MOTOR INSURANCE

CLAIMS

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 Claims
• What is a Claim?
• A Claim is a request for reimbursement (or
compensation) by the insured and
addressed to the insurer.
• A claim can be made (i.e. notified) without
an insured loss event is happening. In
such a case, the claim would be invalid.

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 Claims…
• What is a loss?
• A loss is the occurrence of an insured event, such as an
overturning of the insured motor vehicle which results in
financial disadvantage for the insured.
• It is the time where the value of the cover and the claims
service is put in to test.
• Motor insurance, particularly private motor, is sold
largely by price nonetheless a bad experience of claims
handling can affect the decision of insurers whether or
not to renew with their current insurer.

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 Claims…
• The roles of the claim department are to:
• provide a swift, efficient and technically knowledgeable
claims service
• indemnify the policyholder in accordance with the cover
purchased
• ensure that only valid claims are paid
• consider and if appropriate, deal with third party claims
whilst protecting the policyholder's interest
• protect the central pool of premiums against
overpayment, fraud and expenses incurred due to
inefficient claims -handling processes.
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 Claims process
( 1 ) Event giving rise to the claim;
( 2 ) Claims Notification;
( 3 )Claim Review;
( 4 )Response to Claimant;
(5 ) Claims Investigation;
( 6 ) Claims Negotiation;
( 7 )Claims Settlement;
(8 ) Claims Recoveries;
(9 )Review of Performance
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 Claim process
Claims Process:
The various stages in the claim process
are:
( 1 ) Event giving rise to the claim:
• As stated above this may or may not be an
insured loss event.

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 Claims…
( 2 ) Claims Notification:
This is the reporting (in the prescribed format,
e.g. by filling in the claim form supplied by the
insurer) of the claim by the insured to the
insurer. Ideally, the claim details will be
sufficient to meet the needs of the insurer and
all appropriate documentation will be enclosed.
The purpose of this condition is to enable the
insurer to take steps to investigate claims in
order to minimize its exposure under the policy
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 Claims notification
• It enables loss adjusters and lawyers to be
appointed and generally allows the
circumstances to be investigated so that
detailed evidence is not lost.
• It also gives insurers the opportunity of
investigating possible recoveries from third
parties (the third party refer to anyone other
than the insured who is involved in a loss
event).

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 ( 3 )Claim Review:
This involves the analysis of the claim by the
insurer in the light of such things as:
 the appropriateness of the amounts claimed
 the proposal form, e.g. whether the claim
contradicts earlier statements.
 the exact terms of the policy
 legal requirements

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 Claims review
• economic considerations such as the internal cost
of pursuing extra documentation of entering in the
correspondences with the insured compared to
paying a small claim
• market practice
• As can be seen, some factors may conflict with
each other such as the exact term of the contract
and economic considerations; legal requirements
and market practice.
• Claims review is therefore a key stage in the
process.

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( 4 )Response to Claimant
The initial response from the insurer to the
insured may be only an acknowledgement
and a request for further information.
Depending upon this further information, the
insurer must then convey their "Claim
decision' which can be one of three
choices:
payment, i.e. acceptance of the claim in
broad terms;
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 Response to claimant
• negotiation, i.e. the offer of a lower
amount than that claimed or an offer to
enter into negotiations with the insured
with no amount initially named. In this
situation, liability is accepted by the
insurer and the quantum of the claim is
the only point in dispute
• rejection, i.e., liability is not accepted by
the insurer.
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 Response to claimant
In the case of both negotiation and
rejection, the full reasons for the
decision should be stated.
 This allows the insured to
understand the decision and to
challenge it if the arguments are
flawed.

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(5 ) Claims Investigation
In many cases, such as motor accidents, the
insurer will not be in a position to make a claim
decision before the full facts surrounding the
claim are available.
In order to establish such facts, it may be
necessary to instruct an internal claims
inspector to under take further investigations or
they may appoint loss adjusters who undertake
an independent investigation into the claim and
write a report of their findings for the insurer.

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 (5 ) Claims Investigation

– Once the insurer has finished their

investigation they are expected to send their
response to the claimant.

