Insurance Claims Management

V. Jayalakshmi SSIM
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Unit

1 Topics covered

* Insurance contract * Essentials of Insurance * Principles of Insurance * Insurance Documentation

Insurance: What is it?

Insurance is actually three things: A Transfer System A Business A Contract

Insurance Transfer System

Transferring the Costs of Losses - the company pays for the COVERED LOSSES, by distributing the costs of losses among the insureds Transferring and Sharing - key elements
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Sharing the Costs of Losses

Implies: POOLING of premiums paid Claims paid out of the insurers funds Total COSTS OF LOSSES SPREAD amongst INSUREDS Insurers to ESTIMATE future losses and expenses to determine the PREMIUMS

Insurance as a Contract
An insurance policy is a CONTRACT between the insurance company and the insured Insurance policy evidence of PROMISE to pay for the losses covered PROMISE reduces uncertainty or insecurity for the insured
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Insurance as a contract .
Types of insurance Life Insurance contracts Property and Liability insurance contracts Pensions & Annuities contracts

Insurance a Contract
Insurance Policy is based on the Law of Contracts.

A contract is an agreement embodying a set of promises that are legally enforceable.

Requirements of a Legal Contract

Offer and Acceptance Consideration Competent parties Legal purpose

Distinctive Features of Insurance contracts

    

Aleatory contract Unilateral contract Conditional contract Personal contract Contract of adhesion

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Types of Insurance
Life Insurance Property & Casualty Insurance (P&C) Liability Insurance Pensions & Annuities

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Life Insurance Plans

Term Insurance Endowment Insurance Whole Life Insurance ULIP - Death - Accidental death - Maturity
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P & C Insurance ( General Insurance ) Coverage for property and net income loss Exposures. Protection includes Paying for repair or Replace property damaged, lost, or destroyed Replace net income lost Paying for Extra expenses Covers the costs of accidental losses to an insureds personal & business property
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Property Insurance Coverages

.. allied lines ( fire, windstorm, Fire and

hailstorm, smoke, explosion, and others) Business income ( loss of net income and additional expenses) Crime ( burglary, robbery, theft, employee dishonesty) Ocean and inland marine (hull & cargo insurance, movable property, goods in transit & Carriers) Auto physical damage (collision, fire, theft 14 etc.)

Liability Insurance .
Liability insurance covers liability loss exposures and provides for payment on behalf of the insured for injury to others or others property for which the insured is legally responsible

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Liability Insurance ..
Liability insurance is called as THIRDPARTY INSURANCE Three parties are: Insured Insurance company Claimant (party who is injured / whose property is damaged)
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Types of Plans for Property loss Exposures

Standard Fire and Special Perils Policy Motor Insurance Shop keepers Package Insurance Policy Marine Insurance Policy Burglary and House- breaking Insurance Office Umbrella Policy Overseas Mediclaim policy

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Liability Insurance Policies

Directors and Officers Liability Insurance Policy Public Liability Insurance policy Product Liability Insurance policy Professional Liability Indemnity Insurance Policy

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Principles of General Insurance

`Principle of Utmost Good Faith `Principle of Insurable Interest `Principle of Indemnity * Principle of Subrogation * Principle of Contribution Principle of Proximate Cause

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UTMOST GOOD FAITH

A positive duty voluntarily to disclose, accurately and fully, all facts material to the risk being proposed, whether requested or not  Uberrima Fidei - 'Fidei' means faith. Uberrima means utmost  Faith is complete between both the parties of contract
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Is Caveat Emptor applicable to insurance ?  Insurance is a service and not a good  Both the parties have a moral duty /legal obligation to speak the truth  Non-disclosure of a material fact: Latin phrase is "Suppressio Veri".

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INSURABLE INTEREST
 Legal right to insure,  Right to claim compensation for their financial loss When must an Insurable interest exist?  In property insurance : at the time of loss  In Life insurance: at the inception of the policy, not at the time of death
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Indemnity
Recover loss only to the extent of Insurable interest Object is to place the insured in the same financial position as he was prior to the loss. Sum insured Excess Franchise Salvage Cash, Repair, Replacement, Reinstatement. 23 Exceptions : Valued policy & First loss policy

Subrogation
Rights and remedies of the insured to recover loss from third party are transferred to insurer Prevent Insured from obtaining more than the actual loss. Wrongdoer should not be left unpunished. Normally subrogation takes place after indemnity Knock for Knock agreement Applies only to the extent of indemnification
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Contribution
Found on the principle of equity under common law. Pre requisites : common subject matter, common perils, common insured, policy in force. If no contribution clause Insurer would have to run around for recovery. Sum insured / Total sum insured x loss

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Proximate Cause
The active efficient cause which sets in motion a train of events which brings about result, without intervention of any force started and working actively from new independent source. Proximate Cause is defined as that cause that is immediate, dominant and efficient and which caused the loss.

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General Insurance Documentation

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Documents
Proposal Form Claims Form Renewal Notice Assignment & Transfer Forms

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Proposal Form
    Underwriting Office Add Dev. Officers Name Brokers / Agents Name Name and Address of RTO office (as per RC)

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Proposal form contd..

         

Name of the Proposer Age Full address (where vehicle is normally kept) Address for communication Business / occupation Description of the Vehicle IDV- Insured s Declared Value Scope of cover [ Liability only / Package policy] Period of insurance : From to .. Usage of the vehicle : personal / official / racing
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Deductibles No claim Bonus Geographical extension coverage Car parking open garage / closed garage/ front of house/ away from house Anti theft devices Liability to TP- TPPD of Rs. 6000/only or above PA for named / unnamed persons/ driver Driver details.. Accident history of the vehicle Refusal/ non-renewal/ cancellation of policy? Declaration

Proposal form contd..

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Claim Form
The issue of this form is NOT to be taken as an Admission of Liability

           

Insured details Details of Insured Vehicle Driver at the time of Accident Other Insurance Details of Accident Damage to the insured vehicle Third party injury / deaths/ property damage Injury to driver or occupant Witness Theft Past claims Declaration
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