OBJECTIVE OF THE STUDY

 To find out insurance claim and which are the companies involved in it

 To know what are the trends in Insurance claims

 To find out the developments in the Insurance claim

 To find out the Procedure of Claims

Marine Claim Insurance

Introduction

The claims’ collection procedure follows certain stages, which need further analysis. The levels

of difficulty are rather significant and therefore an interdisciplinary approach is necessary. The

work-flows in this procedure must follow a logical order, both by the policyholder and his

representatives, as well as by the insurance company and the P & I clubs. The present Congress

(as it is defined by its theme), offers the possibility of a systematic analysis of different fields of

knowledge and hence that of Claims, through the presentation and analysis of the workflow in

Marine Insurance Claims. Such a Claim appears when a risk prescribed by the policy contract

occurs and ends with the payment of the compensation from the insurer. It is a fact that the most

important way of dealing with Claims is the prevention of their formation. However it is

reasonable that taking into consideration the multi-diversity of maritime companies and their

“difficulty coefficient”, the prevention of risks is often rather difficult. Therefore whenever a

named peril raises, the procedure of claims’ resolution starts. The first step in the management of

claims is the report of the incident by the Captain to the shipping company, to the insurance

company and the P & I club provided that the incident concerns the P & I club. Alternatively the

incident shall be reported to the insurance company by either the shipping company or by the

insurance broker. The assortment of evidence and proofs, which help towards a more efficient

management of claims, follows in the next step. In any case, the insurance company must be

notified of the claim with a relative note of the policy holder, within a certain deadline starting

from the moment the incident occurred or should have come to the knowledge of the ship-
owners. If this requirement hasn’t been met a claim can’t be substantiated from the

policyholder.1 2. The Procedure of Claims The process of gathering evidence is assisted by

representatives – inspectors appointed by the ship owner who are in charge of contacting all

involved parties, European Research Studies, Volume XII, Issue (3), 2009 172 such as

inspectors, local authorities, shipyards, charterers, receivers of cargo etc. In case these

individuals haven’t been appointed jointly by the ship owner and the insurance company or the P

& I Club, if the latter is involved, the policyholder has the responsibility to appoint a maritime

inspector as well as an engineer inspector 2. The maritime inspector takes over the inspection of

the works concerning the reinstatement of the ship’s sailing ability as well as the Trans load and

storage of the cargo if needed. Respectively, the engineer inspector is in charge of the propulsion

capability and the function of the rest of the ship’s equipment. Meanwhile, the insurance

company has the possibility to assign to Salvage Association the appointment of an inspector3

who will examine thoroughly the case on its behalf. To be more specific, the representative of

Salvage Association focuses his interest on the examination of the causes where the claim stems

from, on the size of the claim as well as on the possible next steps. The extents of the repairs

which must be done to the shipyards as well as the cost of the repairs constitute the main duty of

the inspector of the Salvage Association. It is possible to reason that there has been an

overvaluation of the repairs, and in such case an intervention is necessary in order to re-evaluate

the final amount of money that will be paid for the restoration of damages. If there is an

implication of fraud, the Salvage Association inspector needs to undertake extra investigation

duties. It must also be noticed that he deals with the supervision of salvaging duties. To expedite

those tasks the Salvage Association often uses Lloyd’s global net of representatives. The

policyholder can request from the Average Adjuster a report on the expenditures 4. It is useful to
mention that the Average Adjuster can be replaced in his duties by the Claims Adjuster 5, with

the exception of the General Average whose presence is mandatory. As far as the Average

Adjuster is concerned, it’s often specified in the charter party that if needed to appoint an

Average Adjuster, he must meet a series of requirements regarding his head office, in order to

secure his credibility. The Average Adjuster is responsible for conducting a study where he

describes and quantifies the expenses that are required for the harbor expenses and other

expenses that may arise, as well as the repairs that already have been agreed to be made.

Therefore, the Average Adjuster is responsible of contacts with the inspector insurer for the

estimation of the required repairs and their cost. In order that the claim is presented to the

insurance company, the broker who represents the insured and who has been in charge of the

duty of conducting the claim should firstly complete his work and calculate the Claim (demand).

Alternatively, when the insured has 100% interest from the insured peril, no broker is involved.

Regarding the cases that refer to the ship, the Average Adjuster, who processes the data collected

concerning the case and who ensures that each claim from the insured ‘s side is well founded and

is legally based, intervenes in the procedure. Despite this fact, if certain claims haven’t got a

strong legal support, the Average Adjuster can submit them to insurers “for consideration”6. At

the same time, his advices the two sides contributing to the choice of either taking legal actions

or follow the path of negotiations 7. Work-Flow in the Procedure of Marine Insurance Claims

173 In order to make the choice between Arbitration and Courts, the main criterion taken into

account will be the comparison of expenses required in each case. After The Average Adjuster

completes his work, he delivers to the broker his report where the final amount of recognized

expenses is determined. In most cases the broker who deals with the settlement of the claims is

the one who negotiated the accomplishment of the insurance in the first place 8. Often the broker
undertakes the assignment of maritime inspectors on behalf of the insured 9. After he has

assembled and classified the reports of the Average Adjuster joint with the reports of the marine

inspectors, the broker undertakes the duty to present the various claims to the involved insurance

companies that have undertaken the coverage of the relevant risks. The broker’s position presents

particularities, because although he acts on behalf of the insured, he undertakes at the same time

the additional duty of providing information to the insurers, before the report of the Average