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( 6 ) Claims Negotiation
– Armed with the full facts of the case, the
insurer may decide that a lesser amount
should be offered than that originally claimed.
For example, the insurer may believe that part
of the damage to the car was caused prior to
the occurrence of the insured event.

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( 7 )Claims Settlement
This stage may quickly follow the response
to the claimant in the case of simple
claims, liability for which is immediately
accepted by the insurer.
On the other hand, claim settlement may
be delayed for some time in the case of
claims where liability is initially denied,
then subsequently negotiated.

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(8 ) Claims Recoveries
• Following payment of the claim, it is often
the case that the insurer will be able to
recover part of the outlay from other
sources:
• From third parties considered liable for the
insured event by exercising their subrogation
rights
• from reinsurers if the claim fall above the
priority.

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• Review of Performance
• This will only be carried out in respect of
sample of claims, plus any large or
particularly problematic claims. The idea is
to ensure that:
• Standards of service are being maintained
• Internal decisions were correctly made
• Any reserves still attaching to claims reflect the
current positions of the claim in line with the
corporate reserving policy
• To see if anything can be learned from the
experience. 19
 Own Damage Claims
• It is in this area where claims service is at its
most critical. Vehicle, some of which may be
used for business, may be out of commission.
In any event, policyholders do not want their
expensive vehicles to be unsightly due to body
damage and will expect speedy repair or
replacement.
• The repair process starts with one or more
(other than the Company's Survey) repair
estimates from local repairers.
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 Own Damage…
• Approved Repairers
– Insurers have always been aware of the
repairers in any locality that are likely to give a
quality and speedy service at a reasonable price.
– They will also know which repairs can be trusted.
– Over the last decade or so insurers have
endeavored to formalize this situation by
providing recommendation and/or approval to a
panel of repairer.

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 Own Damage…
• In order to assist in their marketing and to
enhance their credibility, repairers are
keen to obtain approved status from as
many insurers as possible.
• However, in many ways a blanket
approach does not provide the true
benefits that can be obtained from such an
arrangement.

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 Own Damage…
• The benefits of working with approved
repairers are:
– a close working relationship
– agreed price and standards
– guaranteed workshop availability
– guaranteed courtesy cars
– a steady flow of work for the repairer

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 Own damage…
• Panels of Approved Repairers
– The size of the panels of repairers is critical.
• There need to be sufficient numbers and
geographical spread in order to satisfy the needs of
the insurer's portfolio of motor policies.
• If there are too many repairers on the panel, then
the work will be dissipated and the benefits or
volume business will be lost.
– Repairers must work to certain standard and
possess all essential equipment in order to
carryout repairs to manufacturer's tolerances.
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 Own Damage…
• Repairer need to have a customer focus which should
manifest itself in the presentation and quality of their
premises and in their willingness to submit to quality
standards
• Usually there would be a contract between the insurer
and the repairer within which labor rates would be
agreed.
• Labour costs are quoted
• Parts are charged in accordance with the cost to the
repairer plus, of course, a reasonable profit margin.
• Lump sum quotation –labour plus parts
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 Own Damage…
• Repairers can and do negotiated
discounts from dealers and much will
depend upon volume purchases.
• Insurers might insist upon part of that
discount being passed on to them.

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 Own Damage…
• Courtesy Cars
– Most reasonable sized repairers now offer
some form of alternative transport while they
have a customer's vehicle in for repair and
these are commonly known as courtesy cars.
– Most insurers insist upon availability of
courtesy car from their panel of approved
repairers and indeed then use this fact in their
publicity materials.

