Fraud Prevention and Insurance Policies Quiz

Study Notes

Product Development Risk

Product development risk involves making changes to an existing product to meet customer needs and increase marketability, impacting product coverage and liabilities.
Companies must conduct an actuarial review and obtain approval to sell the new product.
Ensuring compliance with regulatory requirements from Saudi Central Bank (SAMA) for approval of any new product is necessary.
A report on changes in risks and insured behavior post-launch must be prepared.

Underwriting Risk

Underwriting risk involves the assessment process of risks presented to insurance companies for approval.
Clear articulation of policies and phrases is essential to avoid misinterpretation.
Insurance applications must be completed by the insured.
All policy costs and indirect charges must be included in premiums.
Guidelines for underwriting and departmental responsibilities must be set.
Reinsurance regulations must be followed before product selling.
Regular reviews of policies, underwriting guidelines, and processes across departments are necessary for effective functioning.

Pricing Risk in Underwriting

Pricing risk arises from the process of determining the appropriate premium rate.
Companies must consider all potential risks using appropriate means to determine the price of the product.
Evaluating profits and business losses to determine the effects associated with adjusting the premium rate is necessary.
If new patterns emerge, the company should launch the price assessment process (i.e., re-pricing).
Actuarial experts must be engaged in product pricing.

Claims Settlement Risk

Claims settlement risk involves risks associated with the claims payment process for policyholders.
The risk is that actual claims due to policyholders may exceed the carrying amount of the insurance liabilities.
Insurance risk is affected by the exceptional competitive nature of the market and increased frequency and severity of claims, especially motor and medical claims.
Companies must review decisions regarding claims settlement to align with the coverage of the insurance policy.
Periodic evaluation of claims settlement procedures and principles is necessary.
Identifying and applying the claims settlement process with reinsurers to facilitate settlement is essential.
Identifying and applying proper mechanisms for the development of appropriate precautions is necessary.

Solvency Risk

Authorities and organizations, including the Saudi Central Bank (SAMA) and the Capital Market Authority (CMA), prioritize the solvency of cooperative insurance companies.
Senior managers must implement new measures and policies to combat fraud and improve existing ones based on annual reports and under the supervision of the Board of Directors.
Companies need to define and document customer choice policies with necessary conditions for accepting insurance for new customers in each insurance category and product.
Clear and comprehensive procedures should be established for evaluating claims, specifically outlining steps to verify facts, credibility, and indications of fraud activity for each insurance product.
Companies should communicate their anti-fraud policies and the consequences of providing false or inaccurate information to policyholders.
Including an information paragraph in the policy itself can encourage policyholders to read and agree to the measures taken.
Companies must align their development goals, customer satisfaction objectives, and detection of fraudulent practices.
Operational objectives and fraud reduction objectives should be jointly approved by the Board of Directors annually.

Description

Test your knowledge on implementing measures to combat fraud, defining customer choice policies, and establishing procedures for evaluating insurance claims. The quiz covers topics related to new measures, policies, annual reports, customer choice policies, insurance categories, and claim evaluation procedures.