AIC 30 - Assignment 3

Independent medical examination (IME)

A direct intervention technique that included a brief review of the patient's history and treatment and a physical examination of the patient. Insurers use this technique in disputed claims for determining causation, current physical impairment, and the need for present or future treatment.

7-3 Explain what a statement is and the best time in an investigation to obtain one.

A statement is a record of events surrounding an accident as told by an interviewee and are best taken shortly after the loss as to ensure an undiminished account of the event.

Proof of loss

A statement of facts about a loss for which the insured is making a claim.

5-1 Describe the insurance industry's standard loss notice forms.

ACORD forms are the industry standard loss notice. They contain fields for the information relevant to claims for each line of insurance.

5-2 Describe the agency information provided on ACORD loss notice forms.

ACORD forms for property, auto, and GL contain a block at the top regarding the agency. If no information is provided, the rep should consult the policy to determine the producer who submitted the app.

1-1 Explain why establishing and maintaining adequate reserves is important.

Adequate reserving is essential to an insurer's ability to write new business. Solvency and capacity can be negatively influenced by consistently inaccurate or inadequate reserves.

5-5 Describe the policy information contained on the loss notice form that needs to be verified by the claim rep.

All relevant policy information should be verified. This is a common error. The policy number and effective dates can be determined at the same time.

4-2 Describe the 2 distinct differences between an examination under oath (EUO) and a deposition.

An EUO, unlike a deposition can be demanded by an insurer before litigation has begun. Also, an EUO can be demanded more than once.

Individual case method

Basis is on the claim's circumstance and the claim rep's experience in handling similar claims.

5-7 Beth receives a loss notice form regarding a single-vehicle automobile accident. The address on the loss notice form is a po box, while the address on the policy is a street address. The preparer name is different from that of the insured. The loss notice describes property damage to the insured vehicle of $5,000 and no injury to the insured. The form states there were no passengers in the vehicle. Describe the process Beth should follow.

Beth should contact the insured at the phone number/address provided in the policy to verify the validity of the claim and to obtain the related documentation.

Average value method

Establishes a predetermined dollar amount of reserve for each claim as it is reported based on data from past claims that has been adjusted to reflect current conditions.

6-3 When a claim rep is handling catastrophe claims, what signs might indicate that job-related stress is causing emotional problems?

Fatigue and complaints of an inability to sleep Sudden changes in weight Inappropriate outbursts or atypical irritability Changes in demeanor or personality

3-2 Define good faith.

Good faith is broadly defined as equitable consideration given to the insured's interests and those of the insurer handling the claim.

7-4 Describe Insurance Services Office, Inc. (ISO) ClaimSearch and how it is used in a claim investigation.

ISO Claim Search is a website that can provide a database search to find claims that match submitted claim info. The report produced by ISO Claim Search may indicate a pattern of claims, litigation, duplicate claims, or undisclosed duplicate insurance for the same loss.

6-2 What safety precautions should a claim rep observe when inspecting roof damage?

If a roof inspection is required, the claim rep should ensure any ladder used is approved by OSHA and meet height/weight requirements. The rep should follow manufacturer guidelines for setup and use. Proper clothing and shoes are required as well as the use of common sense to ensure his or her safety.

5-6 Describe how the claim rep should review the preparer information on the loss notice form.

If the notice of loss was prepared by someone other than the insured or producer, the relationship of the preparer should be determined. It is important to follow up directly with the insured to verify the accuracy of the loss notice.

4-3 Explain why an insured may not be required to submit to an independent medical examination (IME), which is listed as a policy condition, giving the impression a claim rep can demand the insured to submit to the exam.

In certain cases an insured may not be required to submit to an IME due to the highly personalized nature of physical contact involved.

5-4 Describe the policy information provided on the loss notice that becomes the starting point for the claim investigation.

Information regarding the loss or occurrence on the form is the starting point for the investigation.

4-1 Describe the factors that can be used to assess whether an insurer's request for information is reasonable.