Adjuster becomes definitive. Consequently he should often show impartiality, which is not

always compatible with the obligations he has towards the insured 10. It seems purposeful to add

that in case that a false representation of real facts is attempted by the insured, the broker will not

be discharged of conspiracy, unless he withdraws from the handling of case 11. Provided that the

claims have henceforth been regulated, the insured can receive the insurance compensation either

directly or via the broker or even via the Average Adjuster12. Having previously ensured

authorization, the broker or the Average Adjuster can collect the compensations and afterwards to

attribute the proportional amount to the beneficiaries. Practically, this entails that a remittance or

a credit note will be issued by the broker or the Average Adjuster to the secured, certifying thus

the payment of the claim. We should add that for any further doubt, the involved parts may

consult the Average Adjuster. In case the risk comes upon on the transported cargo, another

procedure is followed. The recipient of the cargo has the responsibility to inform the involved

parts about the condition of the cargo, immediately as soon as this falls into his perception. More

concretely, the insurers must be notified about the incident, in order to appoint an inspector, who

will undertake to check up the condition of the cargo. We should underline that an inspection

made jointly by the inspector and a representative of the recipient of the cargo is desirable so that

the conclusion is mutually accepted.2 Moreover, the carrier should be informed of the condition
of the cargo and he should be called to participate in the joint inspection of the cargo. From this

inspection can result a claim of the recipient of the cargo against the carrier. The appointed

inspector may decide the landing or the handing of the cargo before the inspection in order to

eliminate the damage. At the same time, it is often useful that the possible intermediary carriers

of the cargo, normally the carriers from the harbor of landing to the storehouse of the recipient as

well as the local harbor authorities13, to be informed about the condition of the cargo. European

Research Studies, Volume XII, Issue (3), 2009 174 Afterwards, the report of the inspector is

handed to the Average Adjuster who should declare the final amount of the compensation. In this

point we should note that with regard to the market of small ships and off-shore oil and natural

gas production and transport, the average adjuster can be replaced by the Loss Adjuster14. In

certain cases the inspector also undertakes the duties of the Average Adjusters. At this point a

difference between the cargo insurance and the ship insurance is underlined. In particular, while

in ship insurance the Average Adjuster is independent, in cargo insurance usually he is appointed

by the insurance company. Evidence of the particular importance of the role of the Average

Adjuster and of his status is that although his report concerning the compensation is not binding

neither for the insured nor for the insurer, it is usually accepted without objections by the

concerned parties. It has been established that the payment of the compensation to the

beneficiary is collected by the broker on behalf of the insured. Usually, monthly - payments have

been agreed but also a special settlement can be arranged. Subsequently, the broker is responsible

of refunding the equivalent sum to the insured. If the broker has a large turnover and proportional

liquidity, it is possible that he pays the compensation to the beneficiary before he collects it from

the insurers. It is, however, possible that the case is not yet closed. For instance, we note the

possibility of a partial recollection of the compensation paid to the insured, in case it is

needed15. A different procedure is required in case of the General Average, which is the situation

in which the owners of the cargo are obliged to contribute proportionally to the expenses done

for the necessary and safe emersion of the ship from a situation which lurks dangers for the ship

or the cargo.3 In this case only the Average Adjuster can undertake the duties of the Adjuster.

When a situation of General Average has to be dealt with, the carrier has the obligation to inform

immediately the recipient of the cargo about this situation. When in advance payment is required

for the participation in General Average, the recipient of the cargo should pay the sum

corresponding to him and claim compensation from the insurance company. It should be noted

that the presence of the Average Adjuster is quite important in order to determine the degree of

participation of each party in the total amount of compensation. In the case of the General

Average, at least in the United Kingdom, it has been established that the Average Adjuster

assumes the responsibility to inform anyone related to the cargo about the extent of the claim16

. 3. Conclusions

The application of information systems is necessary in order to facilitate considerably the

settlement of claims. These applications should be put into practice from both the insured and the

insurance companies. If the information systems are simultaneously applied to the preliminary

agreements and the insurance policy, the Work-Flow in the Procedure of Marine Insurance

Claims 175 settlement of claims will be considerably facilitated. The information systems should

cover the needs of both the insured and the insurers. If this occurs it will have important

implications, provided that shipping enterprises have the possibility to create independent
 departments specialized in claims which will use specialized executives where information

systems are applied. The subject analyzed above focuses on the issues of procedures and rational,

equitable and effective settlement of claims setting aside the matters of substance of marine

insurance agreements. However, it offers great opportunity for future development and analysis,

and for the beginning of a scientific dialogue. As a concluding Remarque, I would like to

underline the quantity and variety of legislation, the variance of jurisprudence in various

countries, an issue that should be scrutinized in order to reach to synthesis.

Documents Required for Claims

Claims under marine policies have to be supported by certain documents which vary according

to the type of loss as also the circumstances of the claim and the mode of carriage.

The documents required for any claim are as under:

 Intimation to the Insurance Company: As soon as the loss is discovered then it is the

duty of the policyholder to inform the insurance company to enable it to assess the loss.

