C130 Chapter 10 Essential Skills for the Insurance Broker and Agent

STUDY 10 - Claims / Page 1

Clients judge value of insurance by how their claims are serviced and paid.

1. Broker > client seeks advice from.
2. Opportunities > to be of service to clients / to strengthen relationship with client.
3. Satisfied Client > earns loyalty which translates into future business or referrals.

Broker’s Role

1. Assisting Client > taking first report / notice of loss and transmitting to insurer.
2. Explaining Claims Process > reduces anxiety / helps set realistic expectations.
3. Monitor Progress > as necessary.
4. Advocate For Insured > when client has concerns.
5. Contractual Duty:    

Express > client told your services include assistance with claims.

Implied > client expectations – not contradicted / supported by past conduct.

Reporting

1. First Report > insured or insured’s broker report to insurer (call centre).
2. Government Insurance > broker refers insured to crown corporation’s phone number.
3. Direct to Broker > service – initial report to insurer / record details / forward promptly / monitor.
4. Referral > advise client – call transfer / documentation to claims department / ID adjuster.

THIRD PARTY REPORTING

1. Who is reporting and what is their relationship to the insured or the insured’s property?
2. Authorized > relative or legal representative – proceed / assignee – contact client first.
3. Loss Payees > financial interest in outcome of claim.
4. Beneficiaries > third parties eligible for $ benefits (injured victim) – call client to discuss.
5. Not on Policy > discuss with client before taking any other action.
6. Statutory Condition > prompt notification to insurer of any loss (BI/PD).

TO REPORT OR NOT TO REPORT

1. Small Claim > client may want to settle themselves v. involving insurer.
2. Challenge > third party accepts / months or years later presents claim to insurer.
3. Insurer > may deny late reported loss on grounds it has prejudiced their interests.
4. Advise Client > consequences / risks / policy duties / insurer on notice / instructions.
5. Auto Loss > seemingly minor BI/PD can escalate / recommend advising insurer ASAP.
6. No-Fault / Government > any accident report = client’s insurer notified (DC / SABS).

LEGAL NOTICES OR WRITS

1. Notice of Liability Claim > sent to insured / received from plaintiff counsel.
2. Forward to Insurer > email / fax / mail / phone if urgent or received at end of day.

LIMITATION PERIOD

1. Prescription > time after which cause of action, right of plaintiff to bring action ceases.
2. Legal Action > must start before limitation period expires, or statute-barred.
3. Third Party Action > Insurance Act / Statute of Limitations.
4. Notify Correct Party > within set time period as prescribed by statute.
5. Broker Responsibilities

i) Delay Submitting > insurer denies on basis of prescription period expired.

ii) Estoppel > party – draws conclusions based on / relies on actions and statements.

iii) Accepting Notice > implies insurer received notice in limitation period = valid claim.

iv) Insurer > can take legal action if broker action / inaction prevented denial of claim.

FIRST NOTICE OF LOSS        Includes complete and accurate information:

1. Insured > policy # / insurer / policy term / name, address and telephone number.
2. Name > party reporting claim.
3. Contact Information > email address / fax number / phone (cell) number.
4. Circumstances > time / location / cause / nature, extent of damage / current location.
5. Insurable Interest > owners / have $ interest in.
6. Third Parties > name and contact information.
7. Witnesses > name and contact information.
8. Policy / Coverage > refer to file for policy information (BI / PD limits).
9. Automobile Losses > driver – age, address, phone number / vehicle / witness data.
10. Police > officer’s name, badge number / details of charges laid / crimes reported to.

INTERACTING WITH YOUR CLIENT       

1. Avoid > remarks that imply loss covered – “good thing you have insurance”.
2. Remain Neutral > avoid creating estoppel / loss may not be covered (policy breach).
3. Active Listening:       
1. Understand > client’s emotional level – ask about well-being.
2. Understand > situation from the client’s point of view.
3. Identify > client’s unasked questions or concerns.
4. Direct Conversation > focus on claim facts / policy terms.
5. Be Flexible > respond to client’s feelings at particular moment.
4. Policy Issues:        Address expectations and concerns:

1. Give Timeline > when things can be expected to happen.
2. Reiterate Policy Specifics > coverage issues / deductible / conditions / limitations.
3. Rating Impact > discuss how making the claim will affect the premium.
4. Avoid Legal Advice > opinions or evaluation of loss.

5. Timeliness > know when to postpone discussion – crisis mode = limited data processing.
6. Collect Information > enough to create first notice of loss.
7. Abeyance File > contact for further discussion of incident.

ADVISING CLIENTS       

Common Questions >   Is the loss insured?   What do I do next?   When do I get paid?

    1) Set Expectations   

1. What to expect once claim reported to insurer.
2. Who > will be contacting them, within what timeframe.
3. How the claim is likely to proceed.
4. Cooperation > details of cause / damage / location / other insurance.
5. Documentation Required > proof of loss or sworn statement.
6. Reassure Client > broker is there to assist in process any time help is needed.

