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General and Property Insurance Operations Risk Assessment: Claims, Pricing, Fraud and Data Controls

A worked example of how an operations team at a general and property insurer finds, scores and controls the risks that affect claims, underwriting data, premiums, fraud, conduct and customer records.

Updated November 2026 8 hazards assessed Review every 6 months Highest risk: Critical to High
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Executive summary

This assessment shows how the operations team of a general and property insurer can find, rate and control the risks that matter to fair claims, sound pricing, accurate reserves and customer trust. Eight risks were chosen because they are plausible in everyday claims, underwriting, premium and compliance work. Claims fraud carries the highest inherent score, while reserve misstatement and data exposure are likely and costly. Each risk is scored before controls and again after existing and added controls. Most risks fall to Medium or Low once the added controls are in place, but claims fraud stays at High because the impact is serious and the controls depend on judgment. The first actions are a second review of large reserve changes, a split of duties for payments, a conflicts declaration for brokers and loss adjusters, and a tested restore of the claims system. Every score illustrates method, not a real organization.

Focus area
General and property insurance operations
Setting
Operations function of a regional general and property insurer that writes home, commercial property and motor cover through brokers
Method
Five by five likelihood and impact risk register

Scope

This assessment covers the operations of a regional general and property insurer, from quote and underwriting support through claims handling, premium collection, broker relationships, reinsurance recovery and regulatory reporting. It looks at risks to accurate reserves, fair customer outcomes, assets, legal duties and trust. It does not provide underwriting advice, legal advice or a view on any real insurer. Jurisdiction, product mix, systems and reinsurance arrangements are assumptions made for teaching.

Context

The insurer has an underwriting team that sets terms with broker support, a claims team of handlers and loss adjusters, a premium and finance team, a compliance function and an IT team that runs the policy and claims system. Claims are recorded in that system, while pricing models and some reserve workings sit in spreadsheets. External brokers, repairers and loss adjusters handle part of the work, and the board receives monthly claims and capital reports. Each risk is scored before controls to show its natural level, then again after existing controls and the additional controls proposed here.

Objectives, assets and stakeholders

The objective is to pay valid claims fairly and promptly, price and accept risk on sound information, hold accurate reserves, protect premiums and customer data, and keep the confidence of policyholders, regulators and the board. The assets in scope are the policy and claims system, premium and claim payment accounts, customer and claimant records, reserve workings, broker and reinsurer relationships and the reputation of the operations team. Stakeholders include policyholders, claimants, brokers, loss adjusters, repairers, reinsurers, staff, the board, the regulator and the external auditor. Every risk has one owner role. The head of operations keeps the register current and reports to the board each month, and the compliance officer checks conduct and conflicts outcomes each quarter.

Risk matrix: before and after controls

Each cell shows hazard numbers placed by likelihood and impact. Compare the two grids to see how controls move each hazard.

Before controls

Inherent risk

Risk before controls: rows are likelihood from almost certain to rare, columns are impact from insignificant to catastrophic. Cells list hazard numbers.
1
Insignificant		 2
Minor		 3
Moderate		 4
Major		 5
Catastrophic
5 Almost certain Likelihood 5, impact 4, score 20, critical: H03
4 Likely Likelihood 4, impact 4, score 16, high: H01 H07
3 Possible Likelihood 3, impact 3, score 9, medium: H04 Likelihood 3, impact 4, score 12, high: H02 H06
2 Unlikely Likelihood 2, impact 4, score 8, medium: H08 Likelihood 2, impact 5, score 10, high: H05
1 Rare

After controls

Residual risk

Risk after controls: rows are likelihood from almost certain to rare, columns are impact from insignificant to catastrophic. Cells list hazard numbers.
1
Insignificant		 2
Minor		 3
Moderate		 4
Major		 5
Catastrophic
5 Almost certain
4 Likely
3 Possible Likelihood 3, impact 4, score 12, high: H03
2 Unlikely Likelihood 2, impact 2, score 4, low: H02 H04 H08 Likelihood 2, impact 3, score 6, medium: H01 H05 H06 Likelihood 2, impact 4, score 8, medium: H07
1 Rare
  • Low 1 to 4
  • Medium 5 to 9
  • High 10 to 16
  • Critical 17 to 25

Hazard register

A summary first, then the detail for each hazard.

