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Project On Claims Management in Life Insurance
Project On Claims Management in Life Insurance
Abstract
The field of insurance has taken a giant leap at the threshold of
twentieth century. Insurance have become an integral part of life of man
all over the globe. The proverb Need is the mother of invention is
proving equally correct in case of insurance Insurance have already had a
considerable impact on many aspects of our society .Claims management
is another important aspect on insurance. It is complex in nature that is
true but it is a driving force to plant confidence in the hearts of people.
Claims Management is one of the most challenging business
processes in the insurance industry. With the number of stakeholders
involved, the dependencies and the logistics, there is a need is to
eliminate manual interventions. For many organizations, claim
management and administration is viewed solely as a service operation.
Claim management is expected to run the claim process efficiently and
keep expenses low, but little attention is given to leveraging high-impact
opportunities afforded through effective data management. In fact, the
data captured in the claim process, which all too often are underutilized,
are rich in valuable information for those who know how to extract and
analyze it.
Claims management is an expert system which generates the rules
and regulations for the assessment of general damages using the key
information contained in medical reports, surveyor report, loss assessors
reports, claimants petition and the procedures or conditions and
warrenties contained in the policy document. The claims management
regulates the payment of general damages and also payment of the loss of
future earnings.
This project is just a gist about how the insurance companies settle
the claims, the procedure that is followed, the intermediaries that are
involved in the process and so on. This project throws light on various
aspects on claims management and the problems faced by them.
Claims in Insurance
Definition of claims:
Claim is a right
of insured to receive
the amount secured
under the policy of
insurance contract
promised by Insurer.
Claims Management
Many insurers have recognized the need to improve the efficiency
of their claims management process. They have streamlined processes,
eliminated paper-based forms and redistributed work to match the
demands to skills. The objective of their efforts is to lower costs, while
also increasing overall throughput. Efficiency improvements make tasks
quicker and less costly to execute. However, to realize even greater
improvements in the claims handling process, insurers must also focus on
the effectiveness of their claims decisions.
Claims handling costs typically represent 10% to 15% of net
earned premium; in contrast, claims payouts represent 40% to 65%.
Insurers that expand their focus to include effective as well as efficient
claims processing will find a far larger pool of savings opportunities.
Technology can play a significant role by providing integrated channels
for communication and collaboration. This would help the insurance
company increase employee productivity by reducing cycle time and
defect rate and also increase employee participation and compliance.
Claims Processing sometimes involves collating and sharing large
amounts of information among multiple parties involved in a claim, from
body shops to adjusters to investigators to lawyers and doctors to
claimants and regulators. And it involves the knowledge of experienced
adjusters to determine the fair and appropriate outcome of a claim. In
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Types of claims
Understanding the requirements for various life insurance benefits
(claims) is important for the customers. The overriding condition on
claims is the payment of premiums i.e. claims are only payable if
premiums are paid up to date. There are various types of claims under life
policies. The most common claims include:
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The general requirements for each of these claims are briefly explained
below.
Death Claims:
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LIC upon the receipt of the claim form will act in the following manner:
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the nominee or
ii.
iii.
iii.
iv.
v.
vi.
policy number / s
vii.
Soon after the receipt of the intimation of the death, the branch office
sends the necessary claim forms along with instructions regarding the
procedure to be followed by the claimant.
2) Submission of Proof of Death
The proof of death required to be submitted is a certificate by
Municipal Death Registry or by a Public Record Office which maintains
the records of births and deaths in the locality. Besides this some other
statements or certificates are also required to be given in the prescribed
Claim forms:
Statement from the doctor
policyholders last illness.
who
attended
the
deceased
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4) Certificate of Ownership.
When the policy is validly assigned, or a nominee has been designated
in the policy, no further proof of title is necessary. In any other case, the
certificate of title is necessary. In such a case the corporation would
require legal evidence of title such as Succession Certificate or Letters of
Administration or Letters of Probate or a Will.
5) Payment and Discharge
After completing all the above formalities, the insurance company
issues a discharge form for completion, which is to be signed by the
person entitled to receive policy money. That is, it should be signed by:
the nominee, in case nomination was made under the policy;
the assignee, in case the policy was validity and unconditionally
assigned;
the legal representative or successor.
In due course, LIC sends the cheque for the amount due to the person
entitled to receive the same.
6) Early death claims:
If death occurs in less than three years from the date of the policy,
following requirements must be complied with:
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Policy Document
ii.
iii.
iv.
Age Proof Document (if age has not been admitted earlier)
v.
vi.
vii.
Certificate of Death
viii.
ix.
x.
xi.
Policy Document
Discharge Form 3801
Legal Evidence of Title
Death Certificate
Claim Form No. 3783A
Assignment / Re-assignment Deed, if any (if policy not assigned
/nominated)
Age Proof Document (if age has not been admitted earlier)
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Death claims
Beneficiaries:
The claimants or the beneficiaries under the life insurance policies, paid
on the happening of the events which is death of the assured, are as
follows:
The legal heirs of the policyholder.
The nominees, assignees and transferees
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The insured may opt for the following alternatives while settling the
claims:
Pay the claims as reported by the surveyor or the claims made by
the insurer whichever is less.
Take help of the agent or some other persons and compromise or to
come to an agreement with the assured in case of a disputed claim.
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Insurance users pay their premiums, year after year, trusting their policies
to protect their lives or businesses in the event of a loss. However, there
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ii.
iii.
iv.
v.
vi.
vii.
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LIC
ICICI Prudential
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Claims payment
period
Documentation
Use of technology
Efficiency of
employees
Infrastructure
ICICI is customer
oriented and customer
satisfaction and delight
are its main objectives.
It settles the claims in
8-10 working days.
2007-08
2006-07
Rs in crores
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134.22
31,955.18
129.29
32,093.90
Claims by death
Numbers(in lakhs)
Amount
6.73
5,250.40
6.02
4,443.32
Annuties
2,393.24
2,189.64
Surrenders
18,024.59
15,955.31
Total
57,623.41
54,682.17
Outstanding claims
at the end of the year
2007-08
2006-07
Rs. In crores
Maturity
Death
123.02
232.41
42.95
205.44
Total
355.43
248.39
Ratio of outstanding
claims to claims
payable:
0.96%
0.68%
Claims settlement
Claims settled during the year
Maturity
Death
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Year
Number
2007-08
5,138.12
Number
Amount
134.22
Amount
31,873.35
6.73
2006-07
129.29 32,101.92
4,383.99
6.02
2005-06
115.58 24,724.58
3,748.58
5.27
Total Income
Total Premium Income
Total life fund
Total Assets
Total Investment
Investment in
Infrastructure
7. Policies in force
(31/03/2006)
:
:
:
:
:
:
21.79 crores
Case study
(1)
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(2)
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(3)
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Conclusion
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Bibliography
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Webliography
www.insuremagic.com
www.licindia.com
www.icicprulife.com
www.insurancewatch.com
www.insuranceonline.com
Search engines:
www.google.com
www.ask.com
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