Unverified Domain 3: Claims Handling
Official domain names are unverified; this section covers claims handling, a core insurance operations function. ### Claims process Claims handling verifies coverage, investigates facts, evaluates damages, sets reserves, negotiates, and settles. Good-faith handling requires prompt contact, clear communication, and fair evaluation. Investigation may include police reports, inspections, recorded statements, and fraud indicators. Reserves should reflect ultimate expected cost; inadequate reserves distort financial statements. Subrogation and salvage recoveries reduce net loss. Settlement authority is delegated by severity and complexity. ### Worked example An auto collision claim involves inconsistent statements and a late report. The adjuster verifies coverage, obtains the police report, inspects damage, and checks fraud indicators (staged accident pattern). She sets a reserve, requests a recorded statement, and negotiates a settlement within authority. If fraud is suspected, she refers to the special investigation unit before paying. The reasoning: coverage verification and investigation must precede payment; otherwise the insurer may pay an uncovered or fraudulent claim. ### Traps Candidates admit coverage before investigation, miss subrogation opportunities, set reserves too low, or delay communication, which can create bad-faith exposure. Another trap is ignoring fraud indicators because the amount is small. ### Key points - Verify coverage and investigate before payment. - Set reserves to ultimate expected cost. - Pursue subrogation and salvage. - Document communication and rationale. - Refer suspected fraud to the SIU.