    2) Policy Limitations, Conditions and Obligations       

1. Breach of = coverage benefits being in jeopardy.
2. Advise Client > drawing focus to relevant wording doesn’t affect policy response.
3. Deductible > insurer pays, invoices insured / insured pays contractor direct.
4. Statutory (General – Quebec) Conditions > statute – must be complied with.

    3) Insured’s Entitlements       

1. Fair Settlement > principle of indemnity + relevant policy conditions (cash = ACV).
2. Extensions > alleviate added costs – Additional Living Expenses / defence.

    4) Insured’s Responsibilities    Outlined in Statutory (General) Conditions of policy:   

1. Report Promptly > in writing to agent, broker or insurer.
2. Cooperate With Insurer > expedites claim process.
3. Obtain Estimates > may offer client list of repair shops or contractors.
4. Mitigate Loss > take reasonable action to protect property from further damage.
5. No Abandonment > property cannot be abandoned to insurer unless agreed to.
6. Permit Insurer > determine facts (investigation) and amount of loss (appraisal).

CONTACT AVAILABILITY       

1. Maintaining Contact > throughout entire claim.
2. Letter to Client > receipt of claim / ID insurer, contact person / invite to contact broker.
3. Commitment > broker will monitor claim to ensure satisfactory resolution.
4. Client Follow Up > if insurer’s confirmation of initial report not received, contact client.
5. 24 Hour Service > after-hour emergency calls – call centre phone number.
6. Resource List > adjusters – insurers and independent / claim restoration services.

KNOW YOUR INSURER’S PROCEDURES       

1. Expedites Claim > handling procedures / adjusters / conditions under which to report.
2. Insurers > expect loss reports from insureds, brokers / authorize use of independent.
3. Draft Authority > broker can issue draft or cheque for claims up to a certain limit.
4. Lloyds Broker > assigns claim to pre-selected adjuster / issues claim cheque.

Claims Process

1. Insured / Broker > reports loss to insurer or directly to a staff or independent adjuster.
2. Claims Dept. > records details / verifies coverage – covered / during term / insured peril cause.
3. Loss Not Covered > insurer (adjuster) promptly advises insured.
4. Adjuster Assigned > valid claim – evaluate damages / negotiate / settle / recommend payment.

THE CLAIMS DEPARTMENT

1. Administers Adjustment Process > after claim is presented.
2. Delivers on Promise to Pay > made when client bought policy.
3. Executes Policy Obligations > arising from risk assumed by underwriters.

1) Claims Manager            a) In Charge Of > claims department.

                b) Responsibility > smooth functioning of claims department.

                c) Involved in Claim > only if complex or a problem occurs.

2) Claims Examiner        a) Directs Investigation > oversees activity of adjusters.

                b) Reviews > adjuster reports.

                c) Appoints > independent adjusters to individual claims.

3) Adjusters            a) Represent Insurer > telephone or field (in-person) inspection.

                b) Types > staff – insurer employees / independent – self-employed.

PROGRESSION OF THE CLAIM

1) Broker     Reassures client > common practice / normal / necessary part of process.

2) Adjuster    Helps client prove their claim:

1. Examines > loss scene / damaged property.
2. Records > client description / statements – client, witnesses, third parties.
3. Confirms > loss caused by an insured peril.
4. Assesses Damages > first and third party – bodily injury / property.
5. Offers Fair Settlement > based on documentation collected.

Staff            Employee of insurer / unlicensed / has settlement authority.

Independent        a) Self-Employed > independent business person.

b) Use > contact centre (1-800) / expertise needed.

            c) Duties > confirm assignment / investigate / get instructions.

            d) Preliminary Report / Reserve > sent to insurer within 7 days.

            e) Licensed > provincial authority (AIC).

Public            a) Self-Employed > licensed, insured pays based on % of claim.

b) Use > insureds in dispute with insurer – protect interests.

            c) Licensed > provincial authority (AIC).

3) Support Services        Help insurer assess, determine cause, estimate, access services

Accountants – forensic                Estimators

Appraisers                    Lawyers

    Arbitrators                    Mechanics – auto body, general

Authorities – firefighters, police            Mediators

Contractors                    Medical – doctors, rehabilitation

Doctors                        Private Investigators

4) Claim Resolution       

1. Damages > estimates made / repairs completed, items replaced / cash (ACV).
2. Proof of Loss > insured signs confirming policy / loss / amount of claim / payable.
3. Payment > cheque issued for settlement / broker delivers to client – good PR.
4. Subrogation    

i) Insurer > assumes insured’s right to recover from responsible party.

ii) Third Party > required to pay for damages.

iii) Recovery > reduces insurer’s loss / reflects + on insured’s claim record.

iv) Payment to Others > bank / contractor / independent adjuster / lawyer.

v) Conclusion > insurer pays expenses– independent adjuster / file closed.

Claims Terminology
WAIVER        Voluntary relinquishment of known right – insurer agrees to pay claim.

Creates Estoppel > insurer cannot later avoid paying.

ESTOPPEL    Legal bar created when someone, through action or lack of action, indicates they will not exercise a right they have.

1. Voluntary Admission of Responsibility > client accepts = estoppel.
2. Adjuster Admits Coverage > before the facts are investigated – breach?