Is the information relevant to the claim? Is the information specific and not too vague? Is the insured given an opportunity to comply? Is the insured able to provide at least some of the information requested?

7-7 Oliver receives a claim assignment for an auto accident claim. The accident occurred on a highway in front of a restaurant. The insured driver was killed and the driver of the other vehicle hospitalized in an intensive care unit. What investigative tools might Oliver use to determine what occurred in the accident and who was responsible for this loss?

Oliver should obtain the police report and medical records for both drivers. He will most likely go to the scene, or assign someone to, in order to obtain a diagram and photos. If there are any witnesses, statements should be taken. Consideration should be given to employing an expert to evaluate the scene of the accident and cause of loss.

6-1 How can a claim rep prepare for the physical hazards of claim handling that might occur when an insured or claimant is emotional after a loss?

PLAN ahead; review loss related documents, understand the claimant's emotional state, communicate clearly and express empathy.

7-1 What types of information on the lost notice form might determine the claim rep's plan for the investigation?

Severity of the accident Questionable cause of loss Third-party involvement Minor losses

7-6 Describe some computer tools that an insurer may provide to assist claim reps with investigations.

Some insurers may provide business rule engines that analyze claims for fraud indicators or coverage issues. Expert injury evaluation tools can give the claim rep the benefit of many years' worth of historical data for use in evaluating claims.

1-3 Describe the process of stairstepping the reserve.

Stairstepping a reserve refers to the incremental raising of the reserve amount due to poor planning or other poor claim handling issues. A rep may set a low initial reserve, then increase it each time bills are received in order to issue payments.

3-1 Explain why there is a duty to investigate a claim even though the policy language granting authority to investigate is phrased in such a manner as to create a contractual right but not a duty to investigate.

State law typically imposes a duty to investigate regardless of the terms of the policy.

3-4 Ted is a claim rep investigating a claim of a stolen vehicle that was owned by an insured. Ted suspects the insured may have had the car intentionally stolen even though the insured's claim history and police investigation do not support that conclusion. Review of the insured's financial records also does not indicate a significant motive. However, Ted wants to continue the investigation by interviewing neighbors and business associates of the insured. Is Ted acting in good faith by continuing the investigation?

Ted should continue his investigation as long as new, relevant facts develop or become available. He should not delay decisions while trying to uncover or investigate what could be construed by a jury as unnecessary information.

Reserve

The amount the insurer estimates and sets aside to pay on an existing claim that has not been settled.

3-3 Describe the ways timely contact with the parties to the claim benefits the insurer.

The parties to the loss will be more able to recollect details, and more amicable in providing information and resolving the issue without the involvement of representation or litigation.

1-2 Describe the formula method of setting claim reserves.

This method relies on statistical loss history of similar claims to determine a ratio and apply it to like claims. For example the individual reserve amount for additional living expenses under a homeowners policy and the coverage limit have a ratio of 1:4 so the reserves would be set at 1/4 of the coverage limit.

Loss ratio method

Used to establish aggregate reserves for all claims for a type of insurance.

Formula method

Uses a mathematical formula to determine reserves; for example a certain ratio may exist between medical and indemnity costs in a WC claim that can be applied via a formula

Expert system method

Uses a software application that estimates losses and loss adjustment expenses.

Roundtable method

Uses the consensus of two or more claim personnel who have independently evaluated the claim file.

5-3 Describe the procedures a claim rep should follow if information regarding the insured on the loss notice form does not match the information on the policy.

While an insured may move or change a phone number without notifying the insurer, an investigation should be conducted to determine the reason for the discrepancy. If the name of the insured has changed the person may be questioned. In the event of a significant mismatch, an examination of the insured under oath may be required to provide documentation of his or her identity.

7-2 What factors for the investigation can be determined from a preliminary review of the policy?

