CPCU 520: Insurance Operations 2nd Editions/Chapter 6: The Claim Function

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  1. Third-party administrator (TPA)
    An organization that provides administrative services associated with risk financing and insurance.
  2. Independent adjuster
    An independent claim representative who handles claims for insurers for a fee.
  3. Public adjuster
    An outside organization or person hired by an insured to represent the insured in a claim in exchange for a fee.
  4. Claim guidelines
    A set of guidelines and instructions that specify how certain claim handling tasks should be performed by setting policies and procedures for claim handling.
  5. Diary, or suspense
    A system to remind claim personnel to perform a particular task on a claim.
  6. Activity log
    A record of all the activities and analyses that occur while handling a claim.
  7. Access security
    A security setting that controls an individual computer user's ability to renew, enter, and change information in a claim information system.
  8. Authority level
    A designated dollar amount assigned to claim personnel to limit the reserve amounts they can set and the payment amounts they can make.
  9. Claim audit
    A review of claim files to examine the technical details of claim settlements; ensure that claim procedures are followed; and verify that appropriate, thorough documentation is included.
  10. Internal claim audit
    A review of claim files conducted by insurer's staff to examine the technical details of claim settlements; ensure that claim procedures are followed; and verify that appropriate, thorough documentation is included.
  11. External claim audit
    A review of claim files conducted by organizations other than the insurer that involves reviewing overall claim handling practices; reviewing reserves, and other technical details of claim settlements; investigating consumer complaints; ensuring that claim procedures were followed; and verifying that appropriate, thorough documentation was included.
  12. Third-party claim
    A demand against an insured by a person or organization other than the insured or the insurer seeking to recover damages that may be payable by the insured's liability insurance.
  13. Non-waiver agreement
    A signed agreement indicating that during the course of the investigation, neither the insurer nor the insured waives their rights under the policy.
  14. Reservation of rights letter
    An insurer's letter that specifies coverage issues and informs the insured that the insurer is handling a claim with the understanding that the insurer may later deny coverage should the facts warrant it.
  15. Loss reserve
    An estimate of the amount of money the insurer expects to pay in the future for losses that have already occurred and been reported, but are not yet settled.
  16. Average value method
    A case reserving method that establishes a predetermined dollar amount of reserve for each claim as it is reported.
  17. Roundtable method
    A method of setting reserves by using the consensus of two or more claim personnel who have independently evaluated the claim file.
  18. Individual case method
    A method of setting reserves based on the claims circumstances and the claim representatives experience in handling similar claims.
  19. Expert system method
    A method of setting reserves with a software application that estimates losses and loss adjustment expenses.
  20. Formula method
    A method of setting claim reserves by using a mathematical formula
  21. Loss ratio method
    A loss reserving method that establishes aggregate reserves for all claims for a type of insurance.
  22. Proof of loss
    A statement of facts about a loss for which the insured is making a claim.
  23. Good faith
    The manner of handling claims that requires an insurer to give consideration to the insured's interests that is at least equal to the consideration it gives its own interest.
  24. Subrogration
    The process by which an insurer can, after it has paid a loss under the policy, recover the amount paid from any party (other than the insured) who caused the loss, or is otherwise legally liable for the loss.
  25. Co-insurance
    An insurance-to-value provision in many property insurance policies providing that if the property is underinsured the amount that an insurer will pay for a covered loss is reduced.
  26. Alternative dispute resolution (ADR)
    Procedures to help settle disputes without litigation, including arbitration, mediation, and negotation.
  27. Specified causes of loss coverage
    Coverage for direct and accidental loss caused by fire, lightning, explosion, theft, windstorm, hail, earthquake, flood, mischief, vandalism, or loss resulting from the sinking, burning, collision, or derailment of a conveyance transporting the covered auto.
  28. Special form coverage
    Property insurance coverage covering all causes of loss not specifically excluded.
  29. Direct loss
    A reduction in the value of property that results directly and often immediately from damage to that property.
  30. Indirect loss
    A loss that arises as result of damage to property, other than the direct loss to the property.
  31. Special damages
    A form of compensatory damages that awards a sum of money for specific, identifiable expenses associated with the injured person's loss, such as medical expenses, or lost wages.
  32. Compensatory damages
    A payment awarded by a court to reimburse a victim for actual harm.
  33. General damages
    A monetary award to compensate a victim for losses, such as pain and suffering, that do not involve specific measurable expenses.
  34. Punitative damage (exemplary damages)
    A payment awarded by a court to punish a defendant for a wreckless, malicious, or deceitful act to deter similar conduct; the award need not bear any relation to a party's actual damages.
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CPCU 520: Insurance Operations 2nd Editions/Chapter 6: The Claim Function
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