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 Own Damage…
• The Repair Invoice
– Once repairs are completed, the policyholder
will be asked to sign a form.
– Traditionally, this form has been termed a
'satisfaction note', but latterly it has been
renamed a collection note.
– The objective is to obtain the policyholder's
acceptance that the vehicle has been
returned in a satisfactory state and they have
cheeked and approved the repair.
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 Own Damage…
– However, in acknowledging the lay status of
the majority of policyholders, there would not
be a bar to the insured returning the vehicle
later if they find fault in the cold light of day.
– Up on collection of the vehicle, the
policyholder will be required to pay:
• excesses as shown in the policy
• any private work carried out at the same time as
the main repair
• any contribution for betterment
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 Own Damage…
• The Role of the engineer
– On a day-to-day, case-by-case basis, the
cost of repairs is controlled by insurance
engineers.
– Many insurers employ engineers on their own
staff. They will obviously act in the best
interests of their employer, but this will
normally involved a customer focus as well as
a cost control function.

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 Own Damage…
– Engineers will agree method and cost with
garage estimator and will provide repair
authority.
– They will be available for consultation should
something change during the course of repair
and will sign off the final invoice.

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 Own Damage…
– The costs calculated by engineers will
determine whether or not any particular repair
is worth while, taking into account the over all
value of the damaged car.
– If the repair is not economically viable then
the engineer will declare the vehicle an
insurance write-off.
– They will then go on to calculate the pre-loss
value of the vehicle.

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 Theft Claims
• The handling of theft claims differ from other own
damage claims in important ways.
• This arises from the fact that there is a tendency for
many vehicles, reported as stolen, to be recovered
with in a matter of days or weeks of the theft.
• If the vehicle is recovered in a damaged state the
insurer will proceed with the settlements of the claim in
the usual way.
• If the vehicle is not recovered there may be some
doubt as to the pre-theft condition of the vehicle.
•
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 Theft Claims…
• It is always necessary for the theft to be reported to the police (by
the terms of the policy).
• Insurers will customarily wait for a period of approximately six to
twelve weeks before treating the theft as permanent.
• Once the claim is settled a discharge form is required from the
insured stating that if the vehicle is subsequently recovered it will
either be treated as salvage belonging to the insurer or the claims
money will be returned and the vehicle revert to the insurers
ownership.
• Before insurers pay cash to the insured for total loss vehicles or
stolen vehicles, it is very important to check finance details by
requesting a hire purchase information.

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 Theft Claims…
• Before insurers pay cash to the insured for
total loss vehicles or stolen vehicles, it is
very important to check finance details by
requesting a hire purchase or collateral
information.

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 Salvage
• If a claim is settled on total losses basis,
then the insurer will invariably retain the
salvage and will sell it to defray costs.
• The market for salvage is vast:
• many of them are broken for spares or crushed,
• a great number of other vehicles are
successfully passed through trade, repaired and
put back on the road in a safe condition.
•
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 Salvage…
• Motor vehicle salvage is unfortunately an
opportunist’s source for fraud:
– The identify of broken or crushed vehicles
may be taken and used on stolen vehicles;
– vehicles may be cheaply and unsafely
repaired before being sold on with the history
hidden
– salvage may be re-used in insurance
accident or theft claims.
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 Salvage…
– It is for these reasons that the insurance
industry in conjunction with salvage buyers
and government departments has sought to
control the disposal of salvage.

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 Third party propery claims
• It is evident that where damage to two or
more vehicles is involved, the question of
liability for causing the accident is
important, especially in the absence of an
agreement.
• When receiving notification of a claim of
this type, the first step the insurer will take
will be to investigate the circumstances
surrounding the accident.
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 Third party Property…
• The insurer will, wherever possible, seek statements
from independent witnesses.
• At this stage, the claims official should attempt to clarify
any conflict of evidence that might exist.
• He should also inspect the scene of the accident.
• If the accident has been reported to the police and there
is a third party claim, it is important to obtain a copy of
the policy report if possible, in order to compare the
statements given to the police with those given to the
insurer.

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 Third Party Property…
• Accidents tend to be of two different
types:
– Those where one driver was wholly responsible.
– Those where the negligence of two or more
drivers probably contributed.
– In multi-vehicle accidents, insurers will
usually encourage each policyholder insured
comprehensively to claim under his own
policy and then, privately settle the question
of liability between them.
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 Third Party Property…
• In doing that, they will be concerned to do two things:
– not to prejudice any action which their own
policyholder may be taking in respect of his own
uninsured losses: his policy excess, the cost of hiring
a vehicle whilst his being repaired and the like.
– to form an opinion on the effect of the claim on their
own policyholder’s NCD. If their policyholder
successfully recovers his uninsured losses in full,
insurers will not allow the claim to prejudice NCD.