 Policy: The original policy or certificate of insurance is to be submitted to the

company. This document establishes the claimant’s title and also serves as an evidence of the

subject matter being actually insured.

 Bill of Lading: Bill of Lading is a document which serves as evidence that the goods

were actually shipped. It also gives the particulars of cargo.

 Invoice: An invoice evidences the terms of sale. It also contains complete description

of the goods, prices, etc. The invoice enables the insurers to see that the insured value of the
 cargo is not unreasonably in excess of its cost, and that there is no gross overvaluation. The

original invoice (or a copy thereof) is required in support of claim.

 Packing List: which shows the list of Items and condition of packing.

 Survey Report: Survey report shows the cause and extent of loss, and is absolutely

necessary for the settlement of claim. The findings of the surveyors relate to the nature and

extent of loss or damage, particulars of the sound values and damaged values, etc. It is normally

issued with the remarks "without prejudice" i.e. without prejudice to the question of liability

under the policy.

 Debit Note: The claimant is expected to send a debit note showing the amount claimed

by him in respect of the loss or damage. This is sometimes referred to as a claim bill.

 Copy of Protest: If the loss or damage to cargo has been (issued by insurers) which

transfers the rights of the claimant against a third party to the insurers. On payment of claim, the

insurers may wish to pursue recovery from a carrier or other third party who, in their opinion, is

responsible for the loss. The authority to do so is derived from this document. It is required to be

duly stamped. Some of the other documents required in support of particular average claims are

Ship survey report lost overboard certificate if cargo is lost during loading and unloading

operation, short landing certificate etc.

 Bill of entry: The other important document is bill of entry issued by the customs

authorities showing therein the amount of duty paid, the date of arrival of the steamer, etc.,

account sales showing the proceeds of the sale of the goods if they have been disposed of; repairs

or replacements bills in case of damages or breakage; and copies of correspondence exchanged

between the carriers and the claimants for compensation in case of liability resting on the

carriers.
 Debit Note: The claimant is expected to send a debit note showing the amount claimed

by him in respect of the loss or damage. This is sometimes referred to as a claim bill.

 Dock Receipt: To Show the condition of the Cargo whilst Loading and Unloading.

What to Do in the Event of a Claim

Any shipment that arrives damaged or incomplete requires IMMEDIATE ACTION Upon

Receiving Cargo:

 Examine all packages for external damage. Note signs of damage and shortage on the bill

of lading and/or delivery receipt before you accept delivery

 Count the number of packages. Note shortages on the bill of lading and/or the delivery

receipt

 If the shipment contains fragile items, open the packages to check for breakage - even if

there is no external damage. If there is "concealed damage", contact the carrier immediately.

If there is damage or loss

 Take photographs - if possible - of damaged packages and goods.

 Do not discard damaged packing materials or contents.

 Make every effort to minimize the loss, or prevent further loss, as stipulated under the

insurance contract. Reasonable expenses incurred in minimizing loss are reimbursable

 Immediately put all carriers on notice in writing, holding them responsible for the loss or

damage. Include the bill of lading and/or waybill and/or delivery note number, as well as the

name of the transporting vessel or other mode of transport. A description of the loss should also

be included, and the carrier(s) should be informed that a final claim will be filed when the full

extent of damage has been confirmed.

 When delivery is made by container, if the container is delivered damaged or with seal

broken or missing, or seal number other than that stated in the shipping documents, retain all

defective or irregular seals for subsequent identification. Make sure that the tallyman who goes

along with the container note, the damage or discrepancy on his tally sheet and get a copy of

damage/exception sheet from the tally company.

 Obtain damaged cargo certificate or short landed memo or exception list issued by the

carriers/forwarders, or make notations of the damage/loss on the bill of lading or carriers

delivery receipt.

 DO NOT give a clean receipt to the delivering carrier/forwarder unless you can

immediately inspect the cargo and you have found it undamaged. When there is any doubt, you

should mark any documentation with "Received in Apparent Good Order and Condition".

 As soon as you are aware of a potential loss/claim, immediately notify the

carrier/forwarder and/or the responsible parties involved in writing of the damaged or missing

cargo and of your intent to hold them responsible within the time limit set out in your contract of

carriage.

 In case of theft, pilferage, robbery, malicious damage or traffic accident, please refer to

the local authority and obtain the relevant Police or Traffic Accident Report. Also weighment slip

at the point of loading and weighment slip at the point of unloading should be produced.

 Take such reasonable action to prevent further loss.

 Notice of Claim for Transportation by Inland vessels or Road Carriers (booking and

destination offices) within 6 months from the date of booking in terms of Sec10 of the Carriers

Act 1865.
 Notice of Claim for Transportation by Air, the concerned Air carriers within 7 days from

the date of delivery of goods at the destination or in non-delivery within 14 days from the date of

booking in terms of Rule26(2) Chapter III of the Indian Carriage of Air Act. Rule 26 is appended

here below:

 “26. (1) Receipt by the person entitled to delivery of luggage or goods without complaint

is prima facie evidence that the same have 93 been delivered in good condition and in

accordance with the document of carriage. (2) In the case of damage, the person entitled to

delivery must complain to the carrier forthwith after the discovery of the damage, and, at the

latest, within three days from the date of receipt in the case of luggage and seven days from the

date of receipt in the case of goods. In the case of delivery the complaint must be made at the

latest within fourteen days from the date on which the luggage or goods have been placed at his

disposal. (3) Every complaint must be made in writing upon the document of carriage or by

separate notice in writing dispatched within the times aforesaid. (4) Failing complaint within the

times aforesaid, no action shall lie against the carrier, save in the case of fraud on his part.”

