Chapter 10 – Review Questions
1. The 2 essential functions of insurance are:
a. Insurers reimburse and indemnify policyholders under the terms of their policies
b. By providing this protection and indemnity in the community at large, insurers help to maintain economic stability and confidence
2. The community at large benefit from insurance coverage if the cost of rebuilding houses and businesses, or if the risks of running businesses or of driving on the highways had to be borne w/out insurance protection, the economy would suffer serious consequences. Fire-damaged buildings would be left inadequately repaired or demolished, bankruptcies would soar and entrepreneurs would be deterred from starting new businesses, competition would suffer and many industries would be decimated.
3. The Insurance Bureau of Canada produced the Claims Agreement document.
4. Five issues dealt w/ in the standing instructions of the Claims Agreement are:
a. Advise adjusters of the limits of their authority to settle claims
b. Have adjusters carry suitable proof of identity
c. When liability is denied to a first-party claimant, adjusters will provide reasons for the denial
d. Adjusters will advise third-party claimants in auto claims of the name of the insured, the insurer represented, the policy #, and the date of expiry of the claim under relevant statutory limitation periods
e. Adjusters are to observe Federal and Provincial laws and regulations relating to unfair and deceptive acts and practices
5. The three standards also included in the Claims Agreement that adjusters must achieve are:
· Diligently seek to exercise skill and care, refusing to be influenced by self-interest or inappropriate considerations urged upon them by others
· Promptly report policy violations and cases of fraud to the company
· Co-operate appropriately w/ opposing adjusters
6. Six activities that adjusters must not engage in according to the Claims Agreement:
· Not seek secret profit or acquire any financial interest in matters entrusted to them
· Not offer inducement to public officials or employees of any organization in order to obtain a benefit for themselves or their company
· Not exceed their authority as conferred by their company
· Not advise any claimant to refrain from seeking legal counsel
· Not dealing directly w/ any claimant known to be represented by legal counsel except w/ the permission of such counsel
· No offer claimant’s counsel an increased allowance for costs in return for a reduced settlement amount
7. The Canadian Independent Adjusters’ Association produced a code of ethics for independent adjusters.
8. The types of service claimants and policyholders are entitled to according to the code of ethics include:
· Policyholders/claimants are entitled to received courteous, fair and objective treatment at all times
· Policyholders/claimants are entitled to receive prompt and knowledgeable service
· Any policyholder/claimant or other person who has given a written statement to any member may request and obtain a copy w/out charge
· Policyholders/claimants shall not be given legal advice by any adjuster, nor shall they be advised to refrain from seeking legal advice, and no adjuster shall deal w/ any policyholder or claimant who is represented by legal counsel w/out the consent of the legal counsel involved
· Policyholders will be given explanations w/ respect to their insurance coverage as relevant to the loss or claim being adjusted
· Medical info or records shall not be obtained on any policyholder or claimant w/out the written consent of the individual or his legal representative
· An adjuster will identify himself as an insurance adjuster in his dealings w/ any policyholder or claimant and shall if requested fully identify his principals
9. The adjuster’s position with respect to legal advice is not to give any legal advice or refrain the insured from seeking legal advice.
10. The adjuster shall represent only one interest and shall immediately inform his principals of any potential conflict of interest brought about by either dual assignments, financial or other interest in the claim, personal relations, or previous knowledge of circumstances relating to his mandate.
11. The purpose of the Canadian Independent Adjusters’ Association is to promote and represent common business interests of licensed independent insurance adjusters w/in the insurance industry.
12. Code of ethics issues noted by the Canadian Association of Fire Investigators include:
· To be loyal to the organization they represent
· To conduct their personal and official life in such a way as to inspire the confidence of the public
· To act fairly and impartially towards all people
· Not to use they position for personal advantage or profit
· Not to claim qualifications they do not have
· Not to betray a confidence or jeopardize an investigation, but to respect fellow members as people of similarly high standards
· Not to work w/ or provide info to people whose goals are inconsistent w/ the standards of the Association
· To seek the truth at all times in investigating occurrences
13. The standards of conduct outlined for Certified Fraud Examiner are:
· Demonstrate a commitment to professionalism and diligence
· Not engage in illegal or unethical conduct or any activity which would involve a conflict of interest
· Accept assignments only if there is a reasonable likelihood that they can be completed w/ professional competence
· Comply w/ lawful orders of the courts, and testify truthfully and w/out bias or prejudice
· Obtain evidence or documentation to support any opinion rendered
· Disclose confidential info only w/ proper authorization
· Reveal all material facts discovered during an assignment
· Strive continuously to improve professional skills and effectiveness
14. Conduct that would encourage fair and prompt claims handling include:
· Always use appropriate language in any communication
· Do not improperly consider the insured’s race, sex, religion or ethnic group in deciding whether or not to pay a claim
· Keep promises that you make
· Do not deny a claim b/c of a minor technical objection, such as a minor defect in a claims forms
· Make fair and legitimate offers to settle claims
· Consider new and timely info that is relevant
· Do not misrepresent facts or policy provisions
· Acknowledge and act on communications from the insured
· Provide reasonable assistance to the insured w/ respect to documentation required when requested
· Inform the insured about important matters w/ respect to submission of the claim
· Do not ask the insured to provide the same info more than once, or in only a slightly different format
· Do not refuse to pay claims w/out having conducted an adequate investigation
· Do not harass the insured or conduct unwarranted or intrusive surveillance
15. Some unfair and deceptive acts and practices include:
· Unfair discrimination in rates for risks of essentially the same physical hazards and in the same territorial classification
· Literature or statements that misrepresent the benefits of a policy
· Gifts or money that induce prospective insured to buy a policy
· Conduct that results in unreasonable delay or resistance to the fair settlement of a claim
· Making the issuance of a policy conditional on the insured having to purchase another insurance policy
16. W/ regard to gathering personal info, IBC privacy guidelines say:
· Only proper and authorized means will be employed to collect that personal info which is pertinent and essential to the effective conduct of the insurance business, and to the extent possible such personal info will be obtained directly from the individual concerned
· Personal info that is collected and retained will be considered to be confidential and proper safeguards will be provided to protect that confidentiality whether stored in hard copy or in electronic data banks
W/ regard to retaining personal info, IBC privacy guidelines say:
· Every reasonable effort will be made to ensure that personal info collected, used, retrained or disclosed is accurate, relevant, timely, and complete
· The company will not permit access to, or disclosure of personal info, retained by the company to any person, other than an employee, agent, broker, reinsurer, or other insurers w/ a legitimate business need for the info, except as may be required by legal process, statutory authority, contractual obligation or business practice
· All employees, agents, brokers, and other persons or organizations acting for or on the company’s behalf, including pools and associations, will be required to conform to the applicable guidelines and to such legislation
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