Assignment

Principles of Insurance & Banking

Topic: claims of insurance
SUBMITTED TO: Ms Kalyani Dutta SUBMITTED BY: Pahul Chawla MBA/10/26 MBA 4th semester

Life Insurance Claims

Introduction A claim is the payment made by the insurer to the insured or claimant on the occurrence of the event specified in the contract, in return for the premiums paid for the insured. A claim is the demand that the insurer should redeem the promise made in the contract. The insurer has then to perform his part of the contract i.e. settle the claim, after satisfying himself that all the conditions and requirements for settlement of claim have been complied.

Preliminary Procedure Insurer is expected to follow through the following procedure at the start: Whether the policy is in active state? Whether the policyholder has performed his part? The policy status with regard to payment of premium, age admission, outstanding loan & interest, if any, legal restrictions such as under , Foreign Exchange Regulations, report of investigation, police report, if any.

What are the obligations assumed under the contract, which are required to be performed like payment of bonus, survival benefits, payment of SA in installments, waiver of future premiums, etc? Who are persons entitled to demand performance? Submission of Claim Form, Submission of Primary level documents.

MATURITY CLAIMS Under endowment policies, the SA is to be paid when the term of the policy is over. The amount payable on maturity is the SA, less any debts like loan and interest or outstanding premiums. If it is a with-profit policy, the bonuses, as applicable, would be added. - Advance intimation is sent to the insured informing him about the maturity and requesting for submission of discharge voucher and policy document. - The insurer has to satisfy that: there are no assignments the identity of the policyholder is proved the age stands admitted all the premiums are paid the original policy is submitted the discharge voucher duly completed is received Once the documents are received, the insurer sends a post-dated cheque few days in advance. In case, the original policy is reported to be lost, the matter is examined in detail

to ascertain the genuineness of claim and is settled on the basis of indemnity , if found genuine. Under MWP Act polices, the claim to be paid to wife & his children. In case of absolute assignment, the payment will be made to the assignee. If the assignment is conditional, reverting to the life assured on maturity, payment can be made to the assured himself. However, it will be prudent to check that the assignee has no outstanding claims. SURVIVAL BENEFIT CLAIMS A survival benefit is paid during the currency of the policy. The procedure will be similar to payment of maturity claims. The insured sends advance intimation and discharge voucher and the life assured is required to return the same duly stamped, signed, witnessed and send the original policy document also for necessary endorsement. Thereafter post dated cheques will be sent in advance. If the policy is reported to be lost, the insured is advised to obtain a duplicate policy. If the insured dies after the date when the survival benefit was due, but before it is settled,

The survival benefit will not be paid to the nominee. Only the death claim will be paid to the nominee. DEATH CLAIM The procedures in settling a death claim are more complex than in the case of maturity claims. This is mainly because, the facts relating to death have to be studied and the identities of claimants have to be established. The death claim action is initiated with the receipt of intimation from nominee/assignee/relative of life assured/the employer /agent/development officer.

The insurer need not wait till the receipt of intimation. They may even take note of the information received from newspaper reports/media provided identity of the deceased is established. The following will be necessary before settlement of a death claim: Policy documents Deeds of assignments/ reassignments Proof of age, if not already admitted Certificate of death Legal evidence of title, if the policy is not assigned or nominated

If the death has within three years from the commencement of policy, or from revival, following additional requirements may be asked to verify the possibility of suppression of material facts at time of proposal : Statement from the last medical attendant giving details of last illness and treatment Statement from the hospital, if the deceased was admitted to a hospital Statement from the person, who had attended last rites and had seen the dead body Statement from the employer, if the deceased was employed, showing the details of leave

If the life assured had an unnatural death, such as accident, suicide or unknown causes, police inquest report, panchnama, chemical analyzers report/ post mortem report, etc. would also be asked and examined. Depending on preliminary data, a special enquiry may be ordered. In case a claim is repudiated, it is quite likely that the matter may go to court which tend to be sympathetic to the claimant because they are the weaker party. Hence the insurer has to prove beyond any doubt that there has been suppression of material facts duly supported by necessary evidences. Ultimately such claims have to be paid. But still the insurers go through the process of enquiries in case of early death claims which enable them to improve the underwriting standards and also identify the agents and regions, which are prone to more early claims. In case there is no nomination or assignment, the claimant would have to prove his title through legal process under relevant law of succession. Death claims occurring within 2 years from the date of commencement of the policy, or from the date of revival of the policy is called Very Early Claim. Death claims occurring and between 2 to 3 years from the date of commencement of policy or from the date of revival is classified as Early claim. In all cases of early claims and very early claims, investigation will be done by the insurer to make sure that the claim is genuine.

