnel.

Date submitted : 14/5/2007

NAME COURSE

: CHONG KIM FOONG : CLAIMS MANAGEMENT

A)

External Benefits Strategic With the use of a well designed and focused claims philosophy am organization is able to position itself among the best in its field as regards its claims processing efficiency, friendliness and professionalism. As many insurance products are sold on the strength of their claims service and as each customer contact is part of the marketing strategy, a claims philosophy which offers the customer a very high quality service will form part of the overall marketing strategy. Cost When the characteristics of claims which are likely to receive prompt payment are clearly stated, the claimant is then in a position to frame the claim in the required context. The claims process should be shorter and disputes, which are costly for both parties, should be less common. Service Customers of an organization with a written claims philosophy know exactly what they can expect. The promise is defined. In addition, they can refer to the claims philosophy to compare it with the actual service delivered. Personnel By use of a written claims philosophy, the organization is able to offer a consistent claims stance since the general approach will be defined in writing, understood, and applied by each member of the claims team. Internal Benefits Strategic The process of producing a corporate claims philosophy involves analyzing each stage of the claims process within the organization And making an assessment of the nature, speed and efficiency of each element. There is sharper management focus following the issue of written claims philosophy.

B)

C)

D)

A)

B)

Cost The clear statement of the characteristics of claims which will be promptly paid is intended as a side-effect to discourage speculative claims which are wholly without substantiation. Again, the claim process should be quicker and contain fewer disputes if such claims can be avoided. This saves claims costs, administration costs and litigation costs. Service An organization is likely to set specific internal goals and objectives. For example, if the external goal is a prompt response to the insured, this can be defined as five working days so that all correspondence should be responded to within this

C)

Date submitted : 14/5/2007

NAME COURSE

: CHONG KIM FOONG : CLAIMS MANAGEMENT

time. Thus the claims philosophy will provide a focus for the claims departments work and set broad standards internally. D) Personell The claims personnel will be aware of what is expected of them and will work towards achieving the targets set. The staff will be able to take pride in the provision of an efficient service. This will increase staff motivation, as will staff being trained to a higher standard than before in order to reach the new service standards.

Comments: You have the right approach in answering the questions. But for Q5 which is a long question, try to give examples to support the main points. Overall grade: A

Date submitted : 14/5/2007