CLAIMS MANAGEMENT

ABSTRACT

The insurance sector in India has formed a full circle from being an open competitive
market to nationalization and back to a liberalized market again. Tracing the developments in the
Indian insurance sector reveals the 360-degree turn witnessed over a period of almost two
centuries.

Today Insurance Companies in India have grown manifold. The insurance sector in India
has shown immense growth potential. Even today a giant share of Indian population nearly 80%
is not under life insurance coverage, let alone health and non-life insurance policies. This clearly
indicates the potential for insurance companies to grow their market in India.

In simple terms it is a contract between the person who buys Insurance and an Insurance
company who sold the Policy, by entering into contract the Insurance company agrees to pay the
policy holder or his family members a predetermined sum of money in case of any unfortunate
event for a predetermined fixed sum payable which is in normal term called Insurance premiums.

Insurance is basically a protection against a financial loss which can arise on the
happening of an unexpected event. Insurance companies collect premiums to provide for this
protection. By paying a very small sum of money a person can safeguard himself and his family
financially from an unfortunate event.

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CHAPTER I
INTRODUCTION

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INTRODUCTION

INSURANCE IS THE MOST PRUDENT INVENTION OF MAN, IT MAKES DISASTERS

TOLERABLE

- ALBERT EINSTEIN.

Insurance is an intangible product that promises future performance. There is an information gap
between the insurer and the customer that needs to be bridged in a fair manner. The sheer variety
of insurance products available and the hassles of claims processing can confound the best
professional.

INSURANCE BROKERS

Individual and business insurance buyers often need expert advice to enable them to assess the
risks they have, to help them minimize those risks in a practical way, and to match their needs to
the best seller of insurance in the market. Many people and businesses choose to buy insurance
directly, but others - and in particular commercial buyers - use an intermediary.

Intermediaries include:

Insurance brokers - a person or firm that provides independent advice to meet specific
customer needs, choosing from a range of providers.
Insurance agents - act as authorize representatives of a specific insurance company.

Claims management

CLAIM:

Claim is a demand presented for payment of the benefit due under the terms of an insurance
policy.

Claims and loss handling is the materialized utility of insurance; it is the actual "product" paid
for, though one hopes it will never need to be used.

Claims may be filed by insured directly with the insurer or through brokers or agents.

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The insurer may require that the claim be filed on its own proprietary forms, or may accept
claims on a standard industry form such as those produced by ACORD (Association for co-
operative operations research & development).

INSURANCE CLAIM:

An insurance claim is the actual application for benefits provided by an insurance company.
Policy holders must first file an insurance claim before any money can be disbursed to the
hospital or repair shop or other contracted service. The insurance company may or may not
approve the claim, based on their own assessment of the circumstances.

In general, the insurance claim is filed with a local representative of the insurance company. This
agent becomes responsible for investigating the specific details of the insurance claim and
negotiating the payment from the main insurers. Many times a recognized authority can file the
necessary insurance claim forms directly with the insurance company.

After an insurance claim is filed, the insurance company may send out an investigator called an
adjustor or appraiser. The insurance adjustor's job is to objectively evaluate the insurance claim
and determine if the repair estimates are reasonable. This is to prevent possible fraud by
contractors who may inflate their bills for additional compensation. Insurance companies tend to
accept the adjustor or appraiser's evaluation as the final word on the insurance claim.

Some insurance claims may not be recognized by the insurance company for any number of
reasons. If a claimant's premiums have not been paid in full, the policy itself may not be active.
Another insurance company may have already agreed to pay for the damages listed in the claim.
This happens quite often in automobile accidents where one party is held responsible. Another
reason an insurance claim may be rejected is a failure to fall under covered conditions. Most
insurance policies spell out specific areas which qualify for benefits. If the accident or damage
claim was caused by carelessness or an unavoidable "Act of God", the insurance company has
the right to withhold payments.

Insurance company claim departments employ a large number of claims adjusters supported by a
staff of records management and data entry clerks. Incoming claims are classified based on

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severity and are assigned to adjusters whose settlement authority varies with their knowledge and
experience. The adjuster undertakes a thorough investigation of each claim, usually in close
cooperation with the insured, determines its reasonable monetary value, and authorizes payment.
Adjusting liability insurance claims is particularly difficult because there is a third party involved
(the plaintiff who is suing the insured) who is under no contractual obligation to cooperate with
the insurer and in fact may regard the insurer as a deep pocket. The adjuster must obtain legal
counsel for the insured (either inside "house" counsel or outside "panel" counsel), monitor
litigation that may take years to complete, and appear in person or over the telephone with
settlement authority at a mandatory settlement conference when requested by the judge.

NEED & IMPORTANCE OF THE STUDY

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To gain proper idea & knowledge about insurance products port folio offered by
the company and how it handles claims.
To study about the insurance services which the company is rendering.
To know how the company deals with different needs of different category
people.
How company handles different fraudulent claims.
To know how it processes the claims.
To assess the companys competitive analysis in insurance market by having
claims management department.
To know importance of quality management in claims management.

SCOPE OF THE PROJECT

The project study covers the claims management of the following:

General insurance:
Motor insurance
Life insurance:
Children plans and some life policies

OBJECTIVES OF THE STUDY

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The principle objective of the study is to deal with the subject in new perspective to cover the
entire gamut of claims management its strategic role, cost monitoring role, service aspect
role & its redressal.

Understanding the claims procedure enriching the knowledge through different claims.
Understanding the importance of quality management in claims management.
Understand claim processes, procedures& concepts.
Understanding the role of litigations in the claims.
To analyze the important strengths weakness of having claims management department.

METHODOLOGY

The present study is to analyze the claims processing & claims handling by various insurance
companies i.e., both related to general insurance & life insurance.

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A. Type of research is descriptive research by survey method.

B. Primary data is collected from the Investors of zen insurance and secondary data from
company profile, brochures.
C. Sample Size:50 investors. Collection Method: personal.
D. Tool: a structural questionnaire was prepared to collect information pertaining to the
study. The questionnaire was administered to Zen Insurance.
DATA SOURCES:
a) Primary Data:
The data will be collected though holding discussions with the employees of the company
and discussing the questionnaires with existing customers of the company.
b) Secondary Data:
Secondary data will be collected from various sources like text books, journals, published
documents, annual reports, magazines and websites.

RESEARCH DESIGN:
The research is primarily both explanatory as well as descriptive in nature. A well-structured
questionnaire was prepared and personal interviews were conducted to collect the customers
requirements, through this questionnaire.
SAMPLING METHODOLOGY:
a) Sampling Technique:
Random sample method.
b) Sampling size:
Sample size refers to number of elements to be included in the study.
Sample size is 50 investors of ZEN INSURANCE
DATA ANALYSIS TECHNIQUE:
a. Percentages
b. Bar diagrams
LIMITATIONS OF THE STUDY

Most of the information collected is secondary data as no specified books are available
with regard to claims management.

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One of the most influencing and most critical limitations is that Im not trained for the
research study and this is my first study. I tried hard to come at conclusion, but there is
lack of expertise.

Another limitation is that there is lack of time. If given more time then studies will be
more effective.

Companies are not ready to provide me the full fledged information as such I could not
reach up to the mark of the set objectives.

As I have taken major players in present scenario in insurance industry I could not make
out better comparison with regards to the claims management as they are almost same but
with slight difference.

CHAPTER II
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INDUSTRY PROFILE
COMPANY PROFILE

INDUSTRY PROFILE

Brief history of the Insurance sector

The business of life insurance in India in its existing form started in India in the year 1818 with
the establishment of the Oriental Life Insurance Company in Calcutta.

Some of the important milestones in the life insurance business in India are:

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate
the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government to collect
statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act with the
objective of protecting the interests of the insuring public.

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1956: 245 Indian and foreign insurers and provident societies taken over by the central
government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956,
with a capital contribution of Rs. 5 corer from the Government of India. The General
insurance business in India, on the other hand, can trace its roots to the Triton Insurance
Company Ltd., the first general insurance company established in the year 1850 in
Calcutta by the British.