NON-WAIVER    Allows insurer to investigate loss without prejudicing their position, or waiving

AGREEMENT         their right to deny liability, at a later date.

1. Insurer > gives insured written notice investigation doesn’t create estoppel.
2. Insured > signs to allow insurer to investigate all circumstances.
3. Reservation of Rights Letter > to insured on refusal to sign non-waiver.

FORFEITURE    The loss of a right as a result of the non-performance of some obligation or condition.

       

1. Breach of Policy Condition > fail to advise insurer of claim against insured.
2. Insurer Prejudiced > investigation delayed = claim paid that wouldn’t have.
3. Insurer Proves > insured’s breach prejudiced position to invoke forfeiture.

VOLENS    Volenti Non Fit Injuria – voluntary assumption of risk.

Spectator at sporting event knows there is a chance of injury – hockey puck.

SCIENTER    A term used to signify the defendant’s (insured’s) knowledge of a domestic animal’s dangerous propensities.

1. Assumption > apparently harmless animal will continue to be docile.
2. Owner Not Negligent > animal charges due to reason beyond control.
3. Strict Liability > owner negligent if aware of dangerous propensities – wild.
4. Civil Code / Statute > owner must prove animal not vicious / mischievous.

Client Expectations

1. From Insurer > prompt payment of a fair settlement.
2. From Broker > empathy, advocacy and advice.

ADVOCATING FOR CLIENTS

1. Monitors > progress of claim.
2. Advocate > insured complaints – fair treatment / disagreement with insurer on issues.
3. Recognize > limitations in policy contract to respect / cannot interfere in claim process.

1) First Status Review   

1. Timing > within 24 to 48 hours after first notice of loss to insurer.
2. No Reponse to Client > contact insurer – received loss notice / expected contact.

2) Final Review   

1. Timing > after reasonable length of time in which claim should have been settled.
2. Abeyance File > confirm – claim finalized / details of settlement.
3. Outstanding Claim > ask adjuster for reason / re-abeyance file for later date.

Adjuster / Client Disagreement

1. Ask > if you can faciliate communication in any way.
2. Consult With Both Parties > insurer (adjuster) / insured.
3. Discuss Progress > with client / confirm they are content to leave matters as is.
4. On Request > help obtain missing information / clarify miscommunication.
5. Dissatisfaction > result of – miscommunication / misunderstanding.
6. Explain > insurer’s procedures    .
7. Maintain Close Communication > eases difficulties for client / insurer.
8. Facilitate > understand both sides / discuss perspectives / keep dialogue going.
9. Goal > efficient process – minimal inconvenience, frustration / fair settlement.

GIVING ADVICE

1. Consider > whether or not you should give counsel – broker v. legal.
2. Rules > clarify / stay within area of expertise / present pros and cons / let client decide.
3. Minor Loss > explain impact – higher rate / remind of policy conditions / let client decide.
4. Hypothetical ??? > indicate a loss as occurred – probe for clarification.
5. Legal Obligation > broker must advise insurer once aware of loss (ON – auto claims).

DENIAL OF A CLAIM

1. Affects > relationship with client.
2. Approach > professional and courteous.
3. Clear Reasons > unreported circumstances – insured racing vehicle at time of loss.
4. Disagree With > seek clarification from adjuster – cover bound, policy not changed.
5. Record Details > update and abeyance client file.
6. Tailor Actions > discuss amending coverages with client.

DOCUMENTING YOUR FILE

1. All Communications > with client / insurer.
2. Comprehensive Notes > signed / dated or computer operator records.
3. Claim Log:         Date notice received.        Details of progress.

Date of loss.            Client concerns / action taken.

Insured(s).            Other documentation – appraisals.

Claimant(s).            Final outcome – amount paid / deductible.

Type of claim.            Close date.

4. Claim Report > insurer issues automatically or on broker request.
5. Abeyance System > enhances capacity to monitor outstanding claims – client contact.

Customer Service

1. Client Judges Policy > quality of claim handling = quality of product.
2. Expectations Met > broker and insurer service throughout claims process.
3. Client Survey > informal – phone call / formal – letter or questionnaire to be completed.
4. Rate Service > broker, insurer helpful, courteous / satisfied with claim – progress, settlement.
5. Conclusion > solicit comments / respond prmptly to any issues client raises.

HANDLING COMPLAINTS

1. Commonly Arise From > misunderstanding or miscommunication.
2. Client > has right and obligation to complain if service fails to meet expectations.
3. Active Listening > listen / clarify understanding / record comments / gather data.
4. Reassure Client > concerns will be addressed.
5. Response > immediate / advise of action and date to report back to client.
6. Insurer Resources > representative or claims adjuster.
7. Document Process > note – contact date, time / who was spoken to / what was said.
8. Advise Client > progress / insurer’s final decision / explain reasoning behind decision.
9. Other Resources > insurer protocol / ombudsman (AIC) / consumer hotlines (IBC).
10. Learning Opportunity > positive, negative feedback = service improvements.
11. Attitude > friendly, professional and courteous = client appreciation of your efforts.