Who is covered What is covered When coverage is in effect What causes of loss are covered What is excluded

2-1 Michael, a 28 year old married father of 2 small children, was mowing his lawn with his newly purchased riding lawnmower for the first time when a wheel fell off the mower. Michael was thrown in front of the mower and suffered deep lacerations in his leg and fractures to his leg and right arm. The laverations became infected, and, as a result, Michael spent 2 weeks in the hospital and suffered permanent nerve damage in his leg. He was absent from his job as a graphic designer for an ad agency for 2 additional weeks as he recovered. Michael now walks with a limp and can no longer participate in the recreational sports he enjoyed before the injury. Doctors say his nerve damage is permanent. Michael has submitted a claim for his medical expenses and other losses to the manufacturer of the mower. Ed, a claim rep for the manufacturer's insurer is setting reserves for the claim using the individual case method. Answer these questions relating to setting reserves for Michael's claim: a. Identify factors related to the claimant profile that might affect the claim settlement amount and that should, therefore, be considered in settling the claim reserve. b. Identify factors related to the nature and extent of Michael's injury that might affect the claim settlement amount. c. Identify liability factors that might affect the claim settlement amount.

a. 28 Male Graphic Designer 2 young dependents and a wife who depend on Michael financially and for companionship b. Michael, due to his injury becoming infected, has suffered permanent nerve damage in his leg. He now walks with a limp and may have continuing medical expenses due to his diagnosis. He can no longer enjoy sports recreationally and his lifestyle will be impacted. c. It appears this loss is the result of ordinary negligence, not gross negligence. It is possible that if Michael assembled the mower, an error could have occurred at that point rather than the manufacturer.

1-4 Four claim reps at IC have been assigned new claims. Each rep has reviewed the facts of the assignment, determined which case reserve method is appropriate, and taken the first step toward setting the claim reserve. For each of the following actions, identify which case reserve method the claim rep is most likely to be using. a. Claim rep A contacts the insurer's actuarial department. b. Claim rep B asks two fellow claim reps to help in setting reserves. c. Claim rep C analyzes the circumstances of the case that could affect the settlement value. d. Claim rep D enters the details of the claim into a computer program.

a. Loss ratio method b. Roundtable method c. Individual case method d. Expert system method

4-4 Stephan is an insured under an auto policy. He is involved in an auto accident and some of the circumstances surrounding the accident suggest that is was staged to collect money from his policy. His insurer has requested copies of his federal income tax returns, bank records, and credit card statements. a. If Stepan is taking strong pain medication because of the alleged accident and it prevents him from thinking clearly, how does that affect the time period in which he has to reply to his insurer's request for his financial records? b. If Stephen ultimately provides only his federal income tax returns from three and four years ago, could his insurer be justified in denying his claim?

a. The insured is allowed a reasonable time to comply with the insurer's request, and in this case some additional time may be allowed for Stephan to respond due to the medication he is taking. b. It is possible Stephan's insurer could be justified in denying his claim. In court when determining whether an insured has failed to cooperate certain factors are considered. - The insured has not cooperated at all or only partially - The insurer has been prejudiced in its ability to investigate the claim or defend the insured - The insurer's requests for cooperation were reasonable Stephan cooperated partially by providing old tax returns, but not current documents which would be considerably more relevant. This would not impress a court. The insurer may need to disclose it was prejudiced toward the insured due to his lack of cooperation. This may be easy to do if there are indicators the accident was staged and financial documents could have supported a motive. The insurer's request must also be reasonable which would be easy to support if the above is true.

7-5 Describe how social networking sites can assist in claim investigations. a. What are the legal and ethical issues associated with the use of social networking sites in claim investigation? b. How should claim reps proceed with investigations involving social networking sites?

a. There are various federal and state privacy laws that regulate permissible conduct in investigations of social networking sites. Additionally, there are rules of evidence and ethical concerns regarding the use of individuals' social networking sites b. Claim reps should consult their organizations' guidelines and counsel before undertaking investigations involving social networking sites.