Some of the important milestones in the general insurance business in India are:

1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all
classes of general insurance business.

1957: General Insurance Council, a wing of the Insurance Association of India, frames a
code of conduct for ensuring fair conduct and sound business practices.

1968: The Insurance Act amended to regulate investments and set minimum solvency
margins and the Tariff Advisory Committee set up.

1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the
general insurance business in India with effect from 1st January 1973.

107 insurers amalgamated and grouped into four companies viz. the National Insurance
Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company
Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.

In 1993, Malhotra Committee headed by former Finance Secretary and RBI Governor
R.N. Malhotra was formed to evaluate the Indian insurance industry and recommend its
future direction. The Malhotra committee was set up with the objective of complementing
the reforms initiated in the financial sector. The reforms were aimed at "creating a more
efficient and competitive financial system suitable for the requirements of the economy
keeping in mind the structural changes currently underway and recognizing that
insurance is an important part of the overall financial system where it was necessary to
address the need for similar reforms.
Thereafter many changes have taken place in the insurance sector. Insurance sector in
India was liberalized in March 2000 with the passage of the Insurance Regulatory and

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Development Authority (IRDA) Bill, lifting all entry restrictions for private players and
allowing foreign players to enter the market with some limits on direct foreign
ownership. There is a 26% equity cap for foreign partners in an insurance company.
There is a proposal to increase this limit to 49%. The opening up of the insurance sector
has led to rapid growth of the sector. Presently, there are 16 life insurance companies and
15 of insurance industry in India is immense as nearly 80% of Indian population is
without life insurance cover while health insurance and non-life insurance continues to be
well below international standards.
Furthermore, over the medium and long term, Indias insurance market will continue to
experience major changes as its operating environment increasingly deregulates. On the
one hand, a mix of new products, new delivery systems and a greater awareness of risk
will generate growth. On the other hand, competition will remain intense as private sector
insurers and those about to enter India seek to win market share from the more
established public sector entities.

Composition of Authority under IRDA Act, 1999

As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development Authority
(IRDA, which was constituted by an act of parliament) specify the composition of Authority

The Authority is a ten member team consisting of

(a) a Chairman;
(b) five whole-time members;
(c) four part-time members,
(all appointed by the Government of India)

Duties, Powers and Functions of IRDA

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA.

(1) Subject to the provisions of this Act and any other law for the time being in force, the
Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance
business and re-insurance business.

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(2) Without prejudice to the generality of the provisions contained in sub-section the powers
and functions of the Authority shall include, -

(a) issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel
such registration;

(b) protection of the interests of the policy holders in matters concerning assigning of policy,
nomination by policy holders, insurable interest, settlement of insurance claim, surrender value
of policy and other terms and conditions of contracts of insurance;

(c) specifying requisite qualifications, code of conduct and practical training for intermediary or
insurance intermediaries and agents;

(d) Specifying the code of conduct for surveyors and loss assessors;

(e) Promoting efficiency in the conduct of insurance business;

(f) Promoting and regulating professional organizations connected with the insurance and re-
insurance business;

(g) Levying fees and other charges for carrying out the purposes of this Act;

(h) calling for information from, undertaking inspection of, conducting enquiries and
investigations including audit of the insurers, intermediaries, insurance intermediaries and other
organizations connected with the insurance business;

(i) control and regulation of the rates, advantages, terms and conditions that may be offered by
insurers in respect of general insurance business not so controlled and regulated by the Tariff
Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938);

(j) Specifying the form and manner in which books of account shall be maintained and statement
of accounts shall be rendered by insurers and other insurance intermediaries;

(k) Regulating investment of funds by insurance companies;

(l) Regulating maintenance of margin of solvency;

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(m) Adjudication of disputes between insurers and intermediaries or insurance intermediaries;

(n) Supervising the functioning of the Tariff Advisory Committee;

(o) Specifying the percentage of premium income of the insurer to finance schemes for
promoting and regulating professional organizations referred to in clause (f);

(p) Specifying the percentage of life insurance business and general insurance business to be
undertaken by the insurer in the rural or social sector; and

(q) Exercising such other powers as may be prescribed

COMPANY PROFILE

ZEN INSURANCE BROKERS PVT LTD are IRDA licensed direct insurance broker dealing
with both Life & General insurance businesses.

Their focus & service extends to the retail & institutional segments of the business.

PRINCIPLES OF ZEN INSURANCE BROKERS LTD

Top priority to clients interest
Commitment to quality in advice & execution

High integrity & professionalism

Dedicated teamwork

Mission Statement

To offer independent, reliable, speedy & cost effective solutions fulfilling client's requirements.

Zen Insurance Brokers Pvt. Ltd. is committed to quality and total customer satisfaction, both in
the products they offer and in the service, to ensure a healthy future for all.

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REASONS TO OPT ZEN BROKERS

We will benefit most by developing a close business relationship because the broker understands
your future plans, the associated risks and how to go about it.

When buying insurance we take shortcuts without seeking proper advice, understanding the fine
print or considering whether we are getting value for money. Often we even end up with cover
we don't need and worse without the cover we really do need.

Whether it's business, life, home or motor insurance, qualified brokers provide advice and
assistance to make sure we are properly protected. Dealing with a broker doesn't necessarily cost
more. Rather, it would cost less dealing with brokers who have knowledge of the insurance
market and the ability to negotiate competitive premiums on your behalf. A broker will also
explain your policy and any special situations you need to watch out for.

When selecting a broker there are some basic questions you need answers. For example:

Your risk exposures?

Which of those need insurance?

What would the cost of insurance be?

Coverage but more importantly the exclusions & fine prints?

Market intelligence inputs & service benchmarking of the underwriters?

Ability to design your insurance plan, analyze quotes & speedy execution?

Insurance portfolio MIS support?

Risk Management, claims settlement services, etc., support?

Any special services? For example, special risk management / risk audit services, technical
advice, etc., needed?

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BUSINESS OVERVIEW OF ZEN INSURANCE PVT LIMITED

INSTITUTIONAL
Their approach to insurance is that they firstly list the various risk exposures of any business.
Having identified & understood individual risk exposures they quantify it in monetary values.
This will help them frame an optimum risk strategy which shall be cost effective.
Placement of business shall proceed on the basis of the formulated strategy. However, before
transferring the risks they ensure capacity & specialized service standards of the insurers for the
relevant portfolios.
The first step in this process is the analysis of risk exposures of a business entity.

Risk Analysis of a Standard Business Entity

Insurable Risk
Liabilities Assets Insurable Risks Exposures
Exposures

Share Capital Public Offerings of Fixed Assets Standard Fire & Special Perils
Securities Insurance (Earthquake & Terrorism )
Key man Insurance
Motor Insurance

Boiler Insurance

Machinery Breakdown

Electronic Equipments

Portable Equipments Cover

Industrial All Risk

Reserves & Fire & Machinery Capital Work in Erection All Risk
Surplus Loss of Progress
Profits Contractors Plant and
Machinery

Contractors All Risk

Advance Loss of Profits

Borrowings - Investments -

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Current Current Assets

Liabilities &
Provisions

Accounts Inventories
Payables Standard Fire & Special Perils
(Earthquake & Terrorism)

Burglary

Provisions Accounts Receivables Credit Insurance

Cash in Safe & Cash in Transit

Cash & Bank Balances
Fidelity Cover

Loan & Advances

RETAIL

Irrespective of the size of the transaction, they prefer to clearly understand the clients
requirements before proceeding on any transaction. Their approach to retail insurance is also
systematic but without compromising on speed & service.

Placement of business shall proceed only after detailed risk analysis & a thorough financial
planning exercise, if necessary.

While, the following risks are generally applicable in most cases, they will be able to assist
and design tailor made plans after a thorough understanding of specific requirements.

