CERTIFICATE OF THE GUIDE

TO WHOMSOEVER IT MAY CONCERN

This is to certify that the Project Work titled “A study on claim settlement by
Cholamandalam General Insurance, Bhubaneswar Branch for insured
effected by FANI CYCLONE” is a bonfire work of Mr Battina Abhisek
Enrol/Reg. No: 1806258032 carried out in partial fulfilment for the award of
degree of MASTER IN BUSINESS ADMINISTRATION FOR THE SESSION
(2018-2020) of Biju Patnaik University of Technology, Odisha under my
guidance.

This project work is original and not submitted earlier for the award of any
degree / diploma or associate ship of any other University / Institution. The:
 Embodies the work of the candidate herself
 Has duly been completed
 Fulfils the requirements of the rules and regulation relating to the summer
internship of Institute,
 Is up to the standard both in respect to contents and language for being
referred to the examiner.

Signature of the Guide

Place:
Date:

Page 1
 CERTIFICATE BY THE INTERNAL GUIDE

This is to certify that the Project Work titled “A study on claim settlement by
Cholamandalam General Insurance, Bhubaneswar Branch for insured
effected by FANI CYCLONE” is a benefice work of Mr Battina Abhisek
Reg. No. 1806258032 carried out in partial fulfilment for the award of degree of
MBA of Biju Patnaik University of Technology, Odisha under my guidance.
This project work is original and not submitted earlier for the award of any
degree / diploma or associate ship of any other University / Institution.

Signature of the Guide

Date:
Place:

Page 2
 ACKNOWLEDGEMENT

“It is not possible to prepare a project report without the assistance &
encouragement of other people. This one is certainly no exception. “On the very
outset of this report, I would like to extend my sincere & heartfelt obligation
towards all the personages who have helped me in this endeavour.  Without
their active guidance, help, cooperation & encouragement, I would not have
made headway in the project.

I am extremely thankful and pay my gratitude to my faculty Mr Bhagwan

Behera for his valuable guidance and support.

I extend my Special gratitude to Dr.P.K.Tripathy, Principal of BIJU PATNAIK

INSTITUTE OF IT & MANAGEMENT STUDIES and Prof. K. Chandra
Shekhar, Placement Manager, for giving me this opportunity.

I also acknowledge with a deep sense of reverence, my gratitude towards my

parents and member of my family, who have always supported me morally as
well as economically.

At last but not least gratitude goes to all of my friends who directly or indirectly
helped me to complete this project report.

Any omission in this brief acknowledgement does not mean lack of gratitude.

Thanking You

                (Battina Abhisek)

Page 3
 DECLARATION

I, Mr Battina Abhisek hereby declare that the Project Work titled “A study on
claim settlement by Cholamandalam General Insurance, Bhubaneswar
Branch for insured effected by FANI CYCLONE” is the original work done
by me and submitted to the Biju Patnaik University of Technology, Odisha, in
partial fulfilment of requirements for the award of Master of Business
Administration is a record of original work done by me under the supervision of
Prof .Bhagwan Behera.

Regd. No: 1806258032 Signature of the Student

Date:

Page 4
 CONTENTS
CHAPTER 1
 Executive summary 07
 About Insurance 08
 General Insurance and Its Types 09
 Background of Insurance 10-11

CHAPTER 2

 About company 13-16

 SWOT Of the Company 17
 Company Financials 18-19
 Porters 5 force Model 20
 Competitors Analysis 21-24
 Customers 25

CHAPTER 3

 Claim Settlement Process 27-32

CHAPTER 4

 Literature Review 34-37

Page 5
CHAPTER 1

Page 6
Executive Summary
The objective of this topic are-

1. To study the claim settlement process of the M/s CHOLAMANDLAM GENERAL

INSURANCE OF Fani Cyclone.
2. To study the awareness level of the insured in respect to the claim settlement process.
3. To Study the main reason for the Repudiation or Post loss endorsement reasons.
4.

Page 7
Insurance
Insurance is a contract, represented by a policy, in which an individual or entity receives
financial protection or reimbursement against losses from an insurance company. The
company pools clients' risks to make payments more affordable for the insured.

Insurance policies are used to hedge against the risk of financial losses, both big and small,
that may result from damage to the insured or her property, or from liability for damage or
injury caused to a third party.

Three crucial components of insurance policies are the

1. Premium
2. Policy limit
3. Deductible.

A firm understanding of these concepts goes a long way in helping you choose the
policy that best suits your needs.

Premium

A policy's premium is its price, typically expressed as a monthly cost. The premium is
determined by the insurer based on your or your business's risk profile, which may include
creditworthiness. For example, if you own several expensive automobiles and have a history
of reckless driving, you will likely pay more for an auto policy than someone with a single
mid-range sedan and a perfect driving record. However, different insurers may charge
different premiums for similar policies. So finding the price that is right for you requires
some legwork.

Policy Limit

The policy limit is the maximum amount an insurer will pay under a policy for a
covered loss. Maximums may be set per period (e.g., annual or policy term), per loss
or injury, or over the life of the policy, also known as the lifetime maximum. 

Typically, higher limits carry higher premiums. For a general life insurance policy, the
maximum amount the insurer will pay is referred to as the face value, which is the
amount paid to a beneficiary upon the death of the insured.

Deductible

Page 8
The deductible is a specific amount the policy-holder must pay out-of-pocket before
the insurer pays a claim. Deductibles serve as deterrents to large volumes of small and
insignificant claims. Deductibles can apply per-policy or per-claim depending on the
insurer and the type of policy. Policies with very high deductibles are typically less
expensive because the high out-of-pocket expense generally results in fewer small
claims.

General Insurance: -
On the other hand protects the property and casualty by covering losses from disasters and
accidents there by protecting from property damage and liability, providing the means for
victims to resume their lives and businesses and contribute to the economy.