Summary of hazards with scores before and after controls
No.HazardBeforeAfterOwner
H01 Reserve misstatement from claims assessment errors 16 High 6 Medium Claims manager
H02 Underwriting and pricing errors from poor risk data 12 High 4 Low Underwriting manager
H03 Claims fraud and staged or inflated losses 20 Critical 12 High Special investigations lead
H04 Premium and claim payment misappropriation 9 Medium 4 Low Finance manager
H05 Conflicts of interest with brokers, loss adjusters and repairers 10 High 6 Medium Compliance officer
H06 Regulatory, tax and reporting failures 12 High 6 Medium Compliance officer
H07 Cyber attack and customer data exposure 16 High 8 Medium IT manager
H08 Catastrophe accumulation and reinsurer failure 8 Medium 4 Low Reinsurance lead
H01

Reserve misstatement from claims assessment errors

Financial Before 16 After 6

Claims are assessed or reserved at the wrong value, or reserve changes are not reviewed, so provisions in the accounts are too high or too low and results are misstated.

Who or what is affected: Management, board, reinsurers and the external auditor

Causes

Rushed assessments, incomplete evidence and reserve guidance that is unclear.

Consequences

Misstated results, restated accounts and loss of board confidence.

Existing controls

  • Claims above a set value need manager approval.
  • Reserves are reviewed by the claims manager each month.

Control gaps

Small reserve changes are not reviewed against the claim file, and stale reserves go unchallenged.

Additional controls

  • Prevent: Use a reserve guideline with evidence fields for every change above the agreed value.
  • Detect: Run monthly exception reports on large movements and stale reserves.
Likelihood 4 x impact 4 before; 2 x 3 after Owner: Claims manager Target: Within 45 days Early warning: Reserves unchanged for more than 90 days on open claims.
H02

Underwriting and pricing errors from poor risk data

Operational Before 12 After 4

Risks are priced on incomplete or estimated property, vehicle or occupancy data, so premiums do not reflect the exposure and losses run above the price charged.

Who or what is affected: Underwriters, policyholders and reinsurers

Causes

Incomplete broker submissions, manual rating entries and pricing rules applied inconsistently.

Consequences

Under-priced risks, unexpected losses, disputes and poor reinsurance terms.

Existing controls

  • Quotes are checked against the rating guide by a senior underwriter.
  • Risk details are confirmed with the broker at binding.

Control gaps

Sampling is light, and declared values are rarely checked after binding.

Additional controls

  • Prevent: Require verified property and vehicle data fields before a quote can be bound.
  • Detect: Sample bound risks each quarter and compare declared values with inspection records.
Likelihood 3 x impact 4 before; 2 x 2 after Owner: Underwriting manager Target: Within 60 days Early warning: Bound risks with missing or estimated property values.
H03

Claims fraud and staged or inflated losses

Financial Before 20 After 12

Claimants or organized groups stage losses, inflate repair invoices or misstate circumstances, and the insurer pays claims that are false or overstated.

Who or what is affected: Policyholders, claims staff, honest customers and the insurer's capital

Causes

Financial pressure on claimants, organized rings and weak checks on early evidence.

Consequences

Paid false claims, higher premiums for honest customers, legal action and reputational harm.

Existing controls

  • Claims above a set value are checked by a loss adjuster.
  • Suspicious claims are flagged at first notification by a simple rule set.

Control gaps

Rules are applied only at first notice, and linked claims across different products are not compared.

Additional controls

  • Prevent: Verify claimant identity, repairer invoices and supplier bank details before any payment is released.
  • Detect: Link claims by address, phone, vehicle or repairer to find rings and repeat claimants.
  • Respond: Refer confirmed or strong suspicion cases to the special investigations team and hold payment.
Likelihood 5 x impact 4 before; 3 x 4 after Owner: Special investigations lead Target: Within 60 days Early warning: Claims with repeated claimants, addresses or repairers linked across several files.
H04

Premium and claim payment misappropriation

Financial Before 9 After 4

Premiums held for brokers or claim payments are redirected, altered or released to the wrong payee, so customers and intermediaries lose money and the insurer is exposed.

Who or what is affected: Policyholders, brokers and finance staff

Causes

Trust placed in single users, broker money held for too long and manual payment files.

Consequences

Lost premiums, unpaid claims, legal claims and reputational damage.

Existing controls

  • Payments above a limit need a second approval.
  • Broker account statements are reconciled each month.

Control gaps

Broker balances are reconciled late, and payment files can be edited after approval.

Additional controls

  • Prevent: Separate the person who sets up a payee from the person who releases payment.
  • Respond: Freeze suspect payments and notify the broker and the bank within one working day.
Likelihood 3 x impact 3 before; 2 x 2 after Owner: Finance manager Target: Within 45 days Early warning: Broker account balances not reconciled within the agreed month end window.
H05

Conflicts of interest with brokers, loss adjusters and repairers

Legal and compliance Before 10 After 6

A broker, loss adjuster or repairer has a personal or business link to a claim or policy they handle, which weakens independence and can lead to unfair decisions.