Generalized Risk Analysis

Insurable Risk Insurable Risks

Liabilities Assets
Exposures Exposures

Net Worth Life Insurance Home Home Structure Fire

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Health Insurance
Personal Accident Earthquake, Floods &
Insurance Terrorism
Critical Illness (Preferably Long Term
Covers for maximum discounts)
Students Cover

Home Loan Outstanding Mortgage Insurance Household Assets Household Contents

Insurance *
Home Shifting Transit

Card Shield
Credit Card Dues Vehicles Motor Insurance
Insurance

Financial Assets
viz.FDs,Mutual Funds

Household Contents
Units, Bonds, etc.,
Insurance *

Gold , Jewellery, Household Contents

Antiques, Watches, etc., Insurance *

Cash & Bank Balances

* Includes 3rd Party liability cover towards vendors, guests, etc.,

SPECIALIZED

In addition to more commonly understood business & retail insurances, they also offer services
for specialized covers as under:

Crop Insurance - Comprehensive risk insurance to cover crop yield losses particularly to the
vulnerable non loanee farmers
Marriage Insurance Event delay / cancellation, public liability, etc.,
Specialized Professionals (Loss of License),viz., Pilots, etc.,

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CHAPTER III
LITERATURE

REVIEW

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LITERATURE REVIEW

GENERAL INSURANCE CLAIMS MANAGEMENT

Claims procedure:

All insurance contracts are based on the information provided by the insured in the proposal
form which forms the basis of insurance contract

Some important points, which help in claim procedure, are as follows:

The loss or damage should be reported to the insurer immediately.

On receipt of claim intimation, the insurer will forward a claim form.

Submit the completed claim form along with an estimate of the loss to the insurer. It is
preferable to submit an itemized estimate with separate values.

The insurer will arrange for inspection of the damaged items to assess the loss. In case of
major losses, a specialist-licensed surveyor is deputed.

The insured has to provide the required documents to substantiate the extent of loss.

In case the cause of loss is not established, it is for the insured to prove that the loss or
damage has occurred due to an insured peril.

On agreement of claim amount between the insured and the insurer, the claim is settled.

General insurance Claims Procedure

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When loss or damage occurs, it is useful to make a written note of the basic facts, such as the
time of discovery or when the incident occurred. Best do this as soon as the memory quickly
fades.

The following notes are designed to help you more specifically with most of the typical claim
types:

Damage to Property
Theft of Property

Loss of Money

Motor Accidents

Motor Theft

Employers Liability - Injury to Employees

Damage to Property

Make a list of the damaged property and find as much as you can in the way
of documentary evidence to support of the amounts claimed, such as receipts
or repair estimates.

If damage is extensive they will arrange for your a Loss Adjuster to attend
immediately.

Some insurers operate their own property replacement and repair services.

Theft of Property

Make a list of the lost or damaged items and find as much as you can in the
way of documentary evidence to support of the amounts claimed, such as
receipts or repair estimates.

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Notify the Police of the incident and keep a note of the Crime Reference
Number and station address.

Some insurers operate their own property replacement service.

Loss of Money

Documentary evidence (such as cash withdrawal slips) showing the exact

amount of money stolen will be required.

Notify the Police of the incident and keep a note of the Crime Reference
Number and station address.

Motor Accidents

At the scene of the accident obtain details of:

Third parties names and addresses;

The registration number of any vehicles involved; and

Whenever possible, the name and address of any witness to the accident.

It is a requirement that all accidents are reported as soon as possible, even where there is no
damage to your vehicle. Any accident involving injury needs to be reported to the Police.

Most motor insurers operate a 24-hour helpline where they can take details of the accident over
the telephone and arrange for vehicle to be removed to an approved repairer, if necessary.
Always have Policy Number to hand when contacting insurers direct, and should take a note of
their claim reference number. Any correspondence received from third parties, or their
representatives, should be forwarded immediately.

Most insurers operate an Approved Repairer Scheme - details of which will be provided via their
helpline, or contact Claims Department.

Motor Theft

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Theft of a vehicle should be reported immediately to the Police and as soon as possible to
insurers.

Keep a record of the crime reference number. In most cases insurers will wait a period of
up to six weeks to see if the vehicle is recovered, prior to making a settlement offer.

The original Vehicle Registration Document (V5), MOT Certificate, purchase receipt and
details of any finance/lease agreement etc need to be passed to insurers to enable them to
set a value on the vehicle.

Insurance claim processing is generally necessitated in the field of medical claims processing,
electronic claims processing, mortgage claims processing and is required in other general claims
processing fields for the purpose of quality service:

When we first notify our claim over phone or by letter, insurer makes an entry in the
register maintained for that purpose & allots a number to our claim; this number is called
as CLAIM NUMBER is the key or password to your claim file.
Any further enquires or follow up is likely to be more productive if we are aware of the
number. Insurers then send you a form called CLAIM FORM. This document draws
information pertaining to the accident from you, based on which your insurer decides on
the further course of action.

At this stage you will also be advised of various documents needed for processing your
claim .if not ,you can ask for and obtain a list from the insurer.

GENERAL CLAIMS PROCESSING

Claims under fire insurance

Firstly the insured should take all possible steps to minimize the loss.

The fire brigade may be intimated immediately.

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Lodge a police complaint in case of a fire arising out of - rioting mob, striking workers,
malicious damage by third parties or terrorist damage.

Inform insurer as early as possible , in no case later than 24 hours

To co-operate with the surveyor appointed by the insurer by relevant information.

Obtain a meteorological report in case of loss due to cyclone, flood & inundation and if
the loss is localized like in the case of flood & inundation from a local water source,
MRO report may be obtained.

If the policy is on 'reinstallement basis', the claim is settled only after completion of
repairs/replacement of the damaged items and submission of bills for claim payment.

Burglary Claims / Money Insurance / Fidelity:

Immediately report to the police and obtain a non-traceable certificate that the items are
not found.
Notify insurer as early as possible.
The insurers will insist upon a letter of undertaking on a stamp paper of appropriate value
- letter of Subrogation, for refunding the claim amount when the stolen property is
recovered.
Obtain a final report from Police
Insured has to provide the surveyor complete book of accounts and bills substantiating
the loss on the day of incidence

Personal Accident Claims:

Immediate notification to the insurer.

In case of accidental death, the capital sum is paid to the legal nominee/assignee of the
insured. If the insured fails to provide the name of the nominee, succession certificate
from a court of law is necessary.

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In case of other claims, the insurers may get the insured examined by a specialist or refer
the matter to medical board as is necessary, the cost of which will be borne by the
insurers

Motor vehicle (Private & two wheelers) claims

Notice of an accident (not necessarily a claim) involving third parties should be reported
to the insurers.
The insured may be interested to pay compensation without going into whether he is
liable to pay or not. It is therefore an express condition of the policy that no claim should
be admitted or a compromise arrived at, without the approval of the insurers.
In case of major claims, the insurers may be willing to defend criminal case against the
driver also on the basis of which compensation claims may be decided in the civil courts.
Every accident involving third parties is required to be reported to police. M.V.Act
provides that a third party victim can proceed against the insurers directly. If the alleged
accident is not reported to the insurers, the insurers can consider this as violation of
policy condition. In such circumstances, even if insurers are required to pay
compensation by a court of law, they have an option of recovering such claim amounts
from the insured for violation of specific policy condition.
The insured can proceed with repairs provided the insurers are submitted an estimate of
repairs and the estimated cost of repairs do not exceed Rs.500 in case of Private cars and
Rs.150 in case of two wheelers.
Health claim processing

It is essential for you to augment your health insurance claims processing process structure and
reduce operating costs. Healthcare claims processing outsourcing and accuracy in health
insurance claims processing are the key elements to improving your turn-around time and claims
output. Health insurance is a kind of assurance by the insurance provider to reimburse expenses
for medical treatment thus protecting you and your dependants against any financial constraints
arising on account of a medical emergency. Health insurance covers not only the expenses
incurred during hospitalization but also the pre- and post-hospitalization expenses

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CLAIM REQUIREMENTS

Critical Illness Claimant's statement

Family Physician's statement
Hospital Treatment Certificate
Original Policy Document
Copies of all medical reports including:
Admission Card and Discharge Summary
Laboratory reports
Histopathology reports (if applicable
Specialist reports etc

DOCUMENTATION REQUIRED TO PROCESS CLAIM:

Documents required in case of motor

Registration Certificate
PUC Certificate
Insurance Certificate
Claim form
Driving License of the person driving the vehicle at the time of loss.
FIR, if it is a case of property damage or bodily injury claims or theft.
Vehicle Registration Book

Documents required incase of hospitalization

Claim Form
Attending Doctor's report
Hospital discharge card/ proof of hospitalization with details of treatment.
Bills with prescriptions
Pathological Reports/ X-rays, X-ray Reports.