General Insurance is of five types. Those are:

Health Insurance:
Just like one looks to safeguard ones wealth, these policies ensure guarding the insurer's
health against any calamities that may cause long term harm to one’s life and even hamper
ones earning ability for a lifetime. Some examples of this type of policy are med claim
policy, personal accident, group accident, traffic accident, etc.

Business Insurance:
Risks of loss of profits/business, goods, plant and machinery are most profound in case of
business. Under this head they cover the most widely used policies that cover a business from
any loss of the above kind. Some of these policies are burglary insurance, shopkeeper’s
insurance, key-man insurance, marine insurance, public liability insurance, workmen
compensation insurance, air transit insurance, fidelity guarantee insurance etc.

Automobile Insurance:
Auto Policy is required to be taken to cover the risks that arise to the owner, vehicle and third
party. This includes the Compulsory Vehicle Policy (In India, by the Motor Vehicles Act,
every car owner is required to covered against Act risks)and the Comprehensive Vehicle
Policy.

Fire Insurance:
This policy is required to be taken to prevent any loss of profits /property from incidental fire.
E.g. fire insurance and fire consequential loss policy.

Travel Insurance:
Every year number of tourists die while traveling. They lose their baggages, passports etc. are
left stranded in unfamiliar environments. Medical attention in a foreign land while very

Page 9
expensive is also very difficult to find in foreign land. Travel policies are designed to take
care of all the problems that generally occur while traveling, whether domestic or foreign.

BACKGROUND OF INSURANCE INDUSTRY

The writings talk interns of pooling of resources that could be re-distributed in times of
calamities such as fire, floods, epidemics and famine. This was probably a pre-cursor to
modern day insurance. Ancient Indian history has preserved the earliest traces of insurance in
the form of marine trade loans and carriers ‘contracts. Insurance in India has evolved over
time heavily drawing from other countries, England in particular.

A brief history of the Insurance sector Of India

The business of life insurance in India in its existing form started in India in the year 1818
with the establishment of the Oriental Life Insurance Company in Calcutta.

Some of the important milestones in the life insurance business in India are:

1818: British introduced the Life Insurance to India with the establishment of Oriental Life
Insurance Company.

1850: Non-Life insurance company debut with triton insurance company.

1870: Bombay mutual life insurance society is the first India owned life insurer.

1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of
general insurance business.

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the
life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government to collect
statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective
of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies taken over by the central
government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with
capital contribution of Rs. 5 core from the Government of India.

1957: General Insurance Council, a wing of the Insurance Association of India, frames a code
of conduct for ensuring fair conduct and sound business practices.

Page 10
1968: The Insurance Act amended to regulate investments and set minimum solvency
margins and the Tariff Advisory Committee set up.

1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the general
insurance business in India with effect from 1st January 1973

1993: Malhotra committee was constituted under the chairmanship of former R.B.I chief
R.N. Malhotra to draw a blue print for insurance sector reforms.

1994: Malhotra committee recommended re-entry of private player.

1997: IRDA (Insurance Regulatory and Development Authority) was set up as a regulatory
of the insurance market inIndia.2000: IRDA started giving license to private insurers. ICICI
prudential, HDFC were first player to sell an insurance policy.

2001: Royal Sundaram was the first non-life private player to sell an insurance policy.2002:
Bank allowed to sell insurance plans as TPAs enter the scene; insurers start setting non-life
claims in the cashless mode.

Page 11
CHAPTER 2

Page 12
INTRODUCTION
ABOUT MURUGAPPA GROUP

Founded in 1900, the INR 300 Billion Murugappa Group is one of India's leading business
conglomerates. The Group has 28 businesses including nine listed Companies traded in NSE
& BSE. Headquartered in Chennai, the major Companies of the Group include Carborundum
Universal Ltd., Cholamandalam Investment and Finance Company Ltd., Cholamandalam MS
General Insurance Company Ltd., Coromandel International Ltd., Coromandel Engineering
Company Ltd., E.I.D. Parry (India) Ltd., Parry Agro Industries Ltd., Shanthi Gears Ltd., Tube
Investments of India Ltd., TI Financial Holdings Ltd and Wendt (India) Ltd.

Renowned brands like BSA, Hercules, Montra, Mach City, Ballmaster, Ajax, Parry’s, Chola,
Gromor, Shanthi Gears and Paramfos are from the Murugappa stable. The Group fosters an
environment of professionalism and has a workforce of over 35,000 employees.

ABOUT MITSUI SUMITOMO

Page 13
Mitsui Sumitomo is part of MS&AD, the largest Insurance group in Japan, with an Ordinary
Income (NPW) of JPY 3,200,000 million (INR 14912.5282 billion) at FY2017-2018. The
company has an international network of 878 offices across 40 countries and is centred on the
fast-growing Asian regions.

ABOUT GROUP COMPANIES

CHOLAMANDALAM MS GENERAL INSURANCE COMPANY LIMITED (CHOLA

MS)

Chola MS General Insurance Company Limited is a Joint Venture between the Murugappa
Group and Mitsui Sumitomo Insurance Company Limited, Japan.

Chola MS offers a wide range of insurance products that include Motor, Health, Property,
Accident, Engineering, Liability, Marine, Travel and Crop insurance for individuals and
corporates. In 2018, the company achieved a Gross Written Premium (GWP) of INR 41,026
million. Chola MS currently has 87 branches and over 34,000 agents across the country.

The company champions a brand philosophy of T3 – Trust, Transparency and Technology.

Our Vision:

Page 14
To be the most respected company amongst General Insurers in India for our value creation
to customers and shareholders.

Our Mission:

To bring peace of mind to our clients by protecting them from financial risks.