In the event of Claims being repudiated by the Insurance Company the following

options are available as a recourse:

1. Make a representation to the Insurance Company/TPA.

2. If no reply is received within 15 days on making such representation make a

representation to the Grievance Cell of the Insurance Company.

 3. If No Reply is received or if the reply is not satisfactory then make a representation to

the Insurance Ombudsman who has Quasi-Judicial powers to hear the case and make

adjudication.

4. If still not satisfied the next option is to go to court.

- See more at: http://www.claimsbazaar.com/marine-claims#sthash.Dw7PJs1q.dpuf

Fire Insurance Claim

Fire Insurance basically covers property damage. From the above pictures we can see that it

covers not only Fire but also damages to property due to natural/manmade disasters.

 Fire

 Lightning

 Explosion/Implosion

 Aircraft Damage
 Riot, Strike, Malicious Damage

 Storm, Typhoon, Hurricane, Tornado, Flood and Inundation

 Impact damage

 Subsidence and landslide including Rock slide

 Bursting and overflowing of water tanks, apparatus and Pipes

 Missile testing operations

 Leakage from Automatic Sprinkler Installation

 Bush Fire

 Earthquake/Terrorism etc. are covers that have to be opted for while submitting the

proposal form.

What is the Claims Process?

What do I do in the event of a Claim?

 1Take spot photographs of fire damage to property and contents.

 2Remove articles or stock that could be salvaged.

 3Intimate insurance company on their toll free number and obtain a claim number.

 4Obtain a certificate from fire brigade.

 5In the event of Flood / Cyclone / Earthquake / Lightning damage obtain meteorological

report.

 6In the event of Riot and Strike obtain a first information report from the police

authorities.

 7Submit claim form with claim bill.

What are the documents that have to be submitted for the Claim?

 Completed claim form

 Estimate of loss

 Fire brigade report

 Damaged area plan copy / plant plan copy

 In case of flood claims- meteorological report

 Approved plan copy of Municipal authorities

 Placement of Fire Extinguishers-Sketch

 In case of Implosion/Explosion report from Inspector of Boilers.

 In case of falling of Foreign Objects/Aircraft Damage FIR for local Police Station

 In case of terrorist attacks FIR from Local Police Station.

 In case of Riot and Strike FIR from Local Police Station.

 In case of Manufacturing Units: License issued by Inspector of Factories, Stock

Statement for 30 days, Statement of Stock in process and Purchase bill of Raw Materials and

Statement of Finished Products with value.

 In case of Office Buildings: Approved Plan Copy, Inventory List and Purchase bill of

Furniture/Fixtures/Fittings.

 In case of Shops: License from Local Authority under Shops and Establishment Act,

Copy of Inventory for last 30 days, Copy of purchase bills, Sales Invoice for the last 30 days. In

case of Sale but not delivered the list should be produced. List of Furniture/Fixtures/Fittings and

Municipal Tax Receipts.

 In case of Residential Buildings: Approved Plan Copy, List of contents, Purchase bills if

available and Municipal tax receipts.

What are the reasons for disputes in a Fire Claim?

Quantum of Claim, cause of Fire, buildings extended without approved plans, faulty electrical

installations, not insuring for the full value, breach of Policy Conditions and warranties for eg.

“POULTRY FARMS WARRANTY “Warranted that birds in the poultry farm are not covered

by this insurance.” Non-inclusion of add on covers like Earthquake/Terrorism etc.,

Underinsurance, omission to insure additions, etc.

How do I get relief in case of disputes?

 1Make a representation to the Insurance Company.

 2If no reply is received within 15 days on making such representation make a

representation to the Grievance Cell of the Insurance Company.

 3If No Reply is received or if the reply is not satisfactory then make a representation to

the Insurance Ombudsman who has Quasi-Judicial powers to hear the case and make

adjudication.

 4If still not satisfied the next option is to go to court.

Life insurance claim

I was 23 when I was married and settled in Mumbai, the iconic Financial Capital of India. My

Husband then was 28. In about 5 years our family size had grown to 4 with two dependent
(Parents of my beloved at Nagpur, dependent on him). My husband who started his career as a

lower level executive had climbed up the ladder and our life style had changed.

During his career concentration he left me with the job of evaluating our needs, budgeting,

meeting the needs of his parents, health expenses etc. I used to evaluate his income with tax

payments, liabilities, requirements for the next 20 years and so on. All this came in handy with

Life Insurance investment.

Life was beautiful, children were in the best school, had our own home, brand new car and all

the luxuries.

My Husband was on a trip to Goa, and instead of flying he chose to drive. Yes he was a good

driver but loved to travel at top notch speeds. He was only 40 then. The mobile chimed and since

it was from my husband’s phone I said “wow dear, you reached?” The voice at the other end

gave the feel that something was not well, and then I fainted.