Documents required for Fire insurance

Claim Form duly filled in & signed.
F.I.R, if filed.

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Fire Brigade Report (internal or external or both as the case may be).
Forensic Departments report, if applicable.
Laboratory test report together with the mandate given, if applicable.
Record of Labor involved in activities related to claim.
Original Repair/ Replacement Bills with receipt.
Photographs if arranged.
Departmental Note on the incident.
Basic Documents Required incase of burglary insurance

Claim Form duly filled in & signed.

Claim Bill with supporting documents.

First Information Report / Final Investigation Report.

Photographs if arranged.

Letter of Indemnity.

INTRODUCTION TO LIFE INSURANCE CLAIM MANAGEMENT

Human life is subject to risks of death and disability due to natural and accidental causes. When
human life is lost or a person is disabled permanently or temporarily, there is a loss of income to
the household. The family is put to hardship. Sometimes, survival itself is at stake for the
dependants. Risks are unpredictable. Death/disability may occur when one least expects it. An
individual can protect himself or herself against such contingencies through life insurance.
Though Human life cannot be valued, a monetary sum could be determined which is based on
loss of income in future years. Hence in life insurance, the Sum Assured (or the amount
guaranteed to be paid in the event of a loss) is by way of a benefit in the case of life insurance.
It is the uncertainty that is risk, which gives rise to the necessity for some form of protection
against the financial loss arising from death. Insurance substitutes this uncertainty by certainty.
The primary purpose of life insurance is the protection of the family. Insurance in its various
forms protects against such misfortunes by having the losses of the unfortunate few paid by the

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contribution of the many that are exposed to the same risk. This is the essence of insurance the
sharing of losses and substitution of certainty for uncertainty. There are a variety of life insurance
products to suit to the needs of persons, old people; and also rural people, etc. Life insurance
products could be purchased from registered life insurers notified by the IRDA.

Types of Life Insurance claims

Understanding the requirements for various life insurance benefits (claims) is important for the
customers. The overriding condition on claims is the payment of premiums i.e. claims are only
payable if premiums are paid up to date.

There are various types of claims under life policies. The most common claims include the
general requirements for each of these claims are briefly explained below.

Death Claims:

This is a claim paid when then the person insured dies. For a death claim to be paid the following
basic conditions must be fulfilled.

The policy document, original death certificate, burial permit copy of the ID of the
deceased must be provided to the insurance company.
A report from the doctor who treated the deceased must be presented to the insurance
company.
Claim forms must be completed
A report from the doctor who last treated the deceased person may be required.
A police abstract report may be required where death occurs through an accident.
The documentation required for payment of death claims are easily available and
claimants need to immediately inform the insurance company where problems are
encountered in securing the documents.
The documents are usually required so as to reduce on the possibility of
paying fraudulent claims or paying the wrong claimants. Many insurance companies will
frequently waive certain requirements under certain special circumstances.

Maturity Claims:

A maturity claim is paid out mostly on endowment and education insurance policies whose
duration has expired. For example in an insurance policy with duration of 15 years, the maturity

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value will be paid on the 15th anniversary after affecting the policy. Payment of a maturity claim
is a straightforward affair where the customer returns the original policy document and signs a
discharge form. The claim cheque is usually released in a period of about two weeks once all
required conditions are fulfilled.

Partial Maturity Claims:

Most endowment and education policies provide for payment of partial maturities after a given
duration. The partial maturity is normally paid on set dates in the policy document. A typical
education policy of 10 years provides for payment of 20% of the sum insured after four years
and every year thereafter until the expiry of the policy. The life insurance company usually
prepares partial maturity cheques in an automated manner and the customer does not have to
claim. The cheque is either sent directly to the customer or the nearest branch office for ease of
collection.

Surrender Value Claims:

When a customer is unable to continue with the payment of premiums due to unplanned events
like retrenchment or dismissal he has the option of encashing the policy to receive the surrender
value so long as the policy has been in force for more than 3 years. The procedure for lodging
this type of claim is very simple and is similar to the maturity claim whereby the customer
returns the policy document and signs a discharge form. The claim cheque is then paid to the
customer within two weeks.

Policy Loans: This is strictly not a claim but a benefit given out by life companies for life
policies that have been in force for at least three years. To receive a policy loan directly from a
life company entails assigning the policy to the life company and receiving a loan cheque. The
insurance policy can also be assigned to a bank and the loan is then granted by the banks and the
policy document utilized as security for the loan

Disability Claims:

This will arise in life policies where the customer purchases a personal accident policy rider as
an additional benefit. Disability claims are payable subject to sufficient medical evidence being
provided as proof of disablement.

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Guidelines for claims settlement by IRDA

Proposal for insurance:

1)Except in cases of a marine insurance cover, where current market practices do not insist on a
written proposal form, in all cases, a proposal for grant of a cover, either for life business or for
general business, must be evidenced by a written document. It is the duty of an insurer to furnish
to the insured free of charge, within 30 days of the acceptance of a proposal, a copy of the
proposal form.

2) Forms and documents used in the grant of cover may, depending upon the circumstances of
each case, be made available in languages recognized under the Constitution of India.

3) In filling the form of proposal, the prospect is to be guided by the provisions of Section 45 of
the Act. Any proposal form seeking information for grant of life cover may prominently state
therein the requirements of Section 45 of the Act.

4) Where a proposal form is not used, the insurer shall record the information obtained orally or
in writing, and confirm it within a period of 15 days thereof with the proposer and incorporate
the information in its cover note or policy. The onus of proof shall rest with the insurer in respect
of any information not so recorded, where the insurer claims that the proposer suppressed any
material information or provided misleading or false information on any matter material to the
grant of a cover.

5) Wherever the benefit of nomination is available to the proposer, in terms of the Act or the
conditions of policy, the insurer shall draw the attention of the proposer to it and encourage the
prospect to avail the facility.

6)Proposals shall be processed by the insurer with speed and efficiency and all decisions thereof
shall be communicated by it in writing within a reasonable period not exceeding 15 days from
receipt of proposals by the insurer.

Matters to be stated in life insurance policy:

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1. A life insurance policy shall clearly state:

The name of the plan governing the policy, its terms and conditions;
Whether it is participating in profits or not;
The basis of participation in profits such as cash bonus, deferred bonus, simple or
compound reversionary bonus;
The benefits payable and the contingencies upon which these are payable and the other
terms and conditions of the insurance contract;
The details of the riders attaching to the main policy;
The date of commencement of risk and the date of maturity or date(s) on which the
benefits are payable;
The premiums payable, periodicity of payment, grace period allowed for payment of the
premium, the date the last installment of premium, the implication of discontinuing the
payment of an installment(s) of premium and also the provisions of a guaranteed
surrender value.
The age at entry and whether the same has been admitted;
The policy requirements for
(a) Conversion of the policy into paid up policy,
(b) Surrender
(c) Non-forfeiture and
(d) Revival of lapsed policies;
Contingencies excluded from the scope of the cover, both in respect of the main policy
and the riders;
the provisions for nomination, assignment, and loans on security of the policy and a
statement that the rate of interest payable on such loan amount shall be as prescribed by
the insurer at the time of taking the loan;
Any special clauses or conditions, such as, first pregnancy clause, suicide clause etc.; and
The address of the insurer to which all communications in respect of policy shall be sent
The documents that are normally required to be submitted by a claimant in support of a
claim under the policy.

