Page 25 - The Insurance Times September 2024

slipped, he would also fall into the logs and be crushed into the repairer, which was accepted. When the insurer had
pieces. When I told the GM, he said, "Yes, it is a risky job, paid the claim, they subrogated and immediately demanded
and two people have died earlier in such operations." I sug- recovery from the repairer.
gested to the GM, "If you tie this man with a chain and a
belt to an iron pole, such a man will never slip and fall in- Salvage
side." The GM became very happy and immediately gave
Even when the damage to a car is repaired and the final
instructions. Thus, several claims were averted. I always used
amount of the claim is decided, before the settlement of
to inspect large losses at a casual visit and advise the insur-
the claim, the insurer demands that the damaged parts of
ers on safety measures.
the car be returned because this helps to mitigate the loss.
Some insurers also inspect the salvaged parts to ensure they
Policy Condition are not re-used in other claims. This is the kind of practice
Many of the insurers have suggested that if the insurance the insurers adopt when settling claims. On one occasion,
company inspects the property to be insured and suggests the owner of a petrochemical factory telephoned me and
precautionary measures, many of the losses can be avoided. informed me about a claim of a damaged container, which
I told them that no doubt the idea is good, but the premium was reported to us as a total loss. The insured said that this
rate would be considerably increased because the insurer container, which was originally valued at Rs. 10,00,000, was
has to send a surveyor to every place where the insurance being handed over to the insurance company.
is being done. To evaluate the property, to avoid under-in-
surance, to check the ownership of the property, to check The damage to the container was genuine, but the insured
up insurable interest, etc. To avoid subsequent complica- was trying to inflate the loss to get a bigger claim. I visited
tions, the surveyor has to be paid the fees, and this will be the spot and found that the container was filled with wa-
charged to the person insuring. ter. I requested the owner to wait for a week and I would
come to inspect it again after a week. Slowly, the container
Just imagine if the insurer in one place has to send the sur- was drained and it came back to 90% of its normal size.
veyor to the property located at a distant place; it will be- When I inspected it, the owner was surprised and asked me,
come a great economic loss and a loss of time. It is, there- "What about the check for Rs. 10,00,000?" I told him that
fore, assumed that whatever is declared in the proposal form insurance is for losses, not for profits.
is correct; the insurer accepts it as true and, at the time of
a claim arising, checks up on the truth of these. If these are Maximization of Loss
true, the claim will be passed. This is known as utmost good
faith. If this fact is made aware of, he will not only appreci- Many of the insured people have the tendency to exagger-
ate this aspect but also follow it strictly. ate the loss to get a bigger claim. When I tried to explain
that insurance is not for profit but for actual losses, some of

Subrogation the people were reluctant to believe it. One such person
was the owner of a damaged chemical container. He told
In property claims, when the claim reaches the final stage
me that the container was beyond repair, but when I vis-
of settlement, the insurer does not remain silent. If the in- ited the spot, I found that the container was still salvage-
sured has filed a claim against another party who has caused
able. The owner was not pleased with the engineer's sur-
the damage, the insurer's main aim is to recover the amount
vey, so I visited again with the engineer and after a thor-
paid to the insured. This is possible only when the insurer is
ough inspection, the owner was satisfied with the check I
substituted in place of the insured and becomes entitled to issued for the actual loss. The owner said, "Insurance people
all the rights and remedies available to the insured against
are intelligent," but I told him that "insurance people col-
the other party. In a case where a ship caught fire, the in-
lect a little premium from the many and pay the losses to
surance company, which was fully liable, was satisfied that
the few. If the losses are more, the insurance company will
the ship was properly safeguarded.
collapse."
However, during the investigation, it was found that the ship
had sustained further damage during repair. The insured The Conclusion
and the repairer were asked to lodge a complaint against The insured will entrust the entire responsibility to the agent

The Insurance Times September 2024 23