Insurance Aspects

In this session: We will talk about Insurance Aspects in terms of Financials, Underwriting,
Claims and Billing
How Insurance is sold
• Insurance is sold either directly by Insurance companies or their representatives.
• A producer is a person who sells insurance products for an insurance company or companies.
• Agency is a legal relationship that is formed when one party, the Insurance company, authorizes another party, the agent, to act as
a legal representative of the Insurance company.
• Insurance agents are legal representatives of the insurance company or companies for which they have contractual agreements to
sell insurance.
• An Insurance Broker is an independent business owner of firm that sells insurance by representing customers rather than insurers.
• A managing general agency (MGA) is an independent business organization that appoints and supervises independent agents for
insurance companies that use the independent agency system. The MGA functions almost as a branch office for one or more
insurance companies.
• The direct writing system of insurance marketing uses sales representatives who are employees of an insurance company.
Premium
• Premium is the amount of money an insurance company charges in return for providing coverage for a particular risk.
• There are 3 terms which are commonly used with respect to the premium –
• Written premiums are premiums on policies put into effect, or “written”, during a given period
• Earned premium for a particular policy is the portion of the written premium that applies to the part of the policy period
that has already occurred
• Unearned premium is the portion of the written premium that applies to the part of the policy period that has not yet
occurred
Underwriting
• Underwriting is the process of selecting insureds, pricing coverage, determining insurance policy terms and conditions, and then
monitoring the underwriting decisions made.
• An Underwriter is an insurance company employee who evaluates applicants for insurance, selects those that are acceptable to
the insurer, prices coverage, and determines policy terms and conditions.
• The underwriting process includes below steps –
• Gathering the necessary information
• Information from Producers
• Consumer investigation reports
• Inspection reports
• Claim files
• Making the underwriting decision
• Implementing that decision
• Monitoring the decision
Claims
• A claim is a demand by a person or business seeking to recover from an insurance company for a loss that might be covered by an
insurance policy.
• A claim representative, also called an Adjuster, is a person responsible for investigating, evaluating, and settling claims.
• A claimant is anyone who submits a claim to an insurance company. in some cases, particularly in liability claims, the claimant is a
third party that has suffered a loss and seeks to collect for that loss from an insured. In other cases, particularly in property
claims, the claimant is the insured (the first party).
• Following are the responsibilities of claim representative –
• To respond promptly to the submitted claim
• To obtain adequate information
• To properly evaluate the claim
• To treat all parties fairly
• Claim handling process includes below steps –
• Investigation
• Determining the cause of loss and assessing damage
• Verifying coverage - Is the cause of loss covered under the policy?
• Valuation
• Negotiation and settlement
Billing
• The billing process is the process in which the Insurance company manages the financial transactions required to keep policies in
force.​
• Following is the billing life cycle for a policy –

Receive policy details

Settle the policy Create invoice items

Handle exceptions

Handle delinquency
& collections Schedule invoice
Pay commissions
items on invoices

Process payments
Q&A