End-to-End Claims Lifecycle

Introduction

A claim is the operational point at which an insurance promise becomes a financial, legal and service obligation. Claims management therefore extends well beyond paying or rejecting a claim. It is a controlled sequence of decisions through which an insurer receives information, establishes coverage, evaluates loss, manages uncertainty, determines liability, authorizes payment, pursues recovery and records the final outcome.

The claims lifecycle must balance four objectives that can conflict with one another:

1. Fairness to policyholders, claimants and other affected parties.
2. Accuracy in coverage, liability, valuation and payment decisions.
3. Efficiency in time, cost and resource use.
4. Control over fraud, leakage, regulatory breaches, operational errors and reputational harm.

A mature claims function does not treat these objectives as isolated. Faster settlement is not beneficial if it increases improper payments; rigorous investigation is not beneficial if it creates unreasonable delay or unfair treatment. Effective claims management is consequently a governance discipline as well as an operational process.

Learning Objectives

By the end of this chapter, the reader should be able to:

• explain the stages and control points of an end-to-end claims lifecycle;
• distinguish notification, registration, triage, investigation and settlement activities;
• apply coverage, liability and reserving principles to practical claims decisions;
• design workflows using authority limits, segregation of duties and audit trails;
• identify how documentation, recovery and closure affect claim quality;
• evaluate the use of technology and analytics in claims management;
• recognize ethical, regulatory and fraud-related risks in claims decisions.

1. The Claims Lifecycle as a Control System

A claims process is often represented as a linear chain: notification, investigation, settlement and closure. In practice it is a controlled, iterative system. New evidence may change an initial liability assessment; a closed claim may be reopened when latent damage emerges; a recovery opportunity may become apparent only after settlement.

The lifecycle can be expressed as:

Notification → Registration → Triage → Coverage and liability assessment → Investigation and documentation → Reserving → Authorization → Settlement → Recovery → Closure → Monitoring and possible reopening

The stages overlap. For example, an initial reserve may be established at registration, revised during investigation and finalized after settlement. Similarly, fraud indicators may be identified during notification, but confirmed only after documentary or field investigation.

1.1 Process ownership and the three lines of control

The claims department normally owns day-to-day processing. The first line includes claims handlers, supervisors, surveyors, adjusters and service providers. The second line includes risk, compliance, legal, actuarial and fraud-control functions. The third line is internal audit, which independently evaluates whether controls are designed and operating effectively.

Important governance principles include:

• segregation of duties: the person approving a high-value payment should not be the only person who investigated and entered the claim;
• authority limits: payment, reserve and repudiation decisions should be proportionate to role and expertise;
• standardized evidence requirements: similar claims should be assessed using comparable criteria;
• traceability: material decisions should show who decided, when, on what evidence and under which policy provision;
• exception management: deviations from normal workflow should be documented and reviewed;
• management information: claim trends should inform underwriting, pricing, risk prevention and product design.

2. Notification and First Notice of Loss

Notification, frequently called First Notice of Loss (FNOL), is the initial communication that an event may give rise to a claim. It may be made by the insured, a broker, a third party, a hospital, a repairer, an employer or another authorized representative.

The objective of FNOL is not to decide the claim immediately. It is to capture reliable initial facts, protect the claimant, preserve evidence and initiate the correct workflow.

2.1 Minimum data at notification

A well-designed FNOL records:

• policy number and claimant identity;
• date, time, location and circumstances of the event;
• type and approximate extent of loss;
• immediate safety, medical or emergency needs;
• witnesses and third-party involvement;
• police, fire, medical or other authority reports;
• photographs, video and available documents;
• potential salvage, subrogation or recovery sources;
• preferred communication method and accessibility requirements.

The information should be collected in a manner proportionate to the risk. Requiring an injured person to complete an excessive form before receiving emergency assistance is poor practice, even if the data would eventually be useful.

2.2 Immediate controls

At FNOL, the insurer should check whether the policy appears to be active, whether the reported event falls within the broad class of insured risks and whether urgent mitigation is needed. It should also issue a claim reference and explain next steps, required documents, contacts and expected timelines.

A notification timestamp is important for measuring service standards and compliance with statutory reporting or settlement requirements. Digital channels may improve speed, but they also create risks involving identity verification, cyberattack, inaccessible interfaces and inaccurate automated transcription.