Who or what is affected: Policyholders, claimants, the regulator and staff

Causes

Long personal relationships, fee pressure and unclear rules on hospitality.

Consequences

Unfair decisions, regulatory action, loss of independence and reputational damage.

Existing controls

  • Staff sign a code of conduct each year.
  • Gifts above a set value must be declared.

Control gaps

Declarations are collected but not compared with live assignments.

Additional controls

  • Prevent: Require a conflicts declaration from each broker, loss adjuster and repairer before assignment.
  • Detect: Compare assignment records with staff declarations and report matches each quarter.
  • Respond: Remove the assignment and review affected decisions when a conflict is found.
Likelihood 2 x impact 5 before; 2 x 3 after Owner: Compliance officer Target: Within 60 days Early warning: Broker or loss adjuster assignments without a completed conflicts declaration.
H06

Regulatory, tax and reporting failures

Legal and compliance Before 12 After 6

Returns, complaint records or tax filings are late, incomplete or wrong, so the insurer breaches its duties and the board receives an incomplete picture of performance.

Who or what is affected: Board, regulators, policyholders and auditors

Causes

Rules that vary by jurisdiction, changing requirements and returns prepared at the last minute.

Consequences

Penalties, restated figures, remediation costs and regulator scrutiny.

Existing controls

  • A compliance calendar lists the main returns.
  • Claims and complaints data goes to the board each month.

Control gaps

Applicable rules are assumed and not confirmed before each return.

Additional controls

  • Prevent: Keep a return calendar with an owner and a backup owner for every filing, checked monthly.
  • Detect: Ask a qualified reviewer to test a sample of returns and complaint handling against the rules that apply.
  • Recover: Agree a correction and disclosure route for any late or wrong return.
Likelihood 3 x impact 4 before; 2 x 3 after Owner: Compliance officer Target: Within 30 days Early warning: A return due within 10 days with no named preparer or reviewer.
H07

Cyber attack and customer data exposure

Technology and data Before 16 After 8

Phishing, weak credentials or unprotected spreadsheets expose claimant and policyholder data, and a successful attack can stop claims handling or lead to fraudulent payments.

Who or what is affected: Policyholders, claimants, staff and brokers

Causes

Phishing, reused passwords, unencrypted spreadsheets and data shared with suppliers.

Consequences

Stolen customer data, fraudulent payments, system downtime and regulator notice.

Existing controls

  • The claims system needs a password and is backed up each night.
  • Staff are trained on phishing each year.

Control gaps

Spreadsheets holding claimant data sit outside access controls, and restores are not tested.

Additional controls

  • Prevent: Enable multi-factor sign in and limit access to claimant health and bank data by role.
  • Recover: Test restoring the claims system from backup and keep a written recovery plan.
Likelihood 4 x impact 4 before; 2 x 4 after Owner: IT manager Target: Within 30 days Early warning: A spike in failed sign in attempts or phishing reports from claims staff.
H08

Catastrophe accumulation and reinsurer failure

Financial Before 8 After 4

Too many insured properties sit in one area, or a reinsurer cannot pay recoveries after a large event, so losses exceed the insurer's appetite and capital is strained.

Who or what is affected: Policyholders, reinsurers, the board and the capital team

Causes

Concentration of property in one area, a single weather event and reinsurers with weak capital.

Consequences

Losses beyond appetite, unpaid recoveries, capital strain and service failure.

Existing controls

  • Exposure by postcode is reported each month.
  • The reinsurance panel is reviewed each year against credit ratings.

Control gaps

Aggregation uses older values, and reinsurer exposure is not tracked between reviews.

Additional controls

  • Detect: Report exposure to a single event and compare it with the agreed appetite each month.
  • Respond: Activate the catastrophe response plan and notify reinsurers when a threshold is crossed.
Likelihood 2 x impact 4 before; 2 x 2 after Owner: Reinsurance lead Target: Within 90 days Early warning: Exposure to one event that rises above the agreed appetite.

Rating method and evaluation

Each risk is rated on two five-point scales. Likelihood runs from Rare to Almost certain, and impact runs from Insignificant to Catastrophic, covering money paid out, customer harm, regulatory consequence and effect on trust. Multiplying the two gives a score from 1 to 25, which falls into one of four bands: Low from 1 to 4, Medium from 5 to 9, High from 10 to 16 and Critical from 17 to 25. The score is a guide for ordering work, not a measurement. Inherent risk is the score before any controls. Residual risk is the score after the existing and added controls, and it can never be higher than the inherent score. Where inherent risk is 10 or more, the residual must fall. Critical and High residual risks need senior attention and a dated plan, Medium risks need routine controls with a named owner, and Low risks are accepted and watched. Ratings are challenged by claims handlers, underwriters and the compliance officer, and any rating is reviewed when its warning indicator reaches the threshold or when a claim or complaint shows a gap.

