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Chapter 1 Overview of Insurance Administration Insurance Administration - administering insurance policies - UW, reinsurance, claims & customer service Producer - person

or entity that 1. Sells insurance, including agents, brokers, financial advisors, and bank personnel, or 2. involves in insurance sales made through direct marketing or internet. Applicant - person or entity that submits an app for indiv insurance & seeks to purchase the insurance coverage. Insured/assured (PI). - person whose life, health, property, or income is covered by an insurance policy. Policyowner - person / entity that owns an indiv ins policy. 3P policy –

when one person purchases an indiv ins policy on the life of another person. Master Group Ins Contract/ Group Ins policy - insures a # of people. Policyholder - ER or other ORG that DECIDES what kind of coverage to purchase for the group & NEGOTIATES the terms & ENTERS into the master group insurance contract with the insurer. Group Prospect/ Proposed Group (GI) - group that has applied, but has NOT yet been approved for group coverage. Certificate of Insurance 1. coverage 2. rights Beneficiary - named to receive the policy benefit. Ethics – system of accepted standards of conduct and moral judgment that combines the elements of honesty, integrity and fair treatment. Ethical Duties for Insurance Administration Equity in Risk acceptance

S. and Fair Customer Service -producers & customers Privacy and Confidentiality of Customer Information -restrict access to personal info only to those who have lawful business & specific need. Field Underwriters – producers in the U.Prompt & Equitable Claim Handling – accdg to term of contract & paying only eligible claims Honest. Objective. occupation & avocation -Risk refer NOT ONLY to the possibility of LOSS to an insurer.decides –accepts / declines risk Claim Administration -evaluates -pays eligible claims -denies ineligible claims Reinsurance -transfers a portion of the risk to another insurer Customer Service -answers customer's ques -provides requested info to customers -process customer's policy changes and transactions -solves customer's problems Insurance Administration Functions 1. health. but also the actual person(s) being insured. Underwriting – process of assessing & classifying the degree of risk represented by the PI/GI with respect to a specific ins product making a decision to Accept or Decline that risk. Insurance Administration Functions Underwriting -investigates. Underwriter . sex. assesses and classifies degree of risk . Adequate Financial Resources Equity in Risk Acceptance -evaluates every application – consistently -charges each policy owner a premium rate – based SOLELY on factors that affect the degree of risk -Factors – age.

gathering info about insurer's business environment. underwriting applications and issuing policies. as well as planning the promotion and distribution of the insurer's products. Claim Administration – process of evaluating each submitted claim of the decision. . improve insurer's competitive position by a. New Business – refers to activities an insurer undertakes in receiving applications. and selection process. Policyowner Service –all service activities performed for people /entities that own individual insurance policies. Marketing – identify the insurer's prospective customers and what they want. Other Insurance Functions 5. and authorizing the payment of each eligible claim accdg the terms of the policy. Customer Service – broad range of activities that a company and its Eys perform to keep customers satisfied so they will continue doing business with the company and speak positively about it to other potential customers. 2. assessing the insurer's sales performance in the market place c. data about competitors b. Member Service –all service activities performed for group insured. classification. Reinsurance -insurance that one ins company obtains from another ins company on risks associated with the ins policies issued by the 1st company. assisting in the development of competitive. 4. 3. Risk – possibility of financial loss Reinsurance Arrangement – 1st insurer TRANSFERS a portion of a risk to a 2nd insurer. which agrees to pay part of the claims of the 1st insurer in exchange for a reinsurance premium.– an ins company HO or regional office EY who performs risk assessment. profitable insurance products.

represent company in litigation. summarizes. Actuarial – composed of actuaries – technical experts in insurance. review forms. Advise on claim disputes. maintains ey records. plans and presents appropriate orientation. policy loans. and interest rates -financial reporting activities 7. Compliance – ensures that insurer adheres to all applicable laws and regulations in each jurisdiction in which the company does business. analyzes and reports data about the company's financial condition. and financial instruments who apply the mathematical knowledge to industry & company statistics to calculate various financial values. training and devt for each employee. annuities. 10. Accounting – collects. . Treasury Operations – manages cash as it flows through the company. Some companies have separate Training & Development. company expenses. -setting up bank accounts -managing lockboxes for collection of premium payments -disbursing policy proceeds via checks or automatic deposits -some companies -separate unit in customer service – premium billings 8. policy lapses. select qualified employees. records. Legal – or law department – handles all legal matters of the company. Information Technology – develops and maintains the company's info systems and oversees info mgt throughout the company. Some combine/separate these departments 9. administers EYs benefit programs. Human Resource recruits and screens job applicants. Activities of Actuarial Staff -statistics – predict rate of death -calculate premium rate -legal reserve liabilities -research on trends in mortality rates.6.

