Claims manual

Prepared by:
Noushad Muttippalathingal
Dubai, UAE
Corporate Principles - Claims Management

W e, at the claims department, are

committed to :

• Prompt and polite response to the claimants

• Quick and efficient enquiries about claim

• Fair and accurate assessment of claim

• Clear decision making considering policy terms, legal and

economic considerations

• Deal with claimants sympathetically and sensitively as well as

firmly

• Bear in mind the total costs involved in the claim handling

Note

The above can be treated as the objectives or mission

statement of claims department (each staff has to abide
with these principles)

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Principles of C laims
Handling
(These principles were gathered from ICOB Chapter 7)
• Insurer must carry out claims handling
promptly and fairly
o Keep the customer informed about the
progress of his claim
o Ensure payment is made promptly once
settlement made
o Ensure the competence of the any person
carries out the claim handling
• Guide customers on claiming
o If customer wants to make a claim, the
insurer should provide reasonable
guidance for the same
• Insurer must not reject a claim made by a
customer except :
o There evidence of fraud based on non-
disclosure or misrepresentation of
material fact, breach of warranties &
conditions etc.
• Insurance intermediary has:
o Duty of care, skill and diligence when
acting for customer
o To avoid conflicts of interests
• Insurer must respond promptly to the claim
notification
o Vide durable medium, provide claim
forms to customer
o If appoint a surveyor, their full details to
be given to customer
• Insurer must keep the customer reasonably
informed about the progress of his claim
process or investigation.
• Insurer must notify Customer as soon as
practicable their decision
o (i) Pay their claim fully (ii) Reject the
entire claim partially or fully (iii) Reject
the liability but offer any compromise
settlement.
 In case of (ii) & (iii) above, we
have to explain the reasons with
reference to the policy terms.
o Inform the customer about the mode of
settlement of claim such as payment to
them or paying to the providers of repair,
goods or service or replacement of the
lost property.
• Insurer must settle a claim promptly
• Insurer must keep the records for 3 years after
settlement or rejection
o Details and dates about claim, settlement,
rejection, basis for the decision

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Claims Handling Procedures
(Property Insurance)
(Compiled from CII study course books 745 & 820 and
local market practice)
• Notification of claims:
o Receive the initial intimation or Duly
filled Claim form
• Review of claim
o The notified claim should be reviewed
with considering the following factors.
 Verify whether loss/damage
caused by insured peril, occurred
during the policy period and the
insured has insurable interest, any
breach of warranties or
misrepresentation of facts by the
insured, Premium paid or agreed
to pay etc.
o Appoint internal/external surveyor
depending on nature and volume of loss,
advice the same to insured with any
instructions to mitigate further loss.
 Consider the specialized
knowledge of surveyor while
choosing them.
 Preferably CILA members for big
claims

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  Notices to other insurances or
liable third parties (if any) to
protect Recovery rights
Register claim in the register, open file claim,
provide provisional reserves.

• Acknowledgement of claim:
o This is the response to client which may
be in form of the following.
 Acknowledging the intimation
with request for further details and
documents required
 Informing the claimant about
appointment of a surveyor for
major claims.
 For nominal claims, convey
acceptance in broad terms or
Negotiating for a lower amount
(after the liability accepted)
 Rejecting the claim (Here the
reasons to be mentioned clearly.
Where disputes are expected, refer
to higher authorities before
rejection)
• Claim investigation and reports:
o Keep the customer reasonably updated
about status.
o Prepare Scrutiny sheet/Facing sheet
o Follow-up progress of surveyor’s
adjustment

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  Obtain Preliminary survey report,
Interim payment report
 Revise the provisions accordingly
• Decision making on liability:
o Receive Final Survey Report and review
it
o Ensure documents are collected and
liability established
o Submit for higher approval wherever
required
o Notify the claimant whether claim
accepted (Acceptance Note) or rejected,
mode of settlement and obtain agreement.
• Claim settlement:
o Process settlement computation of the
claim after receipt of the required
documents and adjustment report.
o Consider Deductibles of policy or of any
sections
o If settlement agreed, such payment should
be made within five working days
o Obtain Discharge receipt, Subrogation
form & Form of Indemnity signed
agreeing the customer has been
indemnified in full against the claim and
the rights of any recovery from third party
have been transferred to us.
o Receiving above forms, process
settlement entries
• Dispute on rejected claim:

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 o If the insured refuses the insurer’s
decision of their claim (rejection, lower
settlement etc.), the insured may refer the
same to legal entities such court of law,
arbitrator etc.
• Recovery proceedings:
o Evaluate chances of recovery, salvage
etc., register a recovery claim and send
notice to third party or insurer.
o If any Contribution exists, inform the
other insurer from the early stage of claim
process, update them with the proceedings
and recover from them their contribution
after settlement made.
o Where any recovery expected from a third
party based on the subrogation rights,
serve them notice at early stage of claim,
invite their inputs or comments, start the
recovery proceeding after settlement of
claim.
o If salvaged or remained property at the
loss settlement bear some values, the
same can be disposed to the highest
bidder and credit the same to recovery
claim records.

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Factors determining extend of
liability
(Compiled from CII study course books 745 & GII
Course TCPE)
The measure of indemnity varies based on conditions of
the contract and there are several factors which decide
the extent of liability of Insurer.
• Methods of indemnity
o Repair – Insurer undertakes to repair the
damaged property
 Deductions for betterment
applicable
o Replacement – replaces the property to
the same type age and condition before
the loss.
 Pays the fair market value
o Reinstatement – replaces the property to
same condition as it is new.
 No deductions for betterment,
 No deductions for wear/tear
• Type of policy
o Valued – indemnifies for the value at the
time & place of loss
o Unvalued – indemnifies the value agreed
prior contract irrespective of the insured’s
amount of interest. Over-valuation to be

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 checked while settlement which makes
the contract void.
 Partial losses should be arrived by
applying percentage of
depreciation resulting from the
damage to the agreed value
• Adequacy of Sum Insured :
o If the sum insured of policy is lesser than
the value of property at the time of loss,
claim amount will be deducted
proportionately to the under-insurance,
for indemnity policies.
o In case of re-instatement, the sum insured
should represent minimum 85% of the
reinstatement value, otherwise under-
insurance applies.

The following factors also influence the Net Pay-out of

claims based on policy conditions.
• ‘New for old’ condition
• Additional covers – Memoranda clauses (e.g.
Expediting expenses, Public authority clause etc.)

• Retroactive cover
• Claims-made policies
• Depreciation
• Contribution
• Subrogation rights
• Salvage
• Deductible (Amount/Time)

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