Quality Policy:

We are committed to continuous improvement in Quality of claims settlements to enhance

customer satisfaction through robust technology, processes and proactive culture.

Chola’s Gross Written Premium recorded a growth of 31% during FY 2017-18 to ₹ 4,103
Crores. Combined Ratio (CoR) has improved to 100.79% in FY 2017-18 from 101.25% in
the previous year. Profit Before tax grew by 17% to ₹ 347 Crores.

Retail has been the dominant growth strategy with Motor, Health and Crop insurance
contributing over 80% of the premiums with a good mix across metros and non-metros.
Investment income during the year was ₹ 489 Crores; Investment book size as of end of
March 2018 was over ₹ 6,300 Crores.

CORPORATE SOCIAL RESPONSIBILITY

Cholamandalam MS General Insurance Company Limited (hereinafter referred to as Chola

MS) have been carrying out Corporate Social Responsibility (CSR) activities for a long time
through AMM Foundation, an autonomous charitable trust, in the field of Education and
Healthcare.

CSR PROGRAMMES/PROJECTS

The Company would be adopting a focused and a structured approach towards implementing
its CSR initiatives. It has identified thematic and programme areas to guide the design, intent

Page 15
and approach of its CSR initiatives. These are broad thematic areas with focus on quality
service delivery and empowerment.

The programme areas are:

 Providing basic healthcare facilities to economically backward societies across
geographical areas,
 Improving access to education,
 Provision of Skill Development/Vocational Training,
 Rural Development,
 Environmental sustainability,
 Promoting Sports, arts & culture,
 Sustainable livelihood including setting up old age homes, day care centers and such
other facilities for senior citizens.
BRAND INITIATIVES

The Group continued to invest in building awareness and engagement among core audiences
with the multi-lingual ‘Together Let’s Progress’ campaign on television and digital media.
During the year, the Group increased its investment in digital platforms. In addition to the on-
going digital campaigns, a thematic public awareness campaign titled ‘Good Netizen, Good
Citizen’ was launched with the aim of raising social awareness on the responsible use of
social media and the Internet. The campaign comprising of 6 videos garnered over 16 million
views online.

AWARDS AND RECOGNITIONS

 Cholamandalam MS General Insurance was selected as the “Dream Company to

Work For – Insurance Sector” by Times Ascent and World HRD Congress
 Cholamandalam MS General Insurance won the “Pride of Tamil Nadu Award for
BFSI Sector” for excellence in the Insurance sector

Products & Services

 Health Insurance
 Home Insurance
 Motor Insurance
 Personal Accident Insurance
 Travel Insurance
 Weather Insurance

Page 16
Health Insurance
 Chola Hospital Cash Healthline
 Chola Super Topup Insurance
 Critical Healthline Insurance
 Chola Hospital Cash Healthline

Home Insurance
 Total Home Protect
 Long Term Dwellings

Travel Insurance
 Comprehensive.
 Student
 Leisure
Personal Accident
SWOT Analysis of MS CHOLA
Strength Weakness
 Diversified Business Portfolio  Bank assurance people have a lack of
 Tailor Made Products. knowledge about claim Settlement
 Less Number of Internal Surveyor.
 Emerging new business in MSME.
 Less Authority for Zonal VP Claims
 Brand Name.

Opportunity Threat
 Strong Demand  Entry of Big Financial Player
 Strong Future Growth.  Continuously change in norms by
 Rise in Awareness of safety IRDA.
 Government made compulsory  Rapid Climate change rise chance of
insurance for motor and industry STFI & Cats topic Events.
expecting to do the same with non-
motor segment.

Page 17
FINANCIAL PERFORMANCE

Page 18
BALANCE SHEET AS ON 31ST MARCH 2019

Page 19
PROFIT AND LOSS STATEMENT

POTERS MODEL ANALYSIS OF INSURANCE SECTOR OF INDIA

Threat of Substitutes

a) A small change in service by anyone company in the market can take a major part of
customers with them because there is closely availability of substitute.
b) Investment oriented customer can easily switch to other financial products.

Bargaining power of customer

Page 20
 a) Bargaining power of the customer especially corporate is very high as they pay huge
amount of premium.
b) There are total 24 companies who are providing policies to the customers due to
which customers have wide choice of the premium so the bargaining power will be
high.

Threat of new entry

a) As we saw some of the big financial institution started entering into this sector like
DHFL, Kotak Mahindra so any other finance company may enter.
b) Overall threat is medium given that entry is subjected to licence and regulations
which are set of IRDA (Insurance Regulatory and Development Authority).

Bargaining power of suppliers

a) Suppliers being the distributors or agents have high bargaining power because they
have customers database and can influence customers in making choice

COMPETIOTORS
There are 4 PSU and 20 Private Companies who are engaged in the business of General
Insurance. The list of the firms are as follows:-

NAME OF THE MARKET SHARE

COMPANIES 2017-18
PUBLIC SECTOR
INSURERS
National 10.75%
New India 15.08%
Oriental 7.60%
United 11.57%
Private Sector Insurers
Acko General 0.01%
Bajaj Allianz 6.27%
Bharti AXA 1.16%
Cholamandalam 2.72%
DHFL General 0.09%
Future Generali 1.27%
Go Digit 0.06%
HDFC ERGO** (Formerly 4.84%
L&T Gen.)
ICICI Lombard 8.20%
IFFCO Tokio 3.74%
Kotak Mahindra 0.12%

Page 21
 Liberty General*** 0.54%
Magma HDI 0.35%
Raheja QBE 0.06%
Reliance 3.36%
Royal Sundaram 1.74%
SBI 2.35%
Shriram 1.39%
Tata AIG 3.61%
Universal Sompo 1.53

 The highest market share overall is with the New India Assurance i.e 15.08%.
 The highest market share in the private sector is with ICICI Lombard i.e 8.20%.
 Cholamandalam General Insurance is having a market share of 2.72% and sharing 7 th
position in the Private sector companies and in overall 11th Position.
 So, General Insurance sector is a perfect competition market.