2. While acting under regulation 6(1) in forwarding the policy to the insured, the insurer shall
inform by the letter forwarding the policy that he has a period of 15 days from the date of receipt
of the policy document to review the terms and conditions of the policy and where the insured
disagrees to any of those terms or conditions, he has the option to return the policy stating the
reasons for his objection, when he shall be entitled to a refund of the premium paid, subject only

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to a deduction of a proportionate risk premium for the period on cover and the expenses incurred
by the insurer on medical examination of the proposer and stamp duty charges.

3. In respect of a unit linked policy, in addition to the deductions under sub-regulation (2) of this
regulation, the insurer shall also be entitled to repurchase the unit at the price of the units on the
date of cancellation.

4. In respect of a cover, where premium charged is dependent on age, the insurer shall ensure that
the age is admitted as far as possible before issuance of the policy document. In case where age
has not been admitted by the time the policy is issued, the insurer shall make efforts to obtain
proof of age and admit the same as soon as possible.

Claims procedure in respect of a life insurance policy:

1) A life insurance policy shall state the primary documents which are normally required to be
submitted by a claimant in support of a claim.

2) A life insurance company, upon receiving a claim, shall process the claim without delay. Any
queries or requirement of additional documents, to the extent possible, shall be raised all at once
and not in a piece-meal manner, within a period of 15 days of the receipt of the claim.

3) A claim under a life policy shall be paid or be disputed giving all the relevant reasons, within
30 days from the date of receipt of all relevant papers and clarifications required. However,
where the circumstances of a claim warrant an investigation in the opinion ofthe insurance
company, it shall initiate and complete such investigation at the earliest. Where in the opinion of
the insurance company the circumstances of a claim warrant an investigation, it shall initiate and
complete such investigation at the earliest, in any case not later than 6 months from the time of
lodging the claim.

4) Subject to the provisions of section 47 of the Act, where a claim is ready for payment but the
payment cannot be made due to any reasons of a proper identification of the payee, the life
insurer shall hold the amount for the benefit of the payee and such an amount shall earn interest
at the rate applicable to a savings bank account with a scheduled bank (effective from 30 days
following the submission of all papers and information).

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5) Where there is a delay on the part of the insurer in processing a claim for a reason other than
the one covered by sub-regulation (4), the life insurance company shall pay interest on the claim
amount at a rate which is 2% above the bank rate prevalent at the beginning of the financial year
in which the claim is reviewed by it.

Procedure for settlement of claims in LIC

Settlement of maturity claims:

Under LIC, claims can arise on maturity of policy of the policyholder. The processing of
claims by maturity is normally undertaken by Divisional Office of LIC about two months
before the date of maturity.
The LIC sends intimation before the maturity date. If the notice of maturity is not
received and the date of maturity is known to the policyholder, then the policyholder can
take the necessary steps to get the due Maturity amount. The Corporation sends Maturity
Intimation along with the discharge forms to the policyholder informing him about the
requirements for the settlement of claim.

1) In case the maturity intimation is not received by the policyholder till around 2 months
before the date on which the policy matures, he should contact the concerned Divisional
Office and obtain a copy of the maturity intimation.

2) Policy Document (if not in the custody of LIC as security for loan): On receipt of the
maturity intimation, the policyholder should send the original policy document along with
the last receipt of insurance premium paid. The policy document needs to be submitted in
original unless it is in custody of LIC as security for loan.

3) Age proof document (if age has not been admitted earlier): The policyholder should also
submit his age proof to the Corporation in case it has not already been submitted. In case, the
policyholder has already submitted his age proof to LIC, the form of Discharge (Form No.
3825) to be executed by the policyholder, is also sent along with the Maturity Intimation.

4) L.I.C. accepts following documents as valid age proofs:

a. Horoscope of the assured

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b. Certificate relating to the baptism ceremony among Christians.

c. Birth certificate from the Municipal Corporation

d. High School Certificate

e. Service book.

5) Discharge Form No. 3825 duly stamped & signed, attested by a witness: The form of
Discharge (Form 3825) should then be properly filled, signed and sent to the Office of LIC from
which it was issued. The signature must be on a revenue stamp and must be attested by a witness.

6)Assignment / Reassignment Deed, if any: In case the policy or any Deed of Assignment or Re-
assignment is lost by the policyholder, he has to submit an indemnity bond along with a reliable
surety of sound financial standing acceptable to LIC. The indemnity bond has to be in a
particular format (Form 3815). In such a case the claim is settled in the absence of the policy
document.

7) Existence certificates in case of childrens Deferred Assurance & Pure Endowment Policies.

8) In due course, LIC sends a cheque to the policyholder for the money due to him as per the
terms of the policy.

LIC upon the receipt of the claim form will act in the following manner:

LIC will send an acknowledgement to the effect that the claim form has been received
and the aforesaid document will also state that the insurer is in the process of checking all
the necessary items and will get back to the claimant shortly.
Then the insurer will ask for necessary documents that are required for settlement of
claims. The claimant has to provide all the necessary documents that are being asked by
the insurer.
After verification, the insurer arrives at the final amount that has to be paid to the
claimant and then prepares a cheque or such mode of payment as has been agreed upon in
the policy or between the claimant and the insured.

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Settlement of Death claims: The death claim amount is payable in case of policies where
premiums are paid up-to-date or where the death occurs within the days of grace. The following
is the process of settlement of claims in case of death claims:

1) Intimation of death: The first requirement of the Corporation in the case of death claim is
that an "intimation of death" should be sent to the branch office of the LIC from where the
policy was issued. The intimation needs to be sent by the person who is entitled to get the
proceeds of the policy. It may be:

The nominee or
The assignee of the policy or
The deceased policyholders nearest relative.

The letter of intimation of death should contain the following information:

name of the life assured;

A statement that the life assured is dead;
The date of death;
The cause of death;
the place of death; and
Policy number / s
Claimants relationship with the assured or his status (nominee, assignee, etc.).

Soon after the receipt of the intimation of the death, the branch office sends the necessary claim
forms along with instructions regarding the procedure to be followed by the claimant.

2) Submission of Proof of Death: The proof of death required to be submitted is a certificate by

Municipal Death Registry or by a Public Record Office which maintains the records of births and
deaths in the locality. Besides this some other statements or certificates are also required to be
given in the prescribed Claim forms:

Statement from the doctor who attended the deceased policyholders last illness.
Certificate of treatment in the hospital where the policyholder died or was treated by the
hospital authorities.
Certificate of burial or cremation to be given by an independent person who attended the
funeral and has seen the dead body.
Certificate from the employer if the policyholder was in employment at the time of death.

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3) Submission of Proof of Age: The claimant should submit age proof of the policyholder to
LIC in case it has not already been submitted.

L.I.C. accepts following documents as valid age proofs:

(i) Horoscope of the assured

(ii) Certificate relating to the baptism ceremony among Christians

(iii) Birth certificate from the Municipal Corporation.

(iv) High School Certificate.

(v) Service book.

4) Certificate of Ownership: When the policy is validly assigned, or a nominee has been
designated in the policy, no further proof of title is necessary. In any other case, the certificate of
title is necessary. In such a case the corporation would require legal evidence of title such as
Succession Certificate or Letters of Administration or Letters of Probate or a Will.

5) Payment and Discharge: After completing all the above formalities, the insurance company
issues a discharge form for completion, which is to be signed by the person, entitled to receive
policy money. That is, it should be signed by:

The nominee, in case nomination was made under the policy;

The assignee, in case the policy was validity and unconditionally assigned;
The legal representative or successor. In due course, LIC sends the cheque for the amount
due to the person entitled to receive the same.