Now began our woes. Should I go start working? Now even my parents were blaming that I

should have been employed but not. As I kept mourning I was convinced that my husband had

done his best because he was keen on Life Insurance. Yes, he was Insured for 2crores (of course

over a period of time with various policies), home was covered under a term insurance; kids’

education was covered with policies for education. Now was the real relief. My husband had not

left us in lurch. We could live life as we lived when he was alive. His parents were also duly

supported.

Thanks to Life Insurance.

 How do I calculate my Life Insurance need?

When purchasing life insurance, the question really isn’t how much you need, but how much

capital your family will need at the time of your death, which depends on two variables:

1) How much will be needed at death to meet immediate obligations?

This amount takes into account all final expenses: uncovered medical bills, funeral and estate-

settling costs, outstanding debts, mortgage balance and college costs to name a few.

2) How much future income is needed to sustain the household?

This is the number you’ll arrive at after calculating the “present value” of cash-flow streams your

family will need after your death.

What do I do in the event of a claim?

 Intimation to Insurance company

 Correctly filling up the claim form

 Original policy document

 In case of Natural death, Death certificate from Registrar of Births and Deaths, Legal

Heir certificate from revenue department.

 In case of accidental Death: Death Certificate-from registrar of births and deaths, First

Information Report and Inquest Report and Post mortem report from concerned police station

and Legal Heir Certificate from revenue department.

 In case of Suicidal Death: Claims can be made only upon completion of 1st year of the

policy: Death Certificate from registrar of births and death, First Information Report and Inquest

report and post mortem report from the concerned police station and Legal Heir certificate from

revenue department.

 In case of Murder: Death Certificate from registrar of births and death, First Information

Report and Inquest Report and Post mortem report from the concerned police station and Legal

Heir Certificate from revenue department.

 For Points No.4, 5&6 in the event of multiple Legal Heirs, the Legal Heir making the

claim must produce a No objection certificate from the other Legal Heirs. Kindly note this is

imperative even if “nomination” has been duly endorsed in the policy. In cases where the Legal

Heir is an adopted person such documents pertaining to adoption must be duly submitted.

 In all the above circumstances the discharge voucher given by the Insurance Company

along with copy of bank pass book must be submitted for crediting the claims to the claimants

account.

There is a hiccup in the claim settlement, the Insurance Company is refusing payment, now

what do I do?

 Make a representation to the Insurance Company

 Wait for a period of 15 days and then make a representation to the Grievance cell of the

Insurance Company.

 When reply from the Insurance Company is adverse/ no info make a representation to the

Ombudsman who is a quasi-judicial authority or move the Consumer Redressed Forum

(Consumer Court).
The field of insurance has taken a giant leap at threshold of twentieth century. Insurance have

became an integral part of life of man all over the globe. The proverb ‘Need is the mother of

invention’ i s proving equally correct in case of insurance Insurance have already had

considerable impact on many aspects of our society

.many organization 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. Claim management is one of the most challenging process in the industry.

W it h t h e n u m b e r o f s t a k e h o l d e r i n v o l v e d , t h e d e p e n d e n c i e s a n d t h e

logistics, there is a need to eliminate manual intervention. For many

o r g a n i z a t i o n , c l a i m m a n a g e m e n t a n d 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 a n d r e g u l a t i o n s f o r t h e a s s e s s m e n t o f

g e n e r a l d a m a g e s u s i n g t h e k e y information contained in medical reports, surveyor

report, loss assessor’s reports, claimant’s 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 t h e c l a i m s , t h e p r o c e d u r e t h a t i s

f o l l o w e d , a n d t h e i n t e r m e d i a r i e s t h a t a r e involved in the process and so on.

This project throws light on various aspects on claims management and the problems faced

by them.

Introduction to Insurance in India

The insurance sector in India has come a full circle from being an open competitive

market to nationalization and back to liberalized market again. Tracing the

development in Indian Insurance sector reveals the 360 degree turn witnessed over a

period of almost two centuries. Today insurance companies have grown manifold.

The insurance sector in India has shown immense growth potential. Even today a

giant share of Indian population nearly 80% is not under life insurance coverage, let

alone health and non-life insurance policies. This clearly indicate the potential for insurance

companies to grow their market in India. In simple term it is a contract between the person who

buys Insurance and the Insurance Company who sold the policy. By entering into contract the

Insurance Company agrees to pay the policy holder or his family members a predetermined sum

of money in case of any unfortunate event for a predetermined fixed sum payable which is in

normal term called Insurance Premiums. Insurance is basically a protection against a financial

loss which can arise on the happening of an unexpected event. Insurance companies collect

premium to provide can safeguard himself and his family financially from an unfortunate event.

Brief history of the Insurance sector

The business of life insurance in India in its existing form started in India in the year 1818 witgh

the establishment of the Oriental Life Insurance Company in Calcutta.

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

➢1 9 1 2 : T h e I n d i a n L i f e As s u r a n c e C o m p a n i e s Ac t e n a c t e d a s t h e f i r s t

statue 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 on-life insurance businesses.

➢1 9 3 8 : E a r l i e r l e g i s l a t i o n c o n s o l i d a t e d a n d a m e n d e d t o b y t h e

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 a capital contribution of Rest. 5 core from the Government of India. The General

insurance business in India, on the other hand, can trace its roots to the Triton Insurance

Company Ltd., the first general insurance company established in the year 1850 in Calcutta by

the British. Some of the important milestones in the general insurance business in

India are:

➢1 9 0 7 : T h e I n d i a n M e r c a n t i l e I n s u r a n c e L t d . s e t u p , t h e f i r s

t company to transact all classes of general insurance business.

