Casualty Actuarial Society (CAS) Practice Exam

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What is a primary goal of the claims function in insurance?

  1. Reducing customer complaints

  2. Increasing claim rejection rates

  3. Supporting the insurer's financial goals

  4. Limiting claim expenses

The correct answer is: Supporting the insurer's financial goals

The primary goal of the claims function in insurance is to support the insurer's financial goals. This is achieved through effective claims management, which ensures that claims are processed efficiently and fairly while maintaining the financial integrity of the insurance company. By managing claims effectively, insurers can minimize losses associated with claims payments, thereby protecting their overall financial standing. In addition to this primary goal, the claims function also involves balancing customer satisfaction and operational efficiency. This means providing timely and fair resolutions to policyholders' claims while ensuring that the costs associated with these claims do not significantly impact the insurer’s profitability. Therefore, the claims function plays a crucial role in aligning with the insurer's broader financial objectives. Other aspects like reducing customer complaints or limiting claim expenses, while important, are generally seen as secondary to the overarching goal of maintaining the financial health of the company. Focusing solely on increasing claim rejection rates could lead to customer dissatisfaction and harm the insurer's reputation, ultimately conflicting with long-term financial goals.