6) Early death claims: If death occurs in less than three years from the date of the policy,
following requirements must be complied with:

i. Policy Document

ii. Discharge Form

iii. Assignment / Re-assignment Deed, if any

iv. Age Proof Document (if age has not been admitted earlier)

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v. Certificate of treatment issued by the hospital authorities where the deceased policyholder
was treated last, on Claim Form B1

vi. Certificate by the employer if the deceased was an employee, on the Claim Form E

vii. Certificate of Death

viii. Legal Evidence of Title (if policy is not assigned / nominated)

ix. Claim Form A

x. Statement from the Doctor who attended last the deceased policyholder, on Claim Form B

xi. Certificate of Identity and burial by a person who attended the funeral on Claim Form C

7) Non early claims: If death occurs exactly or after 3 years from the date of the policy the
following requirements must be complied with:

Policy Document
Discharge Form 3801
Legal Evidence of Title
Death Certificate
Claim Form No. 3783A
Assignment / Re-assignment Deed, if any (if policy not assigned /nominated)
Age Proof Document (if age has not been admitted earlier)

8) Ex-gratia Settlement of Death Claims: Ex-gratia Settlement of Death Claims are not a right
claim but on grounds of humanity presently LIC is giving such claim amount for the policies
which are not in force but

If Death occurred after the expiry of grace period of premium due date then Full Sum
Assured along with the bonus will be payables Ex-gratia settlement.
If Death occurred after three months but less than six months after the expiry of first
unpaid premium date half of the Sum Assured without bonus will be paid as Ex-gratia. If
the death occurred between six months and one year from the due date of the first unpaid
premium date, claim may be considered to the extent of the proportionate notional paid-
up value on the basis of actual premium paid.

Important terms in claims

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Beneficiaries in claims: The claimant in life insurance policies at the time of payment of
maturity claims of life insurance policies can be the policyholder or the assignee to whom the
holder of the policy has transferred the policy.

The persons entitled to claim under these policies can be:

The assured himself.

The payee, whose name appears in the benefit schedule of the policy as a party interested.

The creditor who has been properly assigned and nominated to receive the payment under the
policy.

Amount payable: The amount payable upon the maturity of the policy, i.e., non-happening of
the event is the sum assured plus profits and bonus that accrues with the policy. The profits are
paid on pro-rata basis, i.e., in the proportion of the premium paid and declared are bonuses. The
payment of profits is a condition inserted as a clause in the policy itself and it becomes an
obligation on the insurer to pay the amount of such profit as may be accrued to the insured.

Dispute in payment of maturity claims: The disputes arising in such cases are general and may
be restricted to the proof of age, if the age is not admitted at the time of issuing the policy
document and about the good title of the claimant on the policy. Incase of the insurer shrugging
off his liability to make the payment of profits which are accrued to the insured upon maturity
and in case the payment of profit is as per the contract, the insurer has every right to move to the
court and to claim for such payment. The policy document and scheme of the policy contains the
details of the payment and the payment made accordingly may not drag the parties into
litigations.

Death claims Beneficiaries: The claimants or the beneficiaries under the life insurance policies,
paid on the happening of the events which is death of the assured, are as follows

The legal heirs of the policyholder.

The nominees, assignees and transferees

The wife and children of the assured under the Married Womens property Act

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The creditor in whose name the policy has been endorsed

Amount payable: Amounts that can be paid under a life insurance policy are as follows:

The amount insured or the face value of the policy

Bonus if declared by the company, which is recoverable as an insurance amount.

The share of profits in case of participation policy.

Surrender value, where the policy lapses due to non-payment of the premium or where the
assured surrenders the policy, the insurance company may pay a percentage of the premium paid
according to the rules of the company.

Factors affecting the claims settlement:

The factors that affect the claims settlement are as follows:

The policy should be in force on the date of the event.

The risk and cause of event should be covered by the policy.
The cause of loss or the event should be directly related to the loss. A remote cause has
no place in the settlement.
The loss should not have been caused with an intention to gain from the situation.
The preconditions or warranties have to be compiled with. When conditions to be
fulfilled before affecting the cover of the policy, are not performed, the cover of
insurance will not come into effect even though the premium is paid and accepted by the
insurance company.
Presence of insurable interest, in case of the property insurances, at least at the time of
happening of event or loss sufferings. Without having the insurable interest in the subject
matter, no person can get benefit or compensation.
The assured should suffer loss, actual or constructive, to get compensation. The assured
should riot make benefits or gains out of the insurance contract as the insurance contract
is of indemnity in nature. It only makes good the loss suffered by the assured and is not a
source of gains.
Sufficient documentary evidence of loss should be presented along with the application
form.
Multiple claims and reciprocal claims will be settled as per the terms of the contract of
insurance.

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Right to appeal or file a petition with the tribunal or the courts cannot be withdrawn. If
the terms of the policy insist upon arbitration, it is not the end of justice for the insurer or
the assured.

The insured may opt for the following alternatives while settling the claims:

Pay the claims as reported by the surveyor or the claims made by the insurer whichever is
less.
Take help of the agent or some other persons and compromise or to come to an agreement
with the assured in case of a disputed claim.
If the claim is rejected there may be litigation on the insurer. The litigation will cost the
insurer more, as the insurer has to pay the interest for the amount due if he losses the
litigation.
Pay ex-gratia, if the claim is totally baseless and non-acceptable, on humanitarian
grounds and to avoid complications in future.
Arrange to replace the asset either by repairing the same or by purchasing a similar asset
from the market.
Repair the asset to provide the similar type of services as provided before the happening
of event.

Delay in claims settlement

The time value for the settlement of a claim is of importance. All claim papers have to be
submitted within a limited period mentioned in the policy document or otherwise stated in the
Act. In some cases, the death of a person or the accident of vehicle has to be intimated
immediately either orally or in person, either by the policyholder or the claimant or by the
representative of the claimant. The time element is very important in the claims payment for the
following reasons:

The delay in the claims settlement will have an adverse impact on the goodwill and
marketing of the insurance.
The cost of claims will increase with the extension of time.
The insurer may be asked to pay the interest on the unpaid insurance amount because of
the delay. The court may direct the insurer to pay the costs of the case to the assured,
which results in mounting up of costs.

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The delay in payment may lead to litigation which is expensive.

Unproductive use of manpower to defend, expenses incurred and waste of time on
litigations will be an extra burden on the insurer.
Litigations will affect on the productive areas of the business particularly in the
marketing of the insurance business.
The delay also leads to the increasing number of cases with consumer protection
councils. Thus the delay in the settlement of the claims will have an impact on the present
and future business of the insurance along with the cost burden.

As such it is essential to have quicker claim settlements. The delay in claims settlement
may be due to the following reasons:

Late submission of claim form: The claim forms may be submitted late because of the
ignorance or lack of knowledge of the existence of the insurance policies against the lives of
the persons who face the event or no information is given to the beneficiaries or no
nominations are made to the policy.
Innocence and illiteracy of the assured: The assured or the claimant may fail to file the
papers due to lack of knowledge, to file the insurance claims within a certain period or of
the claims procedure.
Not submitting the claims forms in full: If the claim forms are not properly filled, they
will fail to provide the required information to settle the claims and as a result the claim
settlement will be delayed for want of information. If sufficient proof or supporting
documents are not submitted along with the claim form to facilitate claim assessor to know
the date of the event or the cause of the event, claim settlement may be delayed.
The insurer may not get the cooperation of the insured or the claimant to finalize the
claim or arrive at some compromise.
Destroying the evidences, with or without intention, that could have otherwise
facilitated the estimation of the loss payable under the claim.
Not providing information about the changes in the constitution of the organization or
the changed address of the insured or the claimant or any other information required to
make a claim settlement.
The delay on the part of the insurer may be intentional or due to the pressure of work.
Lack of motivation, lack of knowledge of importance of the claims settlement, lack of
awareness among the staff of the organizations or defective supervision or
organizational structure.

