Claims Management Flashcards
6 cards from real PGI practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Claims Management flashcards as text
What does 'proportional reinsurance recovery' mean in the context of claims management?
Answer: The cedant recovers from the reinsurer the same proportion of a loss as the premium ceded under a proportional treaty
Under proportional reinsurance, the cedant recovers from the reinsurer the same proportion of each loss as the proportion of premium ceded. If 40% of premium is ceded, the reinsurer pays 40% of each loss under the treaty.
What is 'claims bordereaux' in reinsurance claims management?
Answer: A periodic schedule of claims and losses reported from the cedant to the reinsurer, enabling the reinsurer to monitor portfolio development
A claims bordereaux is a periodic (monthly or quarterly) schedule submitted by the cedant to the reinsurer listing all reported claims, paid amounts, reserves, and recoveries under the treaty, enabling the reinsurer to monitor loss development.
What is 'late reporting prejudice' and how can it affect reinsurance recoveries?
Answer: Failure to report claims to the reinsurer within required timeframes, potentially allowing the reinsurer to deny the recovery on grounds of prejudice
Most reinsurance contracts require prompt notification of large or unusual claims. Failure to notify within specified timeframes can prejudice the reinsurer's ability to investigate and manage the claim, potentially providing grounds to deny or reduce the reinsurance recovery.
What is 'clash cover' in excess of loss reinsurance?
Answer: Reinsurance protecting against a single event triggering liability under multiple policies or lines of business simultaneously — the 'clash' between policies
Clash cover protects the cedant when a single catastrophic event triggers liability under multiple policies across different lines (e.g., one major accident creates liability claims, workers' compensation claims, and property claims simultaneously), causing the cedant's retentions across multiple lines to 'clash'.
What is 'co-insurance' in commercial property insurance and how does it affect claims?
Answer: A market arrangement where multiple insurers each take a percentage share of the same risk under one contract, each paying their proportional share of losses
Co-insurance (or co-insurance market placement) is when a risk is too large for one insurer and is placed across multiple co-insurers, each taking a percentage line. Each co-insurer pays its proportionate share of any claim independently.
What is the difference between 'paid losses' and 'incurred losses' in claims reserving?
Answer: Paid losses are amounts actually disbursed; incurred losses include paid amounts plus outstanding reserves for reported but unsettled claims (IBNER) and IBNR — the true total exposure
Paid losses represent actual cash payments made to date. Incurred losses include both paid amounts and reserves set aside for claims still being settled (IBNER) and claims not yet reported (IBNR), representing the insurer's best estimate of ultimate total losses.