LOMA 302 THE POLICY LIFECYCLE: INSURANCE ADMINISTRATION MODULE 1 -…
THE POLICY LIFECYCLE:
MODULE 1 - OVERVIEW OF
: This area identifies the company's prospective customers and what they want, and plans the promotion and distribution of products.
: This area assesses and
classifies the risk that an applicant
represents to the insurance company.
: The process of
(1) assessing and classifying the degree of risk represented by a proposed insured or group with respect to a specific insurance product and
(2) making a decision to accept or decline that risk.
: This area develops and maintains the company's information systems and oversees information management throughout the company.
: This area collects, records, summarizes, analyzes and reports the company's financial data.
: This area provides
information to policyowners and handles
policy changes for them.
When the customer contact the insurer is the opportunity
for employees to meet customer's need and build customer
trust and loyalty.
Customer service: The broad range of activities that a company and its employees perform to keep customers satisfied so they will continue doing business with the company and speak positively about it to other potential customers.
Providing exceptional customer service helps an insurer attract and retain customers and improve profitability. Well-served policyowners are more likely to keep their policies in force and buy additional products. This boosts profits because it costs less for an insurer to keep existing customers than to acquire new ones. Satisified policyowners are also more likely to recommend the insurer to family and friends, who then may also buy products, increasing the insurer's sales.
: This area hires and trains employees and administers employee benefit programs.
: This area
evaluates claims and
pays eligible claims to beneficiaries.
A life insurance policy comes to its end in the claim administration area. When the policy's beneficiary files a claim, it is reviewed by staff who determine the insurer's liability.
Prompt and equitable claim evaluation is essential to an insurer's business and financial success. When an insurer pays eligible claims promptly, it fulfills its promise to policyowners and builds a reputation as a trustworthy and reliable company. Failing to do so damages an insurer's reputation and can result in regulatory penalties. But, insurers also must deny ineligible claims, because paying ineligible or fraudulent claims hurts profits and results in higher insurance costs for all policyowners.
Claim administration: The process of evaluating each submitted claim, deciding whether or not the claim is eligible, informing the person who submitted the claim of the decision, and authorizing the payment of each eligible claim according to the terms of the policy.
: This area handles all of the company's legal matters, such as treaties, contracts, and litigation.
: This area applies mathematical knowledge to industry and company statistics to calculate various financial values, including mortality rates, premium rates, and legal reserve liabilities.
: This area ensures that the company adheres to all applicable laws and regulations in each jurisdiction where the company does business.
Because insurers hold a position of public trust, they must operate in ways that protect their financial stability. Insurers promote financial stability by making sound underwriting decisions, which includes accepting as many appropriate risks at appropriate premiums rates as possible.
2. ETHICS IN
: A system of accepted standards of conduct and moral judgment that combines the elements of honesty, integrity, and fair treatment.
Equity in Risk
Based on: (1) - recognized actuarial principles
and (2) - actual anticipated experience.
Customers are also expect promt, accurate,
and empathetic responses.
Privacy and Confidentiality
of Customer Information
Administration staff have an ethical to:
Use only lawful, reasonable and ethical means of getting information.
Get authorization to collect information when required.
Use only accurate information.
Retrict access to personal information only to those people who have lawful and bussiness-specific need for it.
Follow an insurer's written guidelines on how to safeguard confidental information.
Promt and Equitable
Enough financial resource to pay benefit.
SYSTEM AND PROCESSES
An interactive combination of technology, people, and processes that an insurer uses to collect, manipulate, and distribute information about its policies and customers.
Helps employees work effectively and efficiently as they perform the many processes involved in insurance administration.
Life insurers manage these processes to
meet customers' needs promptly and equitably,
while also minimizing operating costs.
Because of the long-term nature of life products, an insurer must continue to service products that it no longer sells, but that require support from outdated computer systems. Often, an insurer has several of these legacy systems operating independently of each other, forming a complex web of administration processes and systems. Antiquated and incompatible systems lack the flexibility of newer, more dynamic technology.
Must comply with regulatory requirements
Insurer must carefully manages its finances
so the company remain solvent.
Updating system and processes so efficient.
Management - BPM
BPM: A strategy for optimizing business
processes or adapting them to meet
changing organizational needs.
BPM technology suite: A collection of software
tools that support and manage the design, modeling, construction, deployment, monitoring, and
refinement of business processes.
Using BPM helps insurers create efficient processes,
which allow the company to adapt quickly to changing
market demands such as: New regulations, Changes in
the economy, Consumer expectations for sales & service.
Processing - STP
Straight through processing (STP): The electronic
processing of every step of a transaction without manual intervention.
A type of technology that stores, organizes,
and retrieves documents that have been
converted to digital images
: a computer can recognize printed text characters in a document and convert it to a dynamic file, with text that the insurer can access and reuse. So, instead of being a static image, the document becomes a file from which the insurer can extract data.
:recognize handwritten characters as well as printed ones.
Outsourcing - BPO
A strategy in which a company contracts with a vendor or other company to perform a specific business function or process.
Example: medical check...
Data refers to unprocessed facts.
Example: a PO name, address, ...
Information: is a collection of data
converted into a form that is meaningful