Likelihood, impact and rating bands

Likelihood

  • 5 Almost certain: Expected to happen in most circumstances.
  • 4 Likely: Will probably happen in many circumstances.
  • 3 Possible: Could happen at some time.
  • 2 Unlikely: Not expected, but it could happen.
  • 1 Rare: Only in exceptional circumstances.

Impact

  • 1 Insignificant: No lasting effect. Handled within routine work.
  • 2 Minor: Small effect that is quickly corrected.
  • 3 Moderate: Noticeable effect that needs managed effort to correct.
  • 4 Major: Serious effect on people, delivery or reputation.
  • 5 Catastrophic: Severe or lasting effect that threatens the whole activity.

Bands (likelihood x impact)

  • Low (1 to 4): Accept and monitor.
  • Medium (5 to 9): Manage with routine controls.
  • High (10 to 16): Senior attention and a treatment plan.
  • Critical (17 to 25): Act first. Do not proceed until reduced.

Monitoring, escalation and review

Review this assessment every 6 months, and sooner when an indicator below reaches its threshold.

Early-warning indicators and escalation thresholds
Indicator to watchEscalate when
Reserve changes above the agreed value made without a second review.Escalate to the claims manager at once, and to the head of operations if the change is not reviewed within 5 working days.
Claims with repeated claimants, addresses or repairers linked across several files.Escalate to the special investigations lead when a link is found, and hold payment until it is reviewed.
Broker or loss adjuster assignments without a completed conflicts declaration.Escalate to the compliance officer before the next assignment, and to the head of operations if unresolved after 10 working days.
Customer complaints about delayed or unexplained claim decisions above the normal level.Escalate to the head of operations when the monthly count rises above the agreed threshold, and to the board if it persists for a quarter.
Failed restore tests or unpatched claims system components.Escalate to the IT manager at once, and to the head of operations if a fix is not in place within 14 days.

Contingency arrangements

If a serious event occurs, such as a suspected fraud ring, a large catastrophe claims surge or a data breach, the head of operations pauses related payments and preserves claim files. The IT manager isolates affected systems and restores data from the latest tested backup. The compliance officer leads contact with the regulator and external auditor, and the reinsurance lead notifies reinsurers as the contracts require. Customers are told early, plainly and with a named contact. Extra handlers are called in from a standby panel to protect service levels.

Prioritized action plan

  1. Introduce a second review of reserve changes above an agreed value, owner claims manager, within 45 days.
  2. Split entry and approval of claim and premium payments, and review system access, owner head of operations, within 60 days.
  3. Add an independence and conflicts check for brokers and loss adjusters before each assignment, owner compliance officer, within 45 days.
  4. Enable multi-factor sign in and test a restore of the claims system from backup, owner IT manager, within 30 days.
  5. Set up fraud referral triggers and a case log for suspicious claims, owner special investigations lead, within 60 days.

Conclusion

Fair and accurate insurance operations depend on steady habits: second reviews of large reserve and payment decisions, split duties, conflicts declarations, checks on every change to payment details and a tested claims system backup. The highest scores sit with fraud, reserve misstatement and data exposure, and each has actions that bring residual risk down. Treat the register as a living record, review it on the stated cycle, and seek qualified advice for any real underwriting, actuarial, legal or regulatory question.

Assumptions and limitations

Assumptions

  • The insurer is authorized in one jurisdiction and its regulator's rules are not named, so legal duties are described in general terms only.
  • Products are household, motor and commercial property cover written through brokers and sold direct.
  • Reserves are set by claims staff and reviewed by an actuarial function that is outside the scope of this example.
  • Systems are a commercial policy and claims platform with some spreadsheets, and all staff use managed devices.

Limitations

  • The scores are examples for learning and do not describe any real insurer, portfolio or claim.
  • Insurance, reserving, tax and conduct rules differ by country and change over time, so specialist review is needed.
  • This is educational content and is not underwriting, actuarial, legal or financial advice.

Related frameworks to study

  • Three lines model of risk ownership
  • Hierarchy of controls
  • Enterprise risk management framework
  • Internal control framework with control activities and monitoring

Finance Risk Assessment

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For Learning Reference Only: This assessment demonstrates how risk assessment principles are applied in a practical setting, providing a useful reference for learning and understanding. Actual assessments may be adapted to suit specific site conditions and circumstances.

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