3. Registration and Data Integrity

Registration converts a notification into a formal claim record. The claim should have a unique identifier linked to the policy, customer, insured object and relevant financial transactions.

Registration generally involves:

1. validating policy and claimant details;
2. checking for duplicate claims or prior related losses;
3. classifying the product, peril and claim type;
4. assigning handlers and service providers;
5. recording initial estimates and reserve information;
6. generating statutory, managerial and fraud-screening data fields.

Poor registration causes downstream errors. A wrong date of loss can affect policy applicability; a wrong coverage code can distort portfolio analytics; an omitted third party can compromise liability management.

Data quality should therefore be treated as a control objective. Mandatory fields, validation rules, duplicate detection, controlled vocabularies and audit logs are more reliable than informal reminders. Data minimization is also important: information should be collected and retained only when justified by claims, legal, regulatory or governance purposes.

4. Triage and Segmentation

Triage allocates a claim to an appropriate route according to urgency, complexity, severity, vulnerability, coverage uncertainty and potential fraud or recovery implications. It is a decision about how the claim should be managed, not a final decision about whether it should be paid.

A practical triage model may classify claims as:

Segmentation should be risk-based rather than merely value-based. A low-value bodily injury claim may be more legally or ethically sensitive than a high-value property claim with clear evidence.

4.1 Triage controls

Triage rules should be tested for unintended discrimination. For example, an algorithm that routes claims involving certain geographic areas or demographic proxies to investigation may reproduce historical bias. Human review, explainable rules, performance monitoring and appeal mechanisms are necessary safeguards.

The insurer should also distinguish a fraud indicator from a fraud finding. Late notification, inconsistent accounts or unusually high repair estimates may justify additional inquiry, but they do not prove dishonesty.

5. Coverage Analysis and Liability Determination

Coverage analysis asks whether the policy responds to the reported event. Liability determination asks who is legally or contractually responsible for the loss and to what extent. These questions are related but not identical.

5.1 Coverage analysis

A structured coverage review normally considers:

• whether the policy was in force at the relevant time;
• whether the claimant is an insured or an eligible beneficiary;
• whether the event is an insured peril or occurrence;
• whether exclusions, conditions, warranties or limitations apply;
• whether deductibles, excesses, sublimits or waiting periods apply;
• whether notice and cooperation requirements have been met;
• whether another policy may also respond.

Policy wording must be interpreted consistently with applicable law and regulatory standards. Ambiguity, unfair terms and consumer-protection rules may affect how exclusions or conditions can be applied. A claims handler should not use a policy condition mechanically without considering causation, materiality, prejudice and the governing legal framework.

5.2 Liability determination

In liability claims, the analysis commonly addresses duty, breach, causation, damage and available defenses. Evidence may include statements, contracts, photographs, expert reports, medical records, accident reconstructions and correspondence.

The insurer should separate:

• facts established by evidence;
• facts alleged by a party;
• assumptions used provisionally;
• legal conclusions;
• unresolved questions.

This separation reduces confirmation bias and makes review more transparent. Liability may be admitted, denied, shared or reserved pending further evidence. In some jurisdictions, the insurer may have duties to defend, investigate or make interim payments even while ultimate liability remains unresolved.

6. Investigation and Documentation

Investigation is the organized collection and evaluation of evidence relevant to coverage, causation, quantum, liability, fraud and recovery. It should be proportionate: a minor, clearly covered loss should not receive the same investigative burden as a complex catastrophe or suspected organized fraud matter.

6.1 Evidence management

Useful evidence-management controls include:

• a documented investigation plan;
• source, date and method for each item of evidence;
• secure storage and access restrictions;
• preservation of originals and metadata where relevant;
• a chain of custody for physical or digital evidence;
• records of interviews and material communications;
• reasoned explanations for accepting or rejecting evidence.

A claim file should allow an independent reviewer to reconstruct the decision. It should not merely contain a collection of documents.

6.2 Interviews and experts

Interviews should be conducted fairly, without coercive or accusatory language. Expert reports should state scope, methodology, assumptions, limitations and conclusions. An insurer should avoid selecting or instructing experts in a way that compromises independence.

Surveillance, open-source intelligence, geolocation and social-media evidence may be lawful in some circumstances but can create privacy, accuracy and proportionality risks. Evidence obtained unlawfully or without reliable provenance may be unusable and can damage trust even when it appears adverse to the claimant.