Some of the competitors which are explained in detail about the companies are as
follows:-

 NEW INDIA ASSURANCE

NEW INDIA ASSURANCE CO. LTD, founded by Sir Dorabji Tata in 1919, a Multinational
General Insurance Company, today operates in 28 countries and headquartered at Mumbai,
India with global business crossed Rs. 22,270 crores in March 2017.

It have been market leaders in India in Non-Life business for more than 40 years. Their
Indian business crossed Rs.19, 100 crores in March 2017. They are the only direct insurer in
India rated A-(Excellent) by AM BEST Company since 2007. They have been rated
AAA/Stable by CRISIL since 2014, indicating that the Company has the highest degree of
Financial Strength to honour its Policyholder's obligations.

Strength

 They are leading the list in market share of General Insurance with a total market
share of 15.08%.
 Largest PSU Insurance Company supported by the Government of India.

Weakness

 Process of Buying a New policy or Claim settlement Process is Slow.

 Poor sales team.

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  HDFC EGRO

HDFC ERGO General Insurance Company Ltd. is a joint venture between HDFC Ltd., India’s
premier Housing Finance Institution and ERGO International AG, the primary insurance entity
of Munich Re Group. The Company offers complete range of general insurance products ranging
from Motor, Health, Travel, Home and Personal Accident in the retail space and customized products
like Property, Marine and Liability Insurance in the corporate space.

Strength

 They have a market share of 4.84% OF Market share with them.

 They are challengers now in the market.
 Fast Service.
 Big Brand Name of HDFC Group.

Weakness

 High premium rates.

IFFCO TOKIO

FFCO-Tokio General Insurance was incorporated in 2000, as a joint venture between the
Indian Farmers Fertilizer Co-operative (IFFCO), which is one of the world’s biggest
cooperative society, and Tokio Marine Group, which is also the largest listed insurance group
in Japan. IFFCO holds 51 per cent in the company and the remaining 49 per cent is held by
Tokio Marine Group.

Strength

 They have a market share of 3.74% with them.

 They are into farmers and rural segment which make them a better player in the
insurance market.
 Better Brand collaboration with Tokio Marine Groups.

Weakness

 Farmer segment will be a burden for the company as a small climate change will get
huge claims from the farmers.

Page 23
FUTURE GENERALI

Future Generali India Insurance Company Limited is a joint venture between Future Group –
the game changers in Retail Trade in India and Generali – a 187 years old global insurance
group featuring among the world’s 60 largest companies*.

The company was incorporated in September 2007 with the objective of providing retail,
commercial, personal and rural insurance solutions to individuals and corporates to help them
manage and mitigate risks.

Future Generali India has been serving the customers by leveraging upon its global Insurance
expertise in diverse classes of products of Generali Group and the Indian retail game
changers Future Group.

Having firmly established its credentials in this segment and effectively leveraging on the
skill set of both its JV partners, Future Generali India has evolved to become a Total
Insurance Solutions Company.

Strength
 Support of Future Group.
 One of the Oldest Company in General Insurance segment.

Weakness
 They have a market share of 1.27% with them.
 Less awareness of this brand in the market.

Hence these are some of the competitors in the market who are going to challenger
Cholamandalam General Insurance in coming future.

Page 24
Customer
There are two segments of INSURANCE:-

INSURANCE

NON MOTOR MOTOR

 In non-motor cases major Clients are companies who insure their Plant & Machinery,
Equipment’s, Stocks, and Building etc.
 In non-Motor Individual people also insure their dwelling properties.

 Motor Claims cases Major clients are Individuals who insured there Vehicles may be
Car, Bike& scooter, Truck, Minivan Etc.

 In motors also some companies do insurance for their vehicles how deals with
vehicles with motors like Bus Owners, Car Rental providers, and those people who
are into the packing and moving business.

 In Motor and non-motor cases all the insurers are Above 18 years of age and should
be the owner of their own business or the goods which are insured.

Page 25
CHAPTER 3

Page 26
 CLAIM SETTLEMENT OF FANI CYCLONE IN M/S
CHOLAMANDALAM GENRAL ISURANCE

Claim settlement is a process of taking a decision whether to give compensation

to the insured or not, if yes then how much.

Claim settlement process in M/s Cholamandalam is as follows:-

INTIMATION BY INSURED TO THE COMPANY THROUGH BANK OR TO

CUSTOMER CARE HELPLINE OF CHOLA

THE CLAIM PROCESSOR RECEIVES THE INTIMATION THROUGH EMAIL WITH

VARIOUS DOUCMENTS ATTACHED AND CP APPOINTS A SURVEYOR EIGHTER
IHA OR EXTERNAL

THE APPOINTED SURVEYOR VISITS THE LOSS LOCATION ADDRESS AND HE

ASSESS THE LOSS

SURVEYOR PREPARES THE REPORT AND ASSESSMENT AND SUBMIT IT TO THE

CHOLA CLAIM TEAM FOR FURTHER PROCESSING

BASED ON THE REPORT CLAIM TEAM PROCESS THE CLAIM FOR PAYMENT/
REPUDIATION/ POST LOSS ENDORSEMENT AND SURVEYOR WILL PAID HIS

Let’s discuss each and everything in details.