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 Third Party Property…
– Once liability has been established, the next
stage is to translate this into a monetary
amount for repair.
– The procedure for approaching repair
estimates may follow a similar pattern to own
damage claims.
– Third party claims should be settled by cash.

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 Third Party Personal Injury
Claims
• Third party personal injury claims are more
complex and expensive to settle than
other type of motor claims.
• Once the degree of negligence has been
established, the next stage is to ascertain
the extent of the injury, the prognosis and
the number of dependants.
•

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Motor Claims Handling Procedures
1. a “notification of Motor Accident Form”
shall be completed.
Please refer to Claims Notification
Form

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UNDERWRITING VERIFICATION

•Claims officer shall register and complete

verification form and pass it to the
underwriting department for their validation
of the existence of a valid cover

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 CLAIM PROCESSING
• Traffic Policy Report and Travel Advance
request
• Assigns an Inspector immediately to
handle the case whenever the
claim necessitates his attendance.

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 Inspector Report

• Towing Service Requisition Form

• The Inspector who has been assigned to

follow up a claim shall give a detailed
report using the “Motor Accident
inspection Report.”

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 Inspector Report
• Insured or his/her Agent or Inspector as
the case may be shall hand over
damaged vehicles necessitating a towing
service to a tower using “Damaged
Vehicles handing over Form”

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 Inspector Report
• The assigned Inspector shall hand over
the damaged vehicle to the Recovery
Department on the date of its arrival to the
Recovery Department against signature of
handing and taking over document. And
present the copy to claims department

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 External assessment by surveyor
• The assigned surveyor after the damaged
vehicle reached in Recovery compound.
Should conduct preliminary assessment

• List of parts to be repaired and changed shall

be prepared and signed by the surveyor and
posted on the vehicle and copies of lists shall
be sent to the claims department.

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 TENDER HANDLING
• As soon as list of parts to be changed or
repaired are posted on the damaged
vehicle the claims department shall
immediately invite garages to submit
their bids for body two repair.
• The Client will be allowed to nominate
two garages

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 TENDER HANDLING
• The assigned Surveyor shall prepare and
submit body assessment report .The
report should include list of damaged
body parts to be replaced, repaired, cost
of parts, labor charges, salvage and pre
accident values and whether the vehicle
can be economically repaired and also
indicate time required fro repairing.

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 TENDER HANDLING
• The original body and mechanical damage
assessment reports shall be deposited in
the bid box maintained at claims
department after being registered and
rubber stamped by the claims manger
secretary

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 TENDER HANDLING
• The garages shall submit their bids in
sealed enveloped within five days after
receipt of invitation.
• All sealed envelopes shall be opened
• Bids analysis
• bids committee approval form

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 TENDER HANDLING
If the Vehicle is repairable, the claims department,
• Shall agree with the insured on any contribution
and any other costs to be borne by him.
• Shall give work order to the winner garage on
contract basis for both body repair
• Sends a copy of the work order to the Recovery
Department so as the Department can hand over
the vehicle to the repairing garage.

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 satisfaction note
• Upon completion of repair work, the claims
department shall issue a vehicle release
order after the garage submitted a
satisfaction note dully signed by the
insured or his/her legal representatives
together with invoices

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 Third party Claims
• “Knock for knock”
• Own damage claims on accidents that
happened out of the traffic road.
• Third party bodily injury claims outside the
scope of the Civil Code Act 2081/2 and
2086/2, which states

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 Third party Claims
• Civil code 2081/2
He shall not be liable where he proves that at
the time when the damage was caused the
machine or vehicle had been stolen from him
Civil Code 2086/2
They shall be relieved of their liability, entirely
or in part, only where the damage is due
solely or partly to the fault of the victim. Or
Proclamation 799/2013 takes prcedence
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 Mechanical damage
• Mechanical damage assessment shall be
made in the garage by the assigned
surveyor.