➢1 9 5 7 : G e n e r a l I n s u r a n c e C o u n c i l , a w i n g o f t h e I n s u r a n c e A

s s o c i a t i o n o f I n d i a , f r a m e s a c o d e o f c o n d u c t f o r e n s u r i n g f a i r conduct and

sound business practices.

➢1968: The Insurance Act amended to regulate investments and set minimum solvency

margins and the Tariff Advisory Committee setup.

➢1972: The General Insurance Business (Nationalization) Act, 1972n a t i o n a l i s e d t h e

g e n e r a l i n s u r a n c e b u s i n e s s i n I n d i a w i t h e f f e c t from 1st January 1973.

➢107 insurers amalgamated and grouped into four company’s viz.the National

Insurance Company Ltd., the New India Assurance Company Ltd.,the Oriental

Insurance Company Ltd., and the United Indian Insurance Company Ltd., GIC

incorporated as a company.

An insurance claim is the actual application for benefits provided b y a n i n s u r a n c e

c o m p a n y. P o l i c y h o l d e r s m u s t f i r s t f i l e a n i n s u r a n c e claim before any money can

be disbursed to the hospital or repair shop or other contracted service. The insurance company

may or may not approve the claim, based on their own assessment of the circumstances.

Individual who take home, life, health, or automobile insurance policies must maintain regular

payments called premiums to the insurers.

Most of the time these premium are used to settle another person’s insurance claim or to build up

the available assets of the insurance company. When claims are filed, the insurance has to

observe the settle rules and procedure and the insurer has also to reciprocate in a similar manner

by undertaking appropriate steps for speedy disposal of claim. It is true that the claims settlement

is complex in nature, but it is the driving force to plant confidence in the heart of people, in

general and beneficiaries inspection. Insurance claim is right of insured under a contract of

insurance. Insurance contract is a contract by which one party called the insurer promises to save

the other party, the insured on payment of consideration known as the premium. The insurer

promises to save the insured are nominees/assignees of the insured on happening of

event or risk insured. Disputes crop up in the payment of claim when the

insurer and the insured understand the process of claims payment in a different way.
Claims settlement is an integral part of the insurance business which is a service industry and its

growth is inter woven with people, the customer and the consumer service. It is inevitable for the

insurance company to protect the guard the interest of the policy holder. An insurance claim is

the only way to officially apply for benefits under an insurance policy, but until the insurance

company has assessed the situation it will remain only a claim, not a pay-out.

Many insurers have recognized the need to improve the efficiency of their claims

management process. They have streamlined processes, eliminated paper-

b a s e d f o r m s a n d r e d i s t r i b u t e d w o r k t o m a t c h t h e demands to skills. The

objective of their efforts is to lower costs, while also increasing overall throughput.

Efficiency improvements make

tasksq u i c k e r a n d l e s s c o s t l y t o e x e c u t e . H o w e v e r, t o r e a l i z e e v e n g r e a t e r im

provements in the claims handling process, insurers must also focus on the effectiveness of their

claims decisions.

C l a i m s h a n d l i n g c o s t s t y p i c a l l y r e p r e s e n t 1 0 % t o 1 5 % o f n e t earned

p r e m i u m ; i n c o n t r a s t , c l a i m s p a y o u t s r e p r e s e n t 4 0 % t o 6 5 % . Insurers that

expand their focus to include effective as well as

efficientc l a i m s p r o c e s s i n g w i l l f i n d a f a r l a r g e r p o o l o f s a v i n g s o p p o r t u n i t i

e s . Technology can play a significant role by providing integrated

channelsf o r c o m m u n i c a t i o n a n d c o l l a b o r a t i o n . T h i s w o u l d h e l p t h e i n s u r a n c

e c o m p a n y i n c r e a s e e m p l o y e e p r o d u c t i v i t y b y r e d u c i n g c y c l e t i m e a n d 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 b o d y s h o p s t o a d j u s t e r s t o i n v e s t i g a t o r s t o l a w y e r s a n d d o c t o r

s t o claimants and regulators. And it involves the knowledge of experienced

adjusters to determine the fair and appropriate outcome of a claim.

Inf a c t , l o s s e s a n d l o s s e x p e n s e s a b s o r b 8 0 % o f p r e m i u m c o l l e c t e d

b y carriers.S e r v i c e representatives and claims adjusters need to access

dataf r o m m u l t i p l e s o u r c e s w h e n p r o c e s s i n g o r a s s e s s i n g a c l a i m , w

hichd e l a ys s e t t l e m e n t t i m e a n d i n c r e a s e s c o s t s . M a n u a l s t e p s

reducetransparenc y of the claims proces s and raise the

risk of fraud,

manipulation or simply human error. Customer retention is also ac

hallenge – experts say that 75 percent of customers leave their insurer due to claims

issues.