Page 27
Intimation by insured to the company through bank or to customer care
helpline of Cholamandalam

 In this step the insured either reaches the bank and ask them to intimate
about their loss occurred due to fani cyclone, this happens only when the
insurance is sold by the bank people how are known as Banca people
(bank assurance) team.
 Major cases of the claims are the customers who took loan from a bank to
start their business.
 Bank assurance people sold the insurance with the loan.
 If the Cholamandalam sales team sold the Insurance policy then the
insured have to call to the customer care of the M/s Chola and Intimate
them about the loss by giving following details:-
a. Policy Number
b. Name of the insured
c. Phone Number of the contact person
d. Location where the survey have to be done.
e. Date of loss.
f. What item got damaged?
g. A small description of how loss is happened.
 After getting these details Claim processor generates a claim number
which is provided as the further UIN to know the claim status.
 These Numbers generally Starts with 213000, 215700, and 2156000 like
on.

Page 28
 The claim processor receives the intimation through email with various
documents attached and claim processor appoints a surveyor either IHA
(in house assessor) or external surveyor.
 After generating Claim number now claim processor appoints a surveyor who will
visit the loss location for assessing the loss of the claimer.
 IHA (In-house assessor) is the surveyor who is the employee of the insurance
company.
 External Surveyor is the person who can be individual or it may be the company of
surveyors and loss assessors. The company should be incorporated under Indian
Partnership act 1932 in LLP act 2008. They are also known as corporate surveyors.
 The appointment of the IHA(In-house surveyor) and External surveyor is based on so
many factors, these are as follows :-
a) Estimated Loss according to the Insurer who intimated the claim. If it below 5
Lakhs then IHA is preferred but if the claim is Above 5 lakhs then External is
preferred.
b) After checking the loss amount provided by the Insurer, now claim processor
have to see what is the loss any special are of loss like Fire in Coal Field, Oil
extractor plant problem, etc. in these areas some specialist and Experienced
person is need for that IRDA Made three categories of Surveyors and
assessors these are as follows:-

Licentiate Member Less than 8 years of holding

surveyor license

Associate Member Not less than 8 years of holding

surveyor license

Fellow Member Not less than 16 years of holding

surveyor license

c) Now the claim processor will send the GM Commercial claims to approve his
proposal of appointing the surveyor, if the GM wants then he may change the
surveyor or go with the proposed surveyor by claim processor.
 Now surveyor is appointed and provided with all the information which is needed to
do survey.

Page 29
 The appointed surveyor visits the loss location address and he assess the
loss
 The surveyor reaches the loss location and assess the loss.
a. During his inspection he asks about the how the incident took place, after that
he sees the policy copy if the loss items is covered in the policy then he goes
for assessment if, it doesn’t cover then surveyor do this as no claim.
b. During assessment he asks for the various documents like

Stock
1. Claim form
2. Claim bill with price of damaged items
3. Occurrence report
4. Stock register
5. Stock register submitted to bank (for financier interest policy)
6. Purchase invoices of damages items
7. Sales invoices (last 6 months/ 1 year as per claim merit)
8. PL balance account details of last 1 or 3 year
9. Tread license
10. Fir (if needed) fire/ burglary
11. Loan account statement (if needed)
12. Fire brigade report (for fire cases)

Building
1. Claim form
2. Claim bill with price of damaged items
3. Occurrence report
4. Repair estimate
5. Repair bill
6. Valuation report
7. Building plan sanction by engineer
8. Address proof
 He takes the photographs and video graphs of the lost location then he assess the loss.
 Assessment sheet :-

Page 30
Building/stock/P&M/ Office Equipment

Particulars Amount
GROSS LOSS(WITHOUT TAX)
Less: Depreciation/Variation/Dead Stock
SUBTOTAL
Less: Salvage
SUBTOTAL
Less: Under Insurance
SUBTOTAL
Excess
NET LOSS(PAYABLE AMOUNT)

DEPRICIATION: - It means the decrease in the value of fixed assets due to wear and tear.

VARIATION:-

DEAD STOCK; - These are those stock which is already un sold able or which won’t have
any value if it sold.

SALVAGE: - This is the amount which the owner of the items will get if he sold it to any
person.

UNDER ISURANCE:- This is the amount of goods kept in excess then the sum insured by
the insurance company, the percentage of the goods amount kept excess is deducted from the
amount after charging Depreciation/Variation/Dead Stock and Salvage.

EXCESS: - Excess means the amount stated in the Schedule, which shall be borne by the
Insured in respect of each and every Claim made under this Policy.

Surveyor prepares the report and assessment and submit it to the Chola
claim team for further processing
 This is the most important part of the claim settlement because it is all up to the
surveyor that how much the payable amount should be given to the insurer.
 He prepares a brief report on his/her survey and prepares FSR (Final Survey Report).
 While preparing the report he should state weather it is payable claim or not.

Page 31
 The claim must be under 12 Perils of the General Insurance policy these are as
follows:-
PERILS COVERED
i. Fire
ii. Lightning
iii. Explosion/ Implosion
iv. Aircraft Damage
v. Riot, Strike and Malicious Damage
vi. Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and
Inundation(STFI)
vii. Impact Damage
viii. Subsidence and Landslide including Rock slide
ix. Bursting and for overflowing of Water Tanks, Apparatus and Pipes
x. Missile testing operations
xi. Leakage from Automatic Sprinkler Installations
xii. Bush Fire.
 Then he must check whether the occupancy of the business owner is as same as he
stated in the policy or differs “Occupancy” means the activity carried out in the
insured premised stated in the schedule and for the purpose for which the same is
used.
 “Period of Insurance” means the period during which cover is provided by this
Policy of Insurance as specified in policy copy. The loss should take place after 15
days of the policy period and should take place before 15 days of the end of the period
of policy otherwise it will be no claim under Close Proximity Cause.
 Now surveyor is ready to do the assessment.
 For Assessment of the price of the stock is take as Current Market price – Profit
percentage. In case of Building bank will give the Property estimation as per the
market price if constructed new building of the same.

