PGI Claims Management 1

Question 1

What is 'large loss management' in commercial insurance claims?

Accepted Answer

A structured approach to handling significant claims involving early notification, dedicated claims handlers, expert appointments, and proactive communication

Answer

Large loss management involves a structured protocol for significant claims: immediate notification up the chain, appointment of dedicated claims professionals, early engagement of forensic accountants or adjusters, proactive communication, and coordination with reinsurers.

Question 2

What is the role of a 'forensic accountant' in major commercial insurance claims?

Accepted Answer

A specialist appointed to quantify business interruption losses, verify financial records, and calculate complex financial aspects of commercial claims

Answer

Forensic accountants are appointed in complex commercial claims to independently assess and quantify financial losses — particularly business interruption claims — examining financial records, projecting lost profits, and verifying claimed amounts.

Question 3

What is 'claims leakage' in insurance claims management?

Accepted Answer

Overpayment of claims due to poor processes, fraud, inadequate reserving, or failures in claims handling, representing value lost from the claims fund

Answer

Claims leakage is the difference between what was actually paid and what should have been paid — resulting from overpayment, fraud, inadequate controls, poor reserving, or process failures. Reducing leakage improves profitability without raising premiums.

Question 4

What is 'incurred but not reported' (IBNR) reserves and why are they important?

Accepted Answer

Reserves set aside for losses that have already occurred but not yet been reported to the insurer — essential for accurate financial reporting

Answer

IBNR reserves account for losses that have already happened but have not yet been reported to the insurer. Without adequate IBNR reserves, an insurer's financial statements will understate liabilities, potentially threatening solvency.

Question 5

What is 'subrogation recovery management' and why is it important for insurers?

Accepted Answer

Actively pursuing recovery from third parties responsible for losses after paying claims, to reduce the net cost of claims

Answer

Subrogation recovery management involves proactively identifying opportunities to recover claim payments from responsible third parties, pursuing legal action where justified, and managing the recovery process to maximize returns and reduce the net cost of claims.

PGI Insurance Practice Test

PGI Insurance Practice Test

PGI Claims Management 1