ACCIDENT AND DISABILITY INSURANCE These benefits are conditional on conclusive evidence, that all the eligibility conditions are satisfied and that the exclusions do not apply. The conditions are that: the accident must be caused by external, violent means, not self inflicted the death must be as a result of injuries caused by that accident the death must occur within 120 days or such other period as may be specified

The exclusions are: Intentional self injury, attempted suicide, insanity, immortality, intoxication Accident while engaged in civil aviation or aeronautics, other than as a passenger Injuries resulting from riots, civil commotion etc.

CLAIM CONCESSION There are situations when, though the policy has lapsed and nothing is payable, yet the insurer pays the death claim. The L.I.C. pays claim in full in the following circumstances, after deducting the outstanding premium with interest. In both the cases, the policy could have been revived by just paying the arrears of premium and no proof of good health would have been necessary: After three years, if death claim arises within six months from the date of lapse After five years, if the death claim arises within twelve months from the date of lapse If the premiums have been paid for 5 years and above, the claim concession is extended for a period 12 months. This is called Extended claims concession.

NON-LIFE INSURANCE CLAIMS Payment of claims is primary service in insurance to the public. Proper settlement of claims requires a sound knowledge of the law, principles and practices governing insurance contracts and thorough knowledge of policy terms and conditions. The settlement of claims involves examination of the loss in relation to coverage under the policy and compliance with policy terms and conditions and warranties. The burden or onus of proof that the loss is within the scope of policy is upon the insured. After the verifications, the amount payable has to be worked out which would depend on the sum insured, extent of insurable interest, application of conditions of average, contribution and subrogation. Claims can be categorized as Standard, Non-Standard and Ex-gratia. While standard claims clearly fall within the scope of policy and settled to full extent,

The non-standard claims involve breach of some policy condition or warranty and their settlement would depend upon rules and regulations of the concerned insurer. Ex-gratia payments are the losses which fall outside the scope of policy and hence not payable.

However, in very special cases, to avoid hardship to the insured, settlement of these losses is considered as a matter of grace. In such cases only certain percentage of the claim is paid .

PRELIMINARY PROCEDURE It involves immediate intimation of loss to the insurer so that necessary steps for inspection, investigation and loss minimization are taken by insurers. In case of losses involving criminal act, police should also be informed. In case of transit claims, notice should also be given to the carriers/ bailees. After verification of policy validity and coverage, the claim is registered with the help of claim form.

MOTOR Claim-Preliminary Process Giving the intimation Be ready with Documents [Registration certificate (photocopy & original), Driving License (photocopy & original), Insurance Policy/Cover note, Claim form duly filled & signed by the insured & if firm then duly stamped.] Appointment of surveyors Assessment of the loss

FIRE Insurance Claim-Preliminary Process Individuals/ corporate must inform insurer as early as possible, in no case later than 24 hours Provide relevant information to the surveyor/claim representative appointed by the insurer The surveyor then analyzes the extent/ value of loss or damage Variety of documents are needed (True copy of the policy along with schedule, Report of fire brigade, Claim Form, Photographs, Past claims experience Forensic Departments report, if applicable, Original Repair/ Replacement Bills with receipt)

Marine Insurance Claim-Preliminary Process In Marine Insurance claims, all the documents of the claim is to be submitted to the insurance company The documents should be submitted in original Wherever original documents are not available second copy may be accepted, but photocopies are not acceptable

The documents are to be submitted preferably in one lot and within reasonable time limit of occurrence of the claim and under all circumstances before claim becomes time barred against carrier etc

Notice of Loss Timely and prompt notice Immediate information Practically If contract is silent about reporting time of loss Act as prudent person Dont presume that Insurer will get the information on its own Loss of right to claim Fire & Marine Immediate notice is utmost required Motor Insurance Inform before displacement of damaged vehicle Notice should contain: Claim Forms Format varies with each class of Insurance Generally requires information regarding Circumstances of losses Date of loss Time of loss Extent of loss Details of Insurance Policy Date of incident Full details of the accident/incident Place of occurrence Nature of loss Expected causes of loss Estimated financial loss Proof of loss After giving the notice of loss, claimant should submit the claim form in the prescribed format, with utmost good faith.

 For Ex

Other questions vary in accordance with different classes of Insurance

Motor Claim Form Rough sketch of the accident Burglary Claim Form Notification to the police Asset Insurance Valuation of the property