Based on the report claim team process the claim for payment/
repudiation/ post loss endorsement and surveyor will paid his fees.

 After the report is submitted to claim team of Cholamandalam the claim processor
reads the report clearly and prepares the claim note based on the report it is of one
page only.

Page 32
 Based on that assessed value first claim processor entre all the details in the server of
Chola which is “Gencon” where the total payable amount to the insured is entered
along with Surveyor fees.
 The surveyor fees is paid according to the Zipsha Schedule provided by IRDA.
 There is a fixed amount slab plus a fixed percentage of the total loss is paid as the fees
of the surveyor.
 After the claim report is correct then now claim team of Cholamandalam Calls the
insured and tell them the amount which they are going to get, after which if they are
okay with that amount then we get a consent message from them on which we
proceed to pay them the amount.
 If they are not okay with that amount then we try to convince them, still if they don’t
happy then we give it to the legal team because of which they are going to fight
legally.
 After this we ask for the NEFT details of the insured account.
a) The neft account should be same as the insured name.
b) If not then amount is not payable.


Page 33
 CHAPTER – 4

Literature Review:

Page 34
Ang and Lai (1987) have developed an equilibrium model of insurance pricing integrating
both the insurance and capital asset markets from the insurers’ viewpoint. In contrast to the
capital assets based models, it emphasizes the importance of the insurance market, i.e. the
claim payments by all insurers as a whole, in pricing insurance premiums. The study
established that premium for insurance is a function of both systematic insurance market risk
and systematic capital market risk.

3. Literature review
The claims function plays an important strategic role in differentiating a company
from its competitors. It not only has to monitor costs and provide claims services
beyond the expectations of customers but also at the same time to operate within
budget. The real credibility and trustworthiness of an insurance company is put to test
when a claim actually arises.
According to Tennyson and Salsas-Forn (2002), the research on insurer
management of opportunism in claiming has resulted into two parallel literatures.
One is a theoretical literature on insurance contracting that yields predictions about the
nature of optimal auditing strategies for the deterrence of fraud whereas the other is a
literature based upon statistical analysis of claims that yields empirical strategies for
the detection of fraudulent claims. Further they linked the two literatures by providing
an empirical assessment of insurers’ auditing practices in relation to theoretical
predictions. The findings of the above mention study are found to be consistent with
use of rational auditing strategies by insurers and it recommends the use of audits for
both deterrence and detection.
In order to minimize the time and legal cost of claim settlement it is of utmost
importance to decide the purview of inclusions under the covered peril. Oza (2008)
emphasizes that insurance contracts being synallagmatic in nature with mutual
obligations on the part of both insurer and insured, any claim that falls within the
coverage and does not attract any exclusion should be paid and paid in full.
In the Indian scenario high claim ratio has been a taxing component to the high
underwriting losses both in the pre as well as post privatization era. Various studies
has rendered that fraud has been one of the major reasons for the high volume of
claims. According to Agarwal (2008) fraud is not always restricted to the cause of loss.
In many cases it arises out of an over stated claim, a claim for assets which did not
exist, false documentation and altered invoices. It also holds that an exaggerated or
overstated claim is not necessarily a fraudulent claim. The study emphasizes on the
need for looking into the intensions of the insured for proper quantification of claims
thus leading to minimizing the claims overheads. The reason for such phenomenon has
been stated by Bansal (2007) as disparity between the rate of increase in penetration
and increased focus on scale of operations, competitive pricing, efficiency of policy
serving and rate of claim disposal. This also leads to a fillip in non operating leakages
and premiums impacting the bottom line of the general insurance players.
An investigation into the reasons for the high claim rejection rates by Seth (2008)
identifies it to as false statements made, failure to disclose relevant facts, claim does
not falling within the items insured under the policy, failure of the insured to comply
with the terms of the agreement, fraud, inordinate and unreasonable delay for the
reporting of the incident, no consequential losses covered under policies and false
statements made when applying for insurance. Since the repudiating a claim is subject
to legal implications involving cost the insurers should be cautious in denying liability
under a policy. Enforcing the thought and importance of communication of the same

Page 35
Ramesh (2008) states a valid general insurance contract may be avoided or rescinded
by one of the parties to it on the ground of a misrepresentation, either by a positive act
or by an omission, made during pre-contractual negotiations. In case of meeting a claim
the reasons for rejection have to be cogent and have to be suitably communicated to the
Factors
influencing
claims
305
insured failing which the aggrieved insured has a right of action against the insurer.
This may further escalate the legal cost of the claim settlement process.
Along with the factors affecting the claims, the impact of regulatory norms on the
same may not be understated. Jain (2004) has attempted to address certain basic issues
relating to agricultural insurance in developing economies with reference to different
operational heads, namely, premiums and claims. The study also makes a critical
analysis of the impact of different regulatory changes over the period of the study.
Bharat (2004) states that in India consumer complaints increase by over 25 percent on
an average each year. It has been observed that it does not necessarily mean a
proportionate rise in claims. One of the major reasons for the phenomenon has been
found to be the high rate of consumer awareness. Hence it may be treated as a healthy
sign for the industry. Emphasizing the importance of an effective claims management
system Kishan (2006) says the real credibility and trustworthiness of a general
insurance company is put to test when a claim actually arises. In other words an
insurance company’s reputation is evaluated by its ability to fulfill its promise of being
there when the customer needs them the most. Moreover, an insurance company also
has an arduous task to ensure an equitable and rational claims settlement. A sound
claims settlement mechanism plays an intrinsic role in ensuring consumer centric
insurance solutions.
With the liberalization and entry of private companies in insurance, Indian
insurance sector has started showing signs of significant change. The challenges faced
by insurance sector pertaining to demand conditions are competition in the sector,
product innovations, delivery and distribution systems, use of technology, and
regulation. With the introduction of detarrifing in general insurance business the
previously enjoyed pricing liberty by the public players has changed to a fiercely
competitive environment (Krishnamurthy et al., 2005). Further Rao (2006) states that
detariffing in India will put further pressure on insurers since they will have to
compete on price and service in the form of claims as well. In need to improve claims
effectiveness if they are unable to cut their present costs, then it will put an upward
pressure on volumes. Study further suggests that in order to minimize the claim cost,
the effectiveness and transparency of the grievance redressal cells should be ensured
with periodical audits.
Ang and Lai (1987) have developed an equilibrium model of insurance pricing
integrating both the insurance and capital asset markets from the insurers’ viewpoint.
In contrast to the capital assets based models, it emphasizes the importance of the
insurance market, i.e. the claim payments by all insurers as a whole, in pricing
insurance premiums. The study established that premium for insurance is a function of
both systematic insurance market risk and systematic capital market risk.
Subsequently for insurance sector Powers et al. (1998) proposed a game-theoretic
model to study various effects of scale in an insurance market. After reviewing a
simple static model of insurer solvency in which all customers have inelastic demand,
they have presented a one-period game in which both the buyers and sellers of