loans & dividends. databases & devices used to perform high volume. people. and repetitive business transactions. Unix. policy value statements. saving date to different storage. . and processes that Collects. Manipulates and Disseminates info. Microsoft Windows. Ex. issuance. Transaction Processing System – organized collection of procedures.quotes. personal computers -OS – windows. Administration Systems –uses to manage information about insurance policies. software. Technology Components Technology Platform – combination of hardware & operating system software on which an administration system runs.Information System – interactive combination of technology. Information Management – use of info systems to provide a company's info users with the info when they need to carry out their job responsibilities. print benefit checks Databases – organized collections of data and information Communications Technology – uses telecommunications to communicate and transfer data electronically Hardware – types of computers the insurer uses Software – computer programs that provide sequences of instructions for a computer and that govern its operation. -harware – mainframes. benefit payments. Operating System Software – controls the basic operations of a computer. servers. routine. Mac Application Software – performs specific business related tasks .

including telecommunication equipment and software that connect them. -ex. & exchanging data with reinsurers. Sale of products over internet .death benefit paid in exchange for proof of death received or payment of renewal premium for continuation of coverage. and analyzed – collection of data that has been converted into a form that is meaningful / useful for the accomplishment of some objective. deposit policy benefits. Intranet . Telecommunications – electronic transmission of communication signals Network – group of interconnected computers & computer devices. E-Commerce – use of the internet and other networks to deliver commercial info and to facilitate business transaction and delivery of products and services. Data – unprocessed facts Information – data are combined. manipulated.portion of an org's intranet that is accessible to people WITHIN the org & to SELECTED external parties to allow home office eys & producers to communicate electronically. Extranet .org's internal computer network that uses Internet Technology but is accessible ONLY to people WITHIN the org. -transfer med lab results.Transaction – any business related exchange. Internet – worldwide network among unrelated users. Email – allows users to type a message into a computer and then send message to other computers connected to a network Electronic Data Interchange (EDI) – computer to computer exchange of data between orgs using a data format agreed upon by the sending and receiving parties -to allow the org to transmit data directly from its computers to the computers of other orgs on the network.

reduced expense decrease error rate – decrease need for data entry & human input improved consistency and quality increase Ey productivity Faster service to customers and producers Critical Components of STP database management system data mining predictive modeling business rules engines document management systems automated workflow systems Centralized Data Repository – database that houses all relevant data contained in the insurer's separate admin systems. Uw can obtain data based on Policy app. Claims staff can access data on benefits and policy terms customers service Rep can retrieve information necessary to answer customer's questions Database Warehouse – type of DBM . -manipulates data in response to queries from users in different functional areas of the company and allows them to access and share the data in the centralized repository. Ex. -ex. forms and records are maintained electronically.****** Technology that enhance Insurance Administration Processes Business Process Management (BPM) – strategy for optimizing business processes / adapting them to meet changing needs. Completion & Submission Application electronically Pure STP – paperless environment. Advantages: increased efficiency. Straight Through Processing (STP) – electronic processing of every step of a transaction w/o manual intervention. Database Management Systems (DBMS) – insurers use this to access centralized repository – group of computer programs that organizes data in a database and allows users to obtain information they need.

-useful in UW process. then. delay. patterns. -collecting patterns and relationships unearthed by data mining. Business Rule Engine (BRE) – application software that automates the decision making process by creating and applying rules to all available information. organizes. and relationships. Ex. Payment History Data and Claims Experience Predictive Modeling – automated technique for predicting future behavior or events. “if. waste time. . Document Imaging/Document Scanning – process of converting printed characters or graphics into digital images on a computer by inserting paper documents in a type of hardware called SCANNER. and retrieves documents that have been converted to digital images. -identify missing information Document Management systems – stores. and store in the insurer's Document Management system. screens and edits data. lost misfiled docs facilitate document sharing Automated Workflow Systems / Workflow Application – technology used to create computer based records pertaining to the status and processing of specific transactions. Advantages elimanates expense of storing papers avoid complicated logistics of storing papers increased efficiency reduce frustration. Scanner – reads the document and translates them into electronic files which are converted to digital images. indexed.. puts data in a standard format.. and then stores the data in the centralized repository. formulating statistical model and generating predictions based on the model.. Data mining – analysis of large amounts of data (external & internal sources ) to discover previously unknown trends. Exception based UW in which rules are applied to process all applications electronically except difficult ones that require human judgment.– that collects data from company's existing databases and possibly form sources OUTSIDE the company..

