Claims Handling and Fraud
Claims process
Candidates must understand the lifecycle: notification, validation, investigation, quantum assessment, settlement and recovery. Know the requirements for prompt notification, cooperation, proof of loss, mitigation and subrogation. Understand reserving at the claim level, large loss reporting and recovery from third parties.
Fraud
Know the types of fraud: opportunistic, organised, staged accidents, exaggerated claims, ghost claims and application fraud. Understand the role of data analytics, fraud indicators, red flags, the Insurance Fraud Bureau, and the Claims and Underwriting Exchange. Know the legal consequences of fraud, including forfeiture of the whole claim where the policy contains a fraud clause.
Traps in questions
- Assuming a fraudulent element only forfeits that element - many policies forfeit the whole claim.
- Forgetting that mitigation is a duty of the insured, not an optional courtesy.
- Missing that subrogation rights can be lost through poor claims handling or waiver.
Worked example
A claim for a stolen laptop is submitted with a receipt showing a higher specification than the recovered item. The discrepancy is a red flag; investigation reveals the receipt was altered. Under a fraud clause, the insurer may decline the entire claim and recover sums already paid.