Page 36
insurance make strategic bids to determine market price and quantity.
Nielson et al. (2005) has submitted the view that the risk management have evolved
significantly over the past decades causing dramatic changes in the communication
channels required to effectively handle the ever-changing risks a firm faces. The first
generation of risk management dealt primarily with risks inside a company creating
JRF
14,3
306
a need for internal risk communication. The second generation, which arose with the
growth in third-party liability claims, involved many more stakeholders external to the
company and forced the risk management function to deal with communications to
these external parties. The third generation, which began as an expansion of the
external risks that firms are exposed to, involves the board and senior management in
risk communication function

Tennyson and Salsas-Forn (2002),

The research on insurer management of opportunism in claiming has resulted into two
parallel literatures. One is a theoretical literature on insurance contracting that yields
predictions about the nature of optimal auditing strategies for the deterrence of fraud whereas
the other is literature based upon statistical analysis of claims that yields empirical strategies
forth detection of fraudulent claims. Further they linked the two literatures by providing an
empirical assessment of insurers’ auditing practices in relation to theoretical predictions. The
findings of the above mention study are found to be consistent with use of rational auditing
strategies by insurers and it recommends the use of audits for both deterrence and detection.
In order to minimize the time and legal cost of claim settlement it is of utmost importance to
decide the purview of inclusions under the covered peril.

Bharat (2004) states that in India consumer complaints increase by over 25 percent on an
average each year. It has been observed that it does not necessarily mean proportionate rise in
claims. One of the major reasons for the phenomenon has been found to be the high rate of
consumer awareness. Hence it may be treated as a healthy sign for the industry.

Krishna (2006) says the real credibility and trustworthiness of a general insurance company
is put to test when a claim actually arises. In other words an insurance company’s reputation
is evaluated by its ability to full its promise of being there when the customer needs them the
most. Moreover, an insurance company also has an arduous task to ensure an equitable and
rational claims settlement. A sound claims settlement mechanism plays an intrinsic role in
ensuring consumer centric insurance solutions. With the liberalization and entry of private
companies in insurance, Indian insurance sector has started showing signs of significant
change. The challenges faced by insurance sector pertaining to demand conditions are
competition in the sector, product innovations, delivery and distribution systems, use of
technology, and regulation. With the introduction of deterring in general insurance business
the previously enjoyed pricing liberty by the public players has changed to a fiercely
competitive environment (Krishnamurthy et al., 2005).

Page 37
Rao (2006) states that de-tariffing in India will put further pressure on insurers since they will
have to compete on price and service in the form of claims as well. In need to improve claims
effectiveness if they are unable to cut their present costs, then it will put an upward pressure
on volumes. Study further suggests that in order to minimize the claim cost, the effectiveness
and transparency of the grievance redressed cells should be ensured with periodical audits.

Nielson et al. (2005) has submitted the view that the risk management have evolved
significantly over the past decades causing dramatic changes in the communication channels
required to effectively handle the ever-changing risks a firm faces. The first generation of risk
management dealt primarily with risks inside a company creatingJRF14, 3306

A need for internal risk communication. The second generation, which arose with the growth
in third-party liability claims, involved many more stakeholders external to the company and
forced the risk management function to deal with communications to these external parties.
The third generation, which began as an expansion of the external risks that firms are exposed
to, involves the board and senior management in risk communication function

Bansal (2007) as disparity between the rate of increase in penetration and increased focus on
scale of operations, competitive pricing, efficiency of policy serving and rate of claim
disposal. This also leads to a fillip in non-operating leakages and premiums impacting the
bottom line of the general insurance players.

Oz (2008) emphasizes that insurance contracts being synallagmatic in nature with mutual
obligations on the part of both insurer and insured, any claim that falls within the coverage
and does not attract any exclusion should be paid and paid in full. In the Indian scenario high
claim ratio has been a taxing component to the high underwriting losses both in the pre as
well as post privatization era. Various studies has rendered that fraud has been one of the
major reasons for the high volume of claims.

Agarwal (2008) fraud is not always restricted to the cause of loss. In many cases it arises out
of an over stated claim, a claim for assets which did not exist, false documentation and
altered invoices. It also holds that an exaggerated or overstated claim is not necessarily a
fraudulent claim. The study emphasizes on the need for looking into the intensions of the
insured for proper quantification of claims thus leading to minimizing the claims overheads.

Seth (2008) identifies it to as false statements made, failure to disclose relevant facts, claim
does not falling within the items insured under the policy, failure of the insured to comply
with the terms of the agreement, fraud, inordinate and unreasonable delay for the reporting of
the incident, no consequential losses covered under policies and false statements made when
applying for insurance. Since the repudiating a claim is subject to legal implications
involving cost the insurers should be cautious in denying liability under a policy.

