Page 432 - IC38 GENERAL INSURANCE

A. Claims settlement process

1. Importance of settling claims

The most important function of an insurance company is to settle claims of
policyholders on the happening of a loss event. Insurer fulfils this promise by
providing prompt, fair and equitable service in either paying the policyholder
or paying claims made against the insured by a third party.

Insurance is marketed as a financial mechanism to provide indemnity on losses
due to insured perils. Were it not for insurance and the claim settlement
process, recovery to normal state after an unfortunate accident / event might
be slow, inefficient and difficult.

One of the non-life insurance companies had the inscription “Pay if you can;
repudiate if you must” in its board room. That is the spirit of the noble business
of insurance.

Settling claims professionally is regarded the biggest advertisement for an
insurance company.

a) Promptness

Prompt settlement of claims, whether the insured is a corporate client or an
individual or whether the size of the loss is big or small is very important. It
must be understood that the insured needs insurance compensation as soon
as the possible after the loss.

If he gets the money promptly, it is of maximum use to him. It is insurance
company‟s duty to pay the claim amount when insured needs it most – as
early as possible after the loss.

b) Professionalism

The insurance officials consider each and every claim on its merits and do
not apply prejudicial or pre-conceived notions to reject the claim without
examining all the documents that would answer the following questions.

i. Did the loss really happen?
ii. If so, did the loss making event really cause the damage?
iii. The extent of damage out of this event.
iv. What was the reason for the loss?
v. Was the loss covered under the policy?
vi. Is the claim payable as per the contract/ policy conditions?
vii. If so, how much is payable?

The answers to all these questions need to be found out by the insurance
company.

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