7. Reserving and Financial Control

A reserve is an estimate of the insurer’s expected future financial obligation for a claim. It is not an admission of liability and should not be used to predetermine the claim outcome.

At the individual-claim level, a simple outstanding reserve relationship is:

The expected ultimate claim cost may include indemnity, defense, adjustment and other directly attributable claim expenses, depending on the accounting and reserving framework. If the estimate is CU 80,000 and payments to date are CU 25,000, the outstanding reserve is CU 55,000, assuming no separate treatment of expenses or recoveries.

A broader net cost relationship is:

Here, indemnity paid is compensation paid under the policy, claim expenses include relevant handling, legal or adjustment costs, and recoveries include salvage, subrogation, contribution and other amounts received or expected from responsible parties. The formula is an analytical identity; accounting presentation may classify components differently.

For a portfolio, an incurred loss ratio is commonly expressed as:

Incurred claims may be defined as paid claims plus changes in claim liabilities during the period, subject to the applicable accounting basis. Earned premium represents the portion of written premium relating to coverage provided during the period. The ratio is meaningful only when the numerator and denominator use consistent periods, definitions and accounting treatment.

7.1 Reserving principles

Reserves should be:

• adequate: sufficient for reasonably foreseeable obligations;
• neutral: not deliberately understated or inflated to influence results;
• current: updated when material evidence changes;
• documented: supported by assumptions and evidence;
• segregated where useful: for indemnity, expenses, legal costs and recoveries;
• subject to authority and review: especially for large or volatile claims.

Case reserves are estimates for identified claims. IBNR, or incurred but not reported, reserves address events that have occurred but have not yet been reported, as well as development on known claims where applicable. IBNR is generally estimated at portfolio level using actuarial methods, whereas the claim handler’s case reserve concerns an individual claim.

Common reserving weaknesses include anchoring on the first estimate, failing to revise reserves after new evidence, confusing gross and net amounts, ignoring inflation or legal costs, and treating a reserve as a spending target.

8. Authorization and Decision Governance

Authorization is the formal approval of a payment, denial, compromise, settlement or other material claim decision. Authority matrices should reflect amount, complexity, legal exposure, vulnerability and reputational impact—not only monetary value.

A sound authorization framework includes:

• documented delegated limits;
• independent review above thresholds;
• mandatory legal or technical review for specified risks;
• controls over bank-account changes and payment destinations;
• dual approval for high-value or unusual payments;
• conflict-of-interest declarations;
• automated blocking of duplicate or unauthorized transactions.

Denials and partial settlements require especially clear reasoning. The decision letter should identify relevant facts, policy provisions, evidence considered, outcome, complaint or appeal rights and any further information that could materially affect the decision. Communication should be comprehensible and culturally and linguistically appropriate.

9. Settlement and Payment

Settlement may involve direct payment, repair, replacement, reinstatement, medical treatment, negotiated compromise, annuity or another contractual remedy. The selected form should reflect policy terms, claimant needs, legal requirements and loss characteristics.

Before payment, the insurer should verify:

• payee identity and authority;
• approved amount and deductions;
• deductible or excess application;
• release or settlement terms where appropriate;
• tax, lienholder and co-insurance requirements;
• bank details through a secure process;
• sanctions, anti-money-laundering and payment controls where applicable.

Service performance should be monitored using measures such as cycle time, first-contact resolution, complaint rates, reopened claims, payment accuracy, leakage and claimant outcomes. Speed alone is not a sufficient quality measure.

10. Recovery: Salvage, Subrogation and Contribution

Recovery reduces the net cost of a claim and may promote accountability. It can arise through:

• salvage: value obtained from damaged property;
• subrogation: the insurer’s pursuit of a responsible third party after indemnifying the insured;
• contribution: allocation among insurers covering the same interest or loss;
• reinsurance: transfer of specified insurance risk under a reinsurance contract.

Recovery rights should be identified early. Evidence may deteriorate, limitation periods may expire and settlement with one party may prejudice rights against another. However, recovery action must not unfairly delay a valid payment to the policyholder where the insurer can settle independently.

Recovery reserves should be realistic. An expected recovery is not equivalent to cash received, and uncertain recoveries should not be used to conceal inadequate gross reserving.

11. Closure and Reopening

Closure confirms that the claim has reached an authorized final state. It should not be a purely administrative status change.