Ramesh (2008) states a valid general insurance contract may be avoided or rescinded by one
of the parties to it on the ground of a misrepresentation, either by a positive actor by an

Page 38
omission, made during pre-contractual negotiations. In case of meeting a claim the reasons
for rejection have to be cogent and have to be suitably communicated to the Factors
influencing claims.

Tanveer Ahmad Darzi ( 2009) in his thesis, ‘Financial Performance of Insurance Industry in Post
liberalization era in India’ has included the financial performance of public and private sector non-
life insurer on the basis of some parameters. In his thesis, he compared the statistical analysis of
public and private non-life insurance companies. He tried to find out the impact of liberalization on
the financial performance of insurance industry in India. His work also examines the impact of
liberalization on security analysis of state owned and private sector companies in the light of ISI
standards. It analyzed the several factors on the solvency of non-life insurers has suggested for
enhancing and synchronizing the probable benefits of liberalization of insurance sector.

Jawahar Babu (2010) in his thesis, ‘General Insurance Claim Management with Special reference to
Motor third party claims in Public Sector Insurance Companies’ has investigated the details of the
motor claim and its management in the recent past in general insurance companies in India. It is
identified certain special features in the area of motor vehicles liability faced by the Indian public
sector insurance companies which are under the provision of jurisdiction to file the claim by
claimants. Compensations are determined by the courts and there is considerable delay in the
judicial process. In this context, it has identified the factors that influence Motor Third Party Claims
Management in public sector non-life insurance companies. It identifies on priority, the Internal and
overall solutions for Motor Third party claim Problems. Abnormal increase in motor accidents in
Motor vehicle Act, the unlimited liability to the insurance companies, fraud an exaggerated claims,
liberal attitude of courts in awarding Compensations, Social Legislation attitude, procedural
complications in dealing with Third Party Claims by court. Finally, attempts to cover overall issues of
Third party claim management in public sector insurance companies, and the problems associated
are analysed.

Krishna Prasad B. (2011) in his thesis, ‘A Study on organizational climate of General Insurance
Companies in Thiruvanathapuram District, Kerala State’ has analysed the organizational climate of
four public sector general insurance companies in Thiruvanthapuram district. He investigates
demographic variables of the employees in organizational climate perceptions and ascertains the
level of perception towards the organizational climate. The factors influencing the perception of the
employees towards the organizational climate were also taken into consideration. Finally, it
investigated the relationship between organizational climate and organizational success which
includes effective job satisfaction, organizational commitment and intention to quit.

Dr. K Rajender, et.al, (2012) in their research paper ‘Investment Practices in General Insurance
Industry’ studied the investment unit for the time, whether the funds are committed for the
expected rate of inflation and for the uncertainty involved in the future flow of funds. It examines
the term-wise and security-wise investment analysis of General insurance companies, ascertains the
operation of insurance business of general insurance companies and evaluates the portfolio return
and earring power of the general insurance companies. The study covers oriental insurance
company and ICICI Lombard general insurance company limited. The analysis of investment is made
through trend and term-wise investments. The study reveals that the trend proportion of term-wise

Page 39
investments were consistent and low degree of correlation in oriental insurance and ICICI Lombard,
it was varying and moderate degree of correlation was observed during the study period which
discloses that there is a significant difference between the public and private general insurance
companies regarding the security wise investments are concerned.

Dr. Saroji Hiremath (2013) in his research article, ‘Insurance Sector Challenges and Opportunities’
stated that new era of insurance development has seen the entry of international insurers, the
proliferation of innovative products and distribution channels, and the raising of supervisory
standards. The number of insurers in India had been augmented by the entry of private-sector
players to a total of 28 up from five before liberalization. A range of new products have been
launched to cater different segments of the market, while traditional agents were supplemented by
other channels including the internet and bank branches. According to him, these developments
were instrumental in propelling business growth in insurance sector. More challenges in health
insurance, still it is undeveloped in India, banc assurance is rapidly changing, outstanding issues
concerning to regulatory body, majority population residing in rural areas are the key areas of
challenges. In contra, opportunities in India is highly populated country and would continue to be so
in the near future, job opportunities are likely to increase, huge inflow of funds to the country,
Marketing strategies with different advertising, brand building etc.

Anoop Kumar S.(2014) in his research article, ‘Motor Claims; dealing with parts made of mixed
constituents while assessing the loss’, examines the motor insurance policy and contract between
the insurer and insured and rate of depreciation applied for different parts and reproduce the same.
The statistical data analyses the rate of depreciation for the vehicle on the basis of age of the vehicle
and also the type and purpose of the vehicle is used. The researcher is of the opinion that all the
parts made of composite material fall under the definition of the other parts for the purpose of
applying depreciation. It is concluded that the surveyors change their mind set and also age old
practice of applying depreciation blindly. This is where the surveyor’s institute, a body formed by
IRDA, and clearly defining the interpretations of certain words in policy conditions which should be
circulated to all the insurance companies. This, in turn, will help the surveyors work truly
independently and fearlessly and then only they can claim.

Dr. Geeta Bhardwaj et.al,(2015) in their research article, “Combating the Invisible Enemy Fraud in
Health Insurance - A TPA’s Perspective” identified the order to successfully combat fraud, a business
should adopt a top down strategy the effect the risk actually has on their business. It investigates the
number of fraud cases in India and observed that 15% of total claims and the types of claims are
opportunistic fraudsters, repeat fraudsters, organized fraudsters. Fraud from the point of insurer as
well as insured identified use commonly assessed fraud. Finally, the outcome of the investigation
clearly points out as to how the fraud was perpetrated, and what motivated the fraudster to do it.

Page 40