C l a i m s h a n d l i n g c o s t s t y p i c a l l y r e p r e s e n t 1 0 % t o 1 5 % o f n e t earned

p r e m i u m ; i n c o n t r a s t , c l a i m s p a y o u t s r e p r e s e n t 4 0 % t o 6 5 % . Insurers that

expand their focus to include effective as well as

efficientc l a i m s p r o c e s s i n g w i l l f i n d a f a r l a r g e r p o o l o f s a v i n g s o p p o r t u n i t i

e s . Technology can play a significant role by providing integrated

channelsf o r c o m m u n i c a t i o n a n d c o l l a b o r a t i o n . T h i s w o u l d h e l p t h e i n s u r a n c

e c o m p a n y i n c r e a s e e m p l o y e e p r o d u c t i v i t y b y r e d u c i n g c y c l e t i m e a n d 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 b o d y s h o p s t o a d j u s t e r s t o i n v e s t i g a t o r s t o l a w y e r s a n d d o c t o r

s t o claimants and regulators. And it involves the knowledge of experienced

adjusters to determine the fair and appropriate outcome of a claim.

Inf a c t , l o s s e s a n d l o s s e x p e n s e s a b s o r b 8 0 % o f p r e m i u m c o l l e c t e d

b y carriers.S e r v i c e representatives and claims adjusters need to access

dataf r o m m u l t i p l e s o u r c e s w h e n p r o c e s s i n g o r a s s e s s i n g a c l a i m , w

hichd e l a ys s e t t l e m e n t t i m e a n d i n c r e a s e s c o s t s . M a n u a l s t e p s

reducetransparenc y of the claims process and raise the

risk of fraud,

manipulation or simply human error. Customer retention is also ac

hallenge – experts say that 75 percent of customers leave their insurer due to claims

issues.

System of claims management

Basis of claims management:

Claims management means and includes all the managerial

decisions and processes concerning the settlement and payment of claims in accordance with

the terms of insurance contract. It includes carrying out the entire claims process

with a particular emphasis on

monitoringa n d l o w e r i n g t h e c l a i m s c o s t s . T h e i m p o r t a n t e l e m e n
t s o f c l a i m s management are claims preparation, claims philosophy, claims processing and

claims

settlement.T h e c l a i m s p h i l o s o p h y i s d e f i n e d a s p r o c e d u r e o r s p e

cifiedapproach to settle the claims. It contains the claims m

a n a g e m e n t Principles and also claims handling methods and procedures. The

claims philosophy includes the preparation of guidelines regarding the receipt

of c l a i m s f r o m t h e i n s u r e r s o r c l a i m a n t s , a n a l y s i s o f t h e

c l a i m s , consideration of the possible decision on the particular is

s u e s a n d disputes, evaluating the impact of the claims cost and expenses, relation

of claims to the consumer satisfaction, monitoring the claim payment and improving the

efficiency of the claims settlement and payment systems and avoiding unnecessary

disputes of

claims.T h e c l a i m s p r o c e s s i n c l u d e s t h e b a s i c c l a i m s p r o c e d u r e a n d ha

ndling of claims. The handling of claims includes the monitoring of situation or

events, which cause the loss to the insured subject matter and give a cause to the insured

to make a claim. The claims process contains two fold procedures to be followed by

the insurer and insured. From the p o i n t o f v i e w o f t h e i n s u r e d , i t i n c l u d e s

t h e s u f f e r i n g o f l o s s o r t h e damage, understanding and identifying the cause of

action, information or giving notice of claim or loss to the insurer, providing sufficient proof

of l o s s t o t h e i n s u r e r o r h i s a g e n t o r t h e l o s s a s s e s s o r a n d s u r v e y o r s . T h e

insurer, on the receipt of the claim from the insured, has to take certain immediate

precautions such as verifying the claims, reviewing the

claima p p l i c a t i o n , r e s p o n d t o t h e c l a i m a n t , a n d

c a r r y o u t c l a i m s i n v e s t i g a t i o n , claims negotiation, claim settlement and claim payment.

Stages in claims system:

The claims handling is the integrated part of the claims management and executes the

decisions made by the claims management machinery of an insurance company. Though claims

management and claims handling are generally the same externally, they are different in nature.

C l a i m s m a n a g e m e n t i s a m a n a g e r i a l f u n c t i o n i n w h i c h t h e insurer ha

s a d e f i n i t e r o l e t o p l a y i n a n a l ys i s o f d a t a , p r o c e s s i n g o f application,

decision-making, budget planning, and business

controla n d f u n d m a n a g e m e n t . I t i s a s u b j e c t i v e c o n c e p t . I

n c l a i m s management, the attention is on making principles and guidelines for smooth and

profitable settlement of claims in the hands of the

insurer.C l a i m s m a n a g e m e n t i n c l u d e s t h e e n t i r e p r o c e s s o f c l a i m s h a n d l

i n g a n d c l a i m s p a y m e n t . T h i s i n c l u d e s r e v i e w o f t h e c l a i m s performance,

monitoring of claims expenses’, legal costs, settlement costs, compromises and planning

for future payments and avoiding the delay and disputes in payment of claims. It is a control

system that has a n i m p o r t a n t p l a c e i n t h e c l a i m s m a n a g e m e n t . I t a l s o i n c l u d e s

r i s k m a n a g e m e n t t e c h n i q u e s , l o s s a s s e s s m e n t , a n d b u s i n e s s f o r e c a s t i n g and

planning.