A closure checklist may include:

• final coverage and liability decision recorded;
• all approved payments completed or properly scheduled;
• recoveries pursued or documented as impracticable;
• outstanding invoices reconciled;
• reserve released or adjusted appropriately;
• complaints, litigation and regulatory reporting completed;
• documents retained under the applicable retention schedule;
• customer communication issued;
• lessons and fraud intelligence coded for analysis.

A claim may be reopened when new damage appears, a payment error is discovered, litigation develops, a recovery opportunity emerges or the original decision was based on materially incomplete information. Reopening should require a reason, authorization, new reserve assessment and an audit trail. It should not be used to disguise poor initial processing or to manipulate performance indicators.

12. Fraud Diagnostics Across the Lifecycle

Fraud controls are most effective when integrated into ordinary claims governance rather than treated as a separate end-stage investigation. Diagnostic signals may include inconsistent chronology, repeated use of the same service providers, staged accidents, inflated invoices, unusual claim frequency, identity anomalies or links to known networks.

A useful analytical distinction is:

• signal: an observation requiring attention;
• indicator: a pattern that raises the probability of misconduct;
• investigative hypothesis: a testable explanation;
• finding: a conclusion supported by reliable evidence;
• adverse action: denial, referral or legal action taken under applicable rules.

Analytics can prioritize claims, detect networks and identify leakage. Machine-learning models may use structured claim variables, text, images or graph relationships. Yet predictive accuracy does not establish dishonesty. Models may encode historical bias, generate false positives or be difficult to explain. Human review, model validation, threshold governance, privacy controls and outcome monitoring are essential.

13. Applied Case: Commercial Fire Claim

The following is an illustrative case, not a report of an actual insurer.

Background

A small manufacturer reports a warehouse fire. The policy was active, with property damage, business interruption and debris-removal cover. The insured reports damage of CU 2.4 million three days after the incident. A neighboring business alleges that hazardous materials were stored improperly.

Problem

The insurer must provide emergency support while determining cause, coverage, quantum, possible regulatory breaches, business-interruption loss and recovery prospects. Initial documents contain conflicting stock values, and the building’s alarm system appears to have been disconnected before the fire.

Analysis

The claim is triaged as critical because of severity, possible bodily and environmental exposure, business interruption and evidence-preservation risk. An adjuster, fire engineer, forensic accountant and legal adviser are appointed. The insurer establishes a provisional reserve of CU 1.6 million based on available evidence, explicitly marking it as uncertain and subject to revision.

The investigation secures CCTV, alarm records, inventory ledgers, purchase invoices, photographs and fire-service reports. It separates the questions of fire cause, policy compliance, physical damage and business-interruption quantum. The disconnected alarm is treated as an indicator requiring analysis, not automatic proof of a policy breach.

Approach and solution

Emergency mitigation and undisputed property damage are funded without waiting for every issue to be resolved. The insured provides a sworn inventory and independent stock records. The forensic accountant reconstructs pre-fire stock and post-fire production capacity. The legal review examines whether the alarm condition was material, whether it was causally connected to the loss and what remedies are available under governing law.

A revised reserve is established after expert reports. The insurer pays the undisputed amount, negotiates the remaining quantum, preserves potential subrogation rights against an electrical contractor and records the basis for all decisions. Recovery is pursued only after confirming that it will not prejudice the insured’s contractual rights.

Outcome

The final settlement is lower than the initial demand but higher than the first reserve estimate. The claim is closed after payment, recovery documentation and complaint-rights communication are completed. A later review identifies that several commercial policies in the portfolio lack clear guidance on temporary alarm impairment.

Learning points

• Critical triage should accelerate expertise, not prejudge liability.
• Reserves must change when evidence changes.
• A suspicious fact is not equivalent to a fraud finding.
• Payment of undisputed amounts can coexist with continued investigation.
• Claim outcomes should improve underwriting and policy wording.

14. Performance, Quality and Continuous Improvement

A balanced claims scorecard should combine operational, financial, customer, control and learning measures. Examples include average and percentile cycle time, reserve development, payment accuracy, expense per claim, complaint uphold rate, reopened-claim rate, recovery yield, fraud referrals, false-positive rates and audit findings.

Metrics require careful interpretation. A low average settlement time may reflect premature denials or inadequate investigation. A high fraud-referral count may show vigilance, or merely an over-sensitive rule. Measures should therefore be segmented by product, severity, channel, geography and claim complexity.