or theft of data or info. determine what skill set is needed for a particular work & routing the work to an employee with those particular skills Shows: 1. wrongful disclosure (accidental/ intention). Completion dates and Time 8. Major Types of Security Risks Security Risks Unauthorized persons might intercept data traveling over the Internet/private network Hackers might gain access to company databases and view. Unauthorized persons might gain access to private customer information by impersonating authorized persons. Centralized Data Repository – houses all the relevant data contained in the insurer’s separate administration system. Technological Tools: Encryption. When it was received 4. Docs created 7. Virtual private network (VPN) Firewall Intrusion detection software Authentication. technical & procedural steps a company takes to prevent the loss. -disadv.expense of maintaining multiple copies of same data & complexity Security – physical. -route docs automatically to staff members for processing. placing the jobs in work queue so that the jobs are available when staff members are ready to work on them. Ey to whom it is assigned 3. Questions that arose 5. etc./ steal data. System Integration Middleware – enable 2/m incompatible systems to work together. Actions taken 6. Type of Transaction 2.-tracking sheet that accompanies a transaction through the entire workflow process from initial receipt through completion & filing. manipulate. -can use business rules engine for purpose o 1. gauging priority of work item & placing priority items in front queues 2. Cookie Biometric authentication . audit log – record of the work that has been completed on a case.

Data backup software Disaster recovery software *Security Risk: A natural or manmade disaster might destroy data or the system’s ability to function.Firewall. *Security Risk: Unauthorized persons might gain access to private customer information by impersonating authorized persons. . Who possesses the required hardware and/or software that contains the decryption key. Technological Tools: 1.Virtual private network (VPN) -.Intrusion detection software -sequences of commands that indicate an unauthorized user is attempting to access the organization’s systems or databases. Antivirus software .Technology that encodes data so that ONLY an authorized person. *Security Risk: Unauthorized persons might intercept data traveling over the Internet/private network. Technological Tools: 1. Can decode the data. manipulate. An org’s network that uses public telecommunications infrastructure such as the Internet to provide authorized individual users *Security Risk: Hackers might gain access to company databases and view. . -combination of technology and procedures designed to verify a user’s identity before giving the user access to a system or database.Authentication. . -ONLY those individuals who ______ 2.software application that detects viruses and prevents them from infecting a computer and/or helps an infected computer recover.The typical authentication procedure calls for someone trying to access the system or database to provide a user name and password. Technological Tools: 1. 2. -combination of hardware and software that creates an electronic barrier between the public and private areas of a company’s systems.Encryption.A virus or worm might destroy data and/or programs or disable computers./ steal data.

communicates the result. Technological Tools: Antivirus software .Cookie . decides what activities are the key to achievement of the company’s goals and objectives. 3. *Security Risk: A natural or manmade disaster might destroy data or the system’s ability to function.Software applications are available that can aid insurers in developing disaster recovery plans.user’s personal computer that enables the server to recognize the personal computer. --Insurers regularly conduct disaster recovery tests to Practice the recovery of key systems and data. Performance Measurement – process through which a company 1. Benchmarks – performance standards often based on standards achieved by leading companies. how to measure performance of this activities. gathers the information 3.2. Performance Standard – established level of performance against which a company or an individual compares actual performance. **** Quality Control – process of ensuring that an organization accomplishes its objectives & follow its standards. and what performance standards it hopes to achieve 2. Disaster recovery software . Technological Tools: Data backup software .Biometric authentication *Security Risk: A virus or worm might destroy data and/or programs or disable computers. that represent a company’s goals for performance. -FALSE: use only internal performance standards .Companies use systems to back up data to the Internet or intranets while the data is being created and then store the back-up copies off site.software application that detects viruses and prevents them from infecting a computer and/or helps an infected computer recover.

com .Thanks! Joyce Michelle H. Genuino Application Coordinator JH Life New Business Manulife Business Processing Services Joyce_Genuino@jhancock.