•
Claims handling: Claims handling is the procedural way of processing a

claimsa p p l i c a t i o n . C l a i m s h a n d l i n g i n v o l v e s u t i l i z a t i o n o f t h e l a i d d o w n p r

inciples as yardsticks and the measuring methods in settling

thei s s u e s b e f o r e i t o c c u r s . C l a i m s h a n d l i n g i s a t r a d i t i o n a l f o r m o f

m a n a g i n g t h e c l a i m s s e t t l e m e n t s . I t i n c l u d e s h a n d l i n g o f v a r i o u s stages of the

insurance claims. It is functional in nature such as

claimsr e v i e w, i n v e s t i g a t i o n a n d u n d e r s t a n d i n g t h e n e g o t i a t i n g p r o c e s s . I t do

es not include any managerial outlook such as risk management, policy making and

decision making. T h u s , i t i s c o n c e r n e d w i t h t h e p r o c e d u r a l m e t h o d s a n d a l s o

interpretations of the claims philosophy. Claims handling may change from case to case

depending on the merits of the claim, but it will not drastically change every moment. It is a

flexible as well as a rigid way o f h a n d l i n g t h e i s s u e s h a v i n g i n t e r e s t o f t h e

i n s u r e r i n m i n d . I t i s s ystematic way of receiving the claims and following other

procedures required for quicker and efficient payment of the claims. Every insurer has a

standardized way of claims handling which will improve quality

And customer service. The insurer’s commitment to the service of the customer is a

part of the claims.

Types of claims

Understanding the requirements for various life insurance benefits (claims) is

importantforthecustomers.The overriding condition onc l a i m s i s t h e p a y m

e n t o f p r e m i u m s i . e . c l a i m s a r e o n l y p a y a b l e i f premiums are paid up to

date. There are various types of claims under life policies. The most common claims include:
The general requirements for each of these claims are briefly explained below.

Death Claims:

This is a claim paid when then the person insured dies. For a death claim to be paid the following

basic conditions must be fulfilled.

➢The policy document, original death certificate, burial permit

copyo f t h e I D o f t h e d e c e a s e d m u s t b e p r o v i d e d t o t h e i n s u r a n

c e company.

➢A r e p o r t f r o m t h e d o c t o r w h o t r e a t e d t h e d e c e a s e d m u s t b e

presented to the insurance company.

➢Claim forms must be completed

➢A report from the doctor who last treated the deceased person may be required.

➢A p o l i c e a b s t r a c t r e p o r t m a y b e r e q u i r e d w h e r e d e a t h o c c u r s throug

h an accident. The documentation required for payment of death claims are

easilya v a i l a b l e a n d c l a i m a n t s n e e d t o i m m e d i a t e l y i n f o r m t h e i n s u r a

n c e company where problems are encountered in securing the documents.

The documents are usually required so as to reduce on the possibility of paying

fraudulent claims or paying the wrong claimants. Many

insurancec o m p a n i e s w i l l f r e q u e n t l y w a i v e c e r t a i n r e q u i r e m e n t s u n d e r c e r t a i n

special circumstances.
Maturity Claims:

A maturity claim is paid out mostly on endowment and

educationi n s u r a n c e p o l i c i e s w h o s e d u r a t i o n h a s e x p i r e d . F o r e x a m p

l e i n a n insurance policy with duration of 15 years, the maturity value will be paid o n t h e

15

The

Anniversary after affecting the policy. Payment of a maturity claim is a

straightforward affair where the customer returns the original policy document and

signs a discharge form. The claim cheese is usually released in a period of about two

weeks once all required conditions are fulfilled.

Partial Maturity Claims:

Most endowment and education policies provide for payment of partial maturities after

a given duration. The partial maturity is normally paid on set dates in the policy document. A

typical education policy of 10years provides for payment of 20% of the sum insured

after four years and every year thereafter until the expiry of the policy. The life

insurancec o m p a n y u s u a l l y p r e p a r e s p a r t i a l m a t u r i t y c h e q u e s i n a n a u t o m a t e d

manner and the customer does not have to claim. The cheese is either sent

d i r e c t l y t o t h e c u s t o m e r o r t h e n e a r e s t b r a n c h o f f i c e f o r e a s e o f collection.
Surrender Value Claims:

When a customer is unable to continue with the payment of

premiums due to unplanned events like retrenchment or dismissal he haste option of

encasing the policy to receive the surrender value so long as the policy has been in

force for more than 3 years. The procedure for lodging this type of claim is very

simple and is similar to the maturity c l a i m w h e r e b y t h e c u s t o m e r r e t u r n s t h e

p o l i c y d o c u m e n t a n d s i g n s d ischarge form. The claim cheese is then paid to the

customer within two weeks.

Policy Loans:

This is strictly not a claim but a benefit given out by life companies for life policies that have

been in force for at least three years. To receive policy loan directly from a life company entails

assigning the policy tithe life company and receiving a loan check. The insurance

policy can also be assigned to a bank and the loan is then granted by the banks and

the policy document utilized as security for the loan

Disability Claims:

T h i s w i l l a r i s e i n l i f e p o l i c i e s w h e r e t h e c u s t o m e r p u r c h a s e s a personal

accident policy rider as an additional benefit. Disability

claimsa r e p a y a b l e s u b j e c t t o s u f f i c i e n t m e d i c a l e v i d e n c e b e i n g p r o v i d e d a s

proof of disablement.