Root-cause analysis should examine whether claims problems arise from product design, underwriting, distribution, repair networks, system configuration, training or customer communication. Closed-claim reviews, thematic audits and controlled process experiments can support continuous improvement.

15. Ethical and Regulatory Foundations

Claims decisions affect financial security, health, property and legal rights. Core ethical duties include honesty, impartiality, confidentiality, respect, accessibility and avoidance of unreasonable delay.

Regulatory obligations vary by jurisdiction but commonly address fair treatment, prompt acknowledgment, adequate investigation, reasons for denial, complaint handling, data protection, record retention, sanctions, anti-money-laundering and outsourcing oversight. The insurer remains accountable for delegated service providers such as surveyors, repairers, medical reviewers and third-party administrators.

Particular care is required for vulnerable customers, including people with disabilities, bereaved families, victims of violence, financially distressed customers and persons with limited language proficiency. Reasonable adjustments and trauma-informed communication are not merely service enhancements; they may be necessary for fair process.

Challenges and Limitations

The lifecycle model has several limitations. Real claims do not always progress in a uniform sequence. Catastrophes can overwhelm normal staffing and supplier capacity. Legal uncertainty may prevent quick liability decisions. Data can be incomplete, contradictory or biased. Automation may improve consistency while reducing explainability. Strict controls may reduce fraud but also increase friction for legitimate claimants.

Management must therefore apply proportionality. Controls should be strong enough to protect funds and rights, but flexible enough to recognize urgent human needs and unusual but legitimate claims. Professional judgment remains necessary, but it must be disciplined by evidence, policy, law, peer review and documentation.

Best-Practice Framework

An effective end-to-end claims operation should:

1. capture accurate FNOL data and provide immediate guidance;
2. validate policy and identity information at registration;
3. triage by urgency, complexity, vulnerability and risk;
4. separate coverage, liability, quantum and fraud questions;
5. investigate proportionately and preserve evidence;
6. maintain current, documented reserves;
7. apply delegated authority and segregation of duties;
8. communicate decisions clearly and respectfully;
9. pursue recovery without delaying valid indemnification;
10. close only after financial, legal, service and data requirements are complete;
11. permit controlled reopening when new material information arises;
12. use outcomes to improve products, underwriting, controls and customer experience.

Chapter Summary

The claims lifecycle is a governed system extending from first notification through registration, triage, coverage and liability analysis, investigation, documentation, reserving, authorization, settlement, recovery and closure. Each stage has a distinct purpose and control risk, but decisions must remain connected through reliable data, documented reasoning and auditability.

Triage should allocate resources without prejudging outcomes. Investigation should be proportionate and evidence-based. Coverage and liability must be analyzed separately, while fraud indicators must not be confused with proven fraud. Reserves represent estimates of future obligations and must be updated as evidence develops. Authorization requires appropriate authority, segregation of duties and secure payment controls. Recovery protects economic value, while closure confirms that financial, legal, service and recordkeeping obligations are complete.

Technology and analytics can improve speed, consistency and fraud detection, but they introduce privacy, bias, explainability and cybersecurity risks. Ethical claims management therefore combines automation with human accountability, fair treatment, regulatory compliance and continuous review. The ultimate measure of a mature claims function is not simply low cost or rapid settlement, but accurate, fair, defensible and sustainable outcomes.

Key Terms

Claim: A request for payment or performance under an insurance policy.

First Notice of Loss (FNOL): The initial report that an event may give rise to a claim.

Registration: Formal creation and classification of a claim record.

Triage: Risk-based allocation of a claim to an appropriate handling route.

Coverage: The scope of protection provided by the policy.

Exclusion: A policy provision removing specified risks, circumstances or losses from coverage.

Liability: Legal or contractual responsibility for injury, damage or loss.

Quantum: The amount or value of the loss claimed or payable.

Investigation: Systematic collection and evaluation of evidence.

Case reserve: An estimate of the future cost of an identified claim.

IBNR: Incurred but not reported claim liability, including relevant development where applicable.

Indemnity: Compensation or benefit provided under the policy.

Subrogation: Recovery pursued by an insurer from a responsible third party after indemnification.

Salvage: Value recovered from damaged property.

Contribution: Allocation of a loss among insurers covering the same interest or risk.

Claims leakage: Unnecessary or avoidable claim cost caused by error, inefficiency or weak control.