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The delay in submission of claims or settlements can be avoided by making the assured aware of
the facts and importance of the insurance and procedure of claims. The insurers can take the help
of the agent or local staff to arrive at a compromise with the claimants when the cases are of
complex nature. The organization should be so designed to avoid holding of papers at one or two
places. The staff should be trained and the importance of the claims management should be
driven into their minds. Use of latest technology to assess the losses and recruitment of able staff
will speed up claims settlement

Role of agents in claims settlement

An agent is a primary source for procurement of insurance business and as such his role is the
corner stone for building a solid edifice of any life insurance organization. To effect a good
quality of life insurance sale, an agent must be equipped with technical aspects of insurance
knowledge, he must possess analytical ability to analyze human needs, he must be abreast with
up to date knowledge of merits or demerits of other instruments of investment available in the
financial market, he must be endowed with a burning desire of social service and over and above
all this, he must possess and develop an undeterred determination to succeed as a Life Insurance
Salesman.

In short he must be an agent with professional approach in life insurance salesmanship. Such an
agency force is expected to be helpful not only in proper field underwriting but also after sales.

Servicing& essential elements for higher retention of business

The insurance company, being a corporate structure, does not deal directly with the customers to
promote the insurance business. It avails the help of middlemen to undertake the promotion such
on its behalf and the agents are middlemen or intermediaries.

Section 40 of Insurance Act 1938 authorizes the payment of the remuneration to the agents for
the services. Section 42 of the Act enumerates the essential qualifications for their appointment
and issuing of licenses.

The appointment of agents to procure policies of insurance is a general practice among

insurance companies all over the world. The agents are allowed to market the insurance business
but not allowed to issue the policies.

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The agent has no right to conclude the insurance contract and the final approval or rejection of
contract proposal is vested with the insurer, the principal. But, in promoting the insurance
business, the agent binds the principal to all activities such as receipt of premium, enquiries and
publishing of information of the insurance contracts and products. The agent is bound by duty
and responsibility to convey message to the insurer. But, giving the information to the agent does
not bind the insurer as the agent is appointed only to promote the insurance business. In times of
disputes, the agent is under an obligation to settle the issue of claims by way of negotiations and
mediations to retain the customer.

Role of agents in an Insurance company

1. Full information must be provided to the proponent at the point of sale to enable him to decide
on the best cover or plan to minimize instances of cooling off by the proponents.

2. An agent should be well versed in all the plans, the selling points and also be equipped to
assess the needs of the clients.

3. Adherence to the prescribed Code of Conduct for agents is of crucial importance. Agents must,
therefore, familiarize themselves with provisions of the Code of Conduct.

4. Agents must provide the office with the accurate information about the prospect for a fair
assessment of the risk involved. The agents confidential report must, therefore, be completed
very carefully.

5. Agents must also possess adequate knowledge of policy servicing and claim settlement
procedures so that the policyholders can be guided correctly.

6. Submission of proposal forms and proposal deposit to the branch office immediately to avoid
delays and to enable the office to take timely decisions.

7. A leaflet or brochure containing relevant features of the plan that is being sold should be
available with the agents. If the agents are well conversant with the claim settlement procedure
and assist the claimants in completing the necessary requirements, it would not only quicken the
process of claim settlement and enhance their professional status but also help the organization to

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improve upon their outstanding claim ratio. This, while further boosting the image of the
organization may provide them an overflowing fountain for further business in those families.
The performance of agents will now depend on not how many hours he works but the quality of
service, his attitude to customers and the image that he will create for the entire life insurance
business.

Thus the agent under the changing economic scenario can achieve their objectives by practicing
psycho-marketing strategies. Their objectives are survival and growth. Maximization of business
is an end to achieve these objectives.

Role of surveyors and assessor in claims settlement

Insurance users pay their premiums, year after year, trusting their policies to protect their lives or
businesses in the event of a loss. However, there are innumerable instances where a genuine
insurance user with a genuine loss and a seemingly valid claim, has been denied his claim
amount in full or part. This happens because the insurance company is not able to estimate the
total amount of the claims. In life insurance claims the insurance company tries to reject the
claims without knowing the cause of the death or loss of the person. Surveyors and Loss
Assessors have been around for decades - we have all heard of them and some of us have had
occasion to use their services but it is quite surprising how little is actually known and
understood about them their job, their duties & responsibilities, their role vis--vis insurers and
insureds, and the insureds rights and duties vis--vis surveyors and assessors. This is because
they never come in the lime light but the main work of assessment and survey of loss is done by
them.

Duties and responsibilities of surveyors and loss assessors:

A surveyor and loss assessor shall, for a major part of the working time, investigate, manage,
quantify, validate and deal with losses (whether insured or not) arising from any contingency,
and report thereon, and carry out the work with competence, objectivity and professional
integrity by strictly adhering to the code of conduct expected of such surveyor and loss assessor.
The following are their duties:

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Declaring whether he has any interest in the subject-matter in question or whether it

pertains to any of his relatives, business partners or through material shareholding.
Maintaining confidentiality and neutrality without jeopardizing the liability of the insurer
and claim of the insured;
examining, inquiring, investigating, verifying and checking upon the causes and the
circumstances of the loss in question including extent of loss, nature of ownership and
insurable interest;
Conducting spot and final surveys, as and when necessary and comment upon franchise,
excess/under insurance and any other related matter;
surveying and assessing the loss on behalf of insurer or insured;
Assessing liability under the contract of insurance;
Pointing out discrepancy, if any, in the policy wordings;
Satisfying queries of the insured/insurer and of persons connected thereto in respect of
the claim/loss;
giving reasons

Impact of claims on underwriting

Insurance underwriting is the process of classification, rating, and selection of risks. In simpler
terms, it's a risk selection process. It is the process of selecting and classifying exposures.

Underwriting is one of the aspects of insurance that makes most peoples eyes glaze over. But
underwriting is one of the most important parts of the insurance process. And knowing what an
underwriter does and why its so important is helpful for people who are shopping for a
new policy.

Claims settlement has a direct impact upon underwriting. If the claims of certain insurance
products are frequently received they have an impact upon the claims reserves and warrant
review of the product and take decision either to modify the terms or continue. Addition or
deletion of the clauses, changing the time span of the insurance product or other changed, are
discussed upon frequency of claims and quantum of amount paid.

Thus the underwriter fixes the premium of the product considering various factors such as cost of
risk, administration expenses, brokerage or marketing expenditure, claims settlement expenses
and budgeted profit. The premium is the present value of the future risk. The underwriting

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department and claims management are related in sharing the information of the claim to find out
the current weaknesses, strengths and the possible improvements.

Insurance is based on risk. When you get an insurance policy, the insurance company is taking
on some of your risk. The underwriter's job is to use all the information gathered from numerous
sources to determine whether or not to accept a particular applicant. Individuals applying for
individually-owned life and health insurance typically receive more underwriting scrutiny than
members holding a group policy. An underwriters job is to make sure that the insurance charges
just the right amount for the coverage it provides. They figure how much risk is represented, how
much coverage the company can offer, and how much that coverage should cost.

The underwriter's primary function is to protect the insurance company insofar as is possible
against adverse selection (very poor risks) and those parties who may have fraudulent intent.

The underwriter has a number of resources that can be called upon to provide the necessary
information for the risk selection process. These sources include:

The policy application;

Medical history and examinations;

Inspection reports;

The Medical Information Bureau (MIB); and

The producer or insurance agent.

Life insurance companies each have their own extensive policy and procedure manuals they are
supposed to follow in determining whether or not to issue an Individual Life insurance policy,
and in pricing that policy. The insurer's underwriters typically use a combination of factors that
experience shows equates with the risk of death (and premature death)

They include the applicant's answers to a series of questions such as:

(1) Age, sex (except in several states that require "unit-sex" rates,)

(2) Height, weight, and health history (and often family health history -- parents and siblings),

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(3) The purpose of the insurance

(4) Marital status and number of children,

(5) The amount of insurance the applicant already has, and any additional insurance s/he
proposes to buy

(6) occupation (some are hazardous, and increase the risk of death), and income (to help
determine suitability),

(7) Smoking or tobacco use (, as smokers have shorter lives),

(8) Alcohol (excessive drinking seriously hurts life expectancy),

Thus the claims payment and information relating to the claims settlement will be directly
helpful to the underwriting departments either to modify the present product or to consider the
information for the future.

