Product and Coverage Options
Covers other people’s injuries or death for which the insured is responsible.
Bodily Injury Liability
Liability: Bodily Injury (BI) & Property Damage (PD)\
(BI: Covers other people’s bodily injury or death for which the insured is responsible. PD:Covers damage to someone else’s property)
What does DOI stands for?
Department of Insurance
The Division of Insurance (DOI) administers the laws pertaining to the protection of the insurance consumer through the regulation of the insurance industry.
What is adverse selection?
If every customer is priced the same, the more favorable customers would seek insurance with competitors while the less favorable customers would remain insured at this lower rate that does not adequately cover the losses they incur
What metric measures the amount of policies that remain in force year over year?
Retention
Retention: means keeping our existing customers at renewal time. Liberty Mutual strives to be an industry leader in retaining customers because it is key to growing profitably. Our retention rate reveals how well customers accept our combination of price and service. The higher the retention rate, the lower our expenses and claims.
Lower expenses - The cost of servicing renewal customers is lower than the cost of acquiring new business customers.
Lower claims - Our inforce book of business tends to have fewer claims than new business customers, thus a lower loss ratio
What coverage provides payments for funeral expenses, regardless of fault?
Coverage B: Medical Payments/PIP
Medical Payments (Med)/Personal Injury Protection (PIP)
Med Covers the insured and other passengers in the insured’s vehicle for medical expenses, regardless of fault, up to the purchased limit per person
PIP Covers the insured and other passengers in the insured’s vehicle for medical expenses, regardless of fault, up to the purchased limit per person, including some lost wages. In some states PIP is mandatory
Endorsement is an
An insurance endorsement/rider is an amendment to an existing insurance contract that changes the terms of the original policy. An endorsement/rider can be issued at the time of purchase, mid-term or at renewal time. Insurance premiums may be affected and adjusted as a result.
What does an Underwriter do?
Underwriters review data associated with applicants, access the risk, determine if coverage should be provided, and if so, how much
What is the next step after an insured files a claim with an insurer?
What is covered under Coverage B for Property?
Other Structures, not attached (shed, detached garage, fence)
What is a deductible?
Amount paid out of pocket before insurance covered
DEFINITION: A deductible is the amount of money that the insured person must pay before their insurance policy starts paying for covered expenses.
What do insurance companies do with underwriting profit?
Invest
(This means that in addition to going towards insurance benefits, money from premiums can go to investments such as stocks, bonds, and mutual funds)
Can you name the difference between flat and segmented changes
Flat changes are generally applied across a state or line of business evenly where segmented changes are applied to a specific variable or segment
What does Comprehensive coverage for auto cover?
Name three underwriting variables taken into consideration when determining premium?
Examples of variables for premium determination are: location, personal and policy characteristics, Credit, age, gender, location, coverages selected, etc.
How is adverse selection avoided?
Price Segmentation, Tier ratings, grouping customers with like characteristics and losses into segments
Answer: To avoid adverse selection, price segmentation is built into the auto and property rating plans. Price segmentation is a combination of tier, rating plans, and discounts. One of the most common segmentation tools that both Personal Lines and Safeco have developed is Tier Rating. With Tier Rating customers are grouped with like characteristics and losses into segments and assigned the appropriate price, based on those characteristics and loss experience. The end result is the right rate for each risk
Who is a claimant?
A claimant is the person that is making a claim or seeking compensation, and is not a policy holder or insured under the policy