Fraud indicator: A fact or pattern that warrants further inquiry but does not itself prove fraud.

Delegated authority: Formal power granted to an employee or function to make specified decisions.

Reopening: Reinstating a closed claim for authorized review because of new material information or an identified error.

Audit trail: A traceable record of actions, decisions, evidence and approvals.

Review Questions

Short Answer Questions

1. What is the purpose of First Notice of Loss, and why should it not be treated as a final coverage decision?
2. Distinguish a fraud indicator from a fraud finding.
3. What information should be recorded when a claim is registered?
4. Explain the difference between a case reserve and an IBNR reserve.
5. Identify four controls that should operate before a high-value claim payment is released.

Long Answer Questions

1. Explain the complete claims lifecycle and discuss how decisions at one stage affect subsequent stages.
2. Discuss the principles of proportionate investigation, including evidence preservation, expert involvement and fair treatment.
3. Analyze the role of reserving in claims management and explain why reserves must be updated as evidence changes.
4. Evaluate the benefits and risks of using artificial intelligence and analytics for triage and fraud diagnostics.
5. Discuss how recovery, closure and reopening should be governed in a mature claims operation.

Analytical / Application Questions

1. A claimant reports a moderate property loss with clear policy coverage, but the invoice is from a repairer associated with several prior suspicious claims. Design a proportionate workflow that protects against fraud without unfairly delaying settlement.
2. A portfolio has earned premium of CU 10 million, paid claims of CU 4 million and an increase in claim liabilities of CU 1.5 million. Calculate the incurred loss ratio, state the assumptions required and explain two limitations of interpreting the result.
3. A closed liability claim is reopened after new medical evidence indicates a materially higher future obligation. Identify the documentation, reserving, authorization, customer communication and governance actions required.

Multiple Choice Questions with Answers

Question 1

Which activity primarily converts an initial loss report into a formal claim record?

A. Registration

B. Settlement

C. Recovery

D. Closure

Correct Answer: A. Registration

Question 2

What is the principal purpose of triage?

A. To prove fraud before investigation

B. To allocate the claim to an appropriate handling route

C. To determine the final settlement amount

D. To release the reserve automatically

Correct Answer: B. To allocate the claim to an appropriate handling route

Question 3

A suspiciously high repair estimate is best classified initially as:

A. A final fraud finding

B. An automatic denial reason

C. A fraud indicator requiring inquiry

D. A confirmed liability admission

Correct Answer: C. A fraud indicator requiring inquiry

Question 4

If expected ultimate claim cost is CU 80,000 and payments to date are CU 25,000, what is the outstanding reserve?

A. CU 25,000

B. CU 55,000

C. CU 80,000

D. CU 105,000

Correct Answer: B. CU 55,000

Question 5

Which statement best describes subrogation?

A. The value obtained from damaged property

B. Allocation among insurers covering the same risk

C. Recovery from a responsible third party after indemnification

D. An estimate of claims not yet reported

Correct Answer: C. Recovery from a responsible third party after indemnification

Question 6

Which control most directly supports segregation of duties?

A. Allowing one handler to investigate and approve every payment

B. Requiring independent approval for high-value payments

C. Deleting superseded claim notes

D. Using only verbal settlement instructions

Correct Answer: B. Requiring independent approval for high-value payments

Question 7

The incurred loss ratio is calculated as:

A. Earned premium divided by incurred claims

B. Paid claims divided by written premium only

C. Incurred claims divided by earned premium

D. Recoveries divided by claim expenses

Correct Answer: C. Incurred claims divided by earned premium

Question 8

Why should a claim file contain the source and date of evidence?

A. To permit reconstruction and review of the decision

B. To guarantee that the claim will be paid

C. To eliminate the need for policy interpretation

D. To replace all expert reports

Correct Answer: A. To permit reconstruction and review of the decision

Question 9

Which event is an appropriate reason to reopen a closed claim?

A. A desire to improve the monthly closure statistic

B. New material evidence affecting the obligation

C. A routine change in the handler’s workload

D. The claimant’s failure to request a reference number

Correct Answer: B. New material evidence affecting the obligation

Question 10

What is a major governance risk of automated fraud scoring?

A. It makes all claims legally invalid

B. It guarantees that no fraud will be missed

C. It can produce biased or unexplained false positives

D. It prevents recovery from third parties

Correct Answer: C. It can produce biased or unexplained false positives