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 Total loss claims

• “Total loss of damaged vehicle shall be

declared if it is uneconomical to repair; taking
the following points into consideration.
 When the vehicle is totally destroyed/lost/due
to insured peril.
 When the repair cost is equal or more than the
sum insured.
 When the repair cost is uneconomical:-

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 Total loss claims
• When the estimated repair cost is equal or
more than 50 % of the sum insured of the
vehicle. In order to determine whether to
declare a total loss it shall require to know
the salvage value of the vehicle
• If the estimated total repair cost exceeds
the sum insured less the salvage value,
then the vehicle shall be declared as
constructive total loss

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 Total loss documents
• The owner-ship title certificate
• Power of attorney confirming that the
salvages can be disposed of or
transferred
• Inland Revenue and Road Transport
Authority tax clearance certificate, I n
respect of vehicle for commercial use
only
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 Total loss documents
• Customs declaration in respect of
diplomatic vehicle
• Clearance letter from Toad Transport
Authority in respect of private Vehicles
and Taxis
• If the total loss vehicle is imported on
duty free additional steps have to be
followed to get the legal right to dispose
the salvage.
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 Bank interest
Claims with a Bank interest
in case of total loss shall be
paid in cash to the insured
only when a written consent
is obtained from the bank.

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 REPLACED PARTS
• All body and mechanical parts for which
new substitution are to be made shall be
handed –over by the garage during the
assessment to the Surveyor who shall
immediately pass them to the recovery
Department on receipt of two copies of the
‘ Replaced parts Delivery Slip’

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 CONTRIBUTION
surveyors decision based on
company’s guide lines

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 EXCESS /RECOVERIES
• Should be collectd

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 THIRD PARTY CLAIMS
HANDLING
• THIRD PARTY PROPERTY

 THIRD PARTY BODLY INJURY

 The law is not clear on the subject of
assessing third party’s claim for bodily
injuries.
 Customs equity and common sense play
therefore a very important part in dealing
with these kinds of claims
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 Bodily injuries
• Third party bodily injuries are handled in
accordance with article 2090 to 2123 of
the Ethiopian Civil Code
• Compensation payable in respect of fatal
injury shall be supported by
» Post-mortem certificate (whenever possible).
» Police or equivalent report.

Court certificate of legal heirs

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 Compensation for permanent
disability shall be supported by :
 Medical Board’s Certificate (whenever
possible) and
• Policy or equivalent report.
• Temporary disability benefits shall be paid on
receipt of a medical certificate ascertaining the
period of incapacity to work as a result of the
injury suffered in the accident and the amount
(benefit) is calculated on the basis of the
earnings foregone of the injured person

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 THIRD PARTY CLAIAMS
FOLLOW-UP
• Third party Recovery Register Book”

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 Recovery from a liable Third party
Collection of recovery from a liable Third
party, where the insured vehicle is
declared as total loss, shall be handled
as follows
 Recover shall be collected after the
salvage is sold

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 Recovery from a liable Third party
• If the value obtained from, the sale of the
salvage is equal or greater than the sum
insured, of the vehicle, then there will be
no collection of recovery from the liable
Third party

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 Recovery from a liable Third party
• If the value obtained from the sale of the
salvage is less than the sum insured, of
the vehicle, then the difference shall be
collected from the liable Third party.
• The liable Third party shall not
retain/obtain the salvage of the vehicle
except by participating in the public
auction of the salvage

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 Claims Procedure summary
Common documents
• Notification of Motor Accident Form
• Copy of the Driving License
• Motor Accident Inspection Report
• Traffic Police and/or other similar report

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 + repairable
In the case of repairable vehicles (additional
documents required)
• Survey Reports
• - Damage assessment
• - Pre accident value
• - Salvage value
• Garage repair estimates

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 ++ total loss
In the case of total loss (additional documents
required)
- Power of Attorney
- Customs Declaration in respect of Duty free
vehicles
- Inland Revenue and Road Transport authority
clearance certificates
- Discharge Receipt from the beneficiary

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Thank you!

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