Frauds in claims settlement

Insurance fraud is any deliberate deception/dishonesty committed against or by an insurance

company, insurance agent, or consumer for unjustified financial gain. It occurs and may be
committed at different points in the transaction by different parties such as policy owners, third-
party claimants, intermediaries and professionals who provide services to claimants. The nature
of these frauds may vary from an inflated/exaggerated value of a legitimate claim to a
completely fabricated or bogus claim where losses never really occurred. Promises made with no
intention to perform them can be treated as a fraud.

The essential components of an insurance fraud are:-

Intent to deceive
Desire to induce insurance company to pay more than it otherwise would.

The fraudulent claims may be of two categories:

The cause or the claim itself is fraudulent

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The claim may be genuine but the method of calculation or the evidences, or the information
submitted may be fraudulent in nature.

As such any fraud made by the insured or the insurer in concluding the
insurance contract or the claims settlement, makes the entire contract voidable at the option of
the person on whom the fraud is played. Creating forged documents such as wills, legal heir
certificates, assignments of the policies and other papers to support their claim, deliberate
destruction of the insured subject with an intention to get the policy amount all constitute
different types of frauds. Sometimes the frauds may also result from gross negligence or
forbearance to use reasonable exertions and means at hand. The fraudulent claim by the assured
will deprive him the right to claim as the insurer has the right to reject it.

Examples of insurance fraud:

1) Creating a fraudulent claim

2) Overstating amount of loss

3) Misrepresenting facts to receive payment

4) Bogus agents/Sale of forged cover notes

How to protect yourself from a fraud:

1. be wary of unregistered insurance agents. Before purchasing insurance, contact your insurance
company to ensure the agent is an authorized agent.

2. Avoid paying premiums in cash. Opt to pay for premiums by cheque or money order. Make
payables to the insurance company instead of the agent.

3. Make sure you receive a written policy after payment of your first premium.

4. Immediately examine your insurance policy to ensure the coverage is what you have requested
for and ensure that the premium amount paid is reflected in the cover note/policy. Request a
receipt as evidence of payment of premium.

5. Do not sign a blank insurance application, or insurance claim form.

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6. be suspicious if the price of insurance seems suspiciously low from other insurance
companies.

7. If you meet with an accident, be careful of strangers who offer you quick cash or urge you to
deal with specific workshops, medical clinic or law firm. They could be part of a fraud syndicate.

8. Insist on detailed bills for repairs and medical services rendered and check for accuracy.

9. Discreetly contact your insurance company or the police if you are being defrauded or have
been/are being persuaded to take part in a fraud. Provide as many details as possible about the
incident - name of the individual(s) involved, amount, date(s), and type of fraud.

Steps to file insurance claim

Understand your policy before a loss, sit down and carefully read your insurance policy.
Call agent or company if you have any questions about what is or is n
Make sure everyone is okay and check to see if anyone needs medical attention. Even if
your injuries are minor, you may still want to have them checked out at a hospital or with
your family doctor. Minor injuries can become major, long-lasting injuries.
Exchange information when you are involved in an accident, get the other driver's name,
address, phone number, insurance carrier, and insurer's phone number. Be prepared to
give the same information to other driver also.
Identify the witness if needed get contact details.
File an accident report and contact local law enforcement officers to have an accident
report prepared
Notify your insurer by contacting your insurance company about the accident as soon as
possible .An insurance adjuster will review the accident report to determine who caused
the accident. If the accident was not your fault, you can have either your insurance
company or the at-fault driver's insurance company handle the repair or replacement of
your vehicle. If you use the other driver's company, you will not have a claim on your
automobile policy and you will not have to pay a deductible.
Do not release insurers too early. Do not relieve your insurance company of its
responsibility until the damages are settled to your satisfaction.
Consider settlement factors

Bodily injuries: You may be entitled to a monetary settlement for injuries caused by
another at fault (liable) party. It can take several days for some injuries to become apparent

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Damages: The insurance company is responsible to pay for the reasonable cost of
repairs to your vehicle. An insurance adjuster will assess the damage. Usually, insurance
companies and auto body shops negotiate disagreements about what should be repaired. If you
disagree with their conclusions, you have the right to obtain another appraisal at any auto body
shop. Appraisal clause: Most insurance policies include an appraisal clause, which can be used
to help settle disputes about physical damage claims between you and your insurance company.
(The appraisal clause does not apply for claims you file with the other party's insurance
company.) If you cannot reach an agreement with your company, you or your insurer can initiate
the appraisal clause. Your appraiser and your insurer's appraiser then select an independent
umpire to try to resolve the dispute. Check your policy or ask your agent or insurance company
for more information about the appraisal clauses.

Insurance Companies pay more than 150 billion each year in claims from policyholders. Those
claims result from losses suffered during fires, hurricanes, tornadoes, robberies, auto accidents,
dog bites, falls and a host of other traumatic incidents.

Comparative analysis

A detailed analysis is made relating to the claims management of the major players in both
the general & life insurance. Claims management is a business that offers claim management
services to the public. It consists of advices or services in respect of claim for compensation,
restitution, repayment or any other remedy for loss or damage or in respect of some other
obligations.

CHAPTER IV
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DATA ANALYSIS
&
INTERPRETATION

QUESTIONNAIRE

It is most common instrument whether administered in person by phone or online questionnaires

are very flexible. The form of each Question is also important. Closed end question include all

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the possible answers and subjects matters choices among them. I have used open-end questions
so that customers can write answer in their own words.

I have also used closed-end questions, which provide answers that are easier to interpret and
tabulate. I have taken care in the wording and ordering of questions. I have used simple, direct,
unbiased wording questions, which are arranged in a logical order. I have asked personal
questions at last so that respondent does not become defensive.

1) Age
(a) 18 to 30
(b) 31 to 50
(c) 51 to 65

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AGE Respondents Percentage

18-30 5 10
31-50 30 60
51-65 15 30
TOTAL 50 100

As evident from the chart that I have taken a sample of 50. Out of which 10% people are aged
between 18 to 30, 60% people are aged between 31 to 50, and remaining 30% people are aged
between 51 to 65.

2) Occupation
(a) Service
(b) Business
(c) Profession
(d) Housewife
(e) Retired
OCCUPATION Respondents Percentage

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service 5 10
business 15 30
profession 10 20
housewives 5 10
Retired employees 15 30
TOTAL 50 100

As the evident from the chart that out of 50 respondents 10% are of service Men, 30% are of
business men, 20% are of professions, 10% are of Housewives and remaining 30% are of retired

3. Which type of insurance do you own

a. Life insurance b. General insurance

Particulars Respondents Percentage

Life insurance 35 70
General insurance 15 30
TOTAL 50 100

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Interpretation
From the above chart & graph we can understand that the investors are more in the life
insurance than the general insurance

4) Do you know the procedure of claims of the insurance?

a. Yes b. No

Particulars Respondents Percentage

Yes 35 70
No 15 30
TOTAL 50 100

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Interpretation
From the above chart & graph we can understand that 70% of the respondents know how
to claim the insurance policy. Only 30% of the respondents dont know how to claim the
insurance policy.

5. Do you know that which regulatory body regulates the insurance sector
a. Yes b. No

Particulars Respondents Percentage

Yes 40 80
No 10 20
TOTAL 50 100

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Interpretation
From the above chart & graph we can understand that 80% of the respondents know
which body regulates the insurance sector. & only 20 percent respondents dont know who
regulates the insurance sector.

6. If yes do you know about the IRDA

a. Yes b. No

Particulars Respondents Percentage

Yes 48 96
No 2 04
Total 50 100

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Interpretation
From the above chart & graph we can understand that 96% of the respondents know
about IRDA & only 04 percent respondents dont know about IRDA.

7. Which claim is very easy to claim

a. Death claim b. Maturity claim c. partial maturity claim d. surrender value claim

Particulars Respondents Percentage

Death claim 15 30
Maturity claim 20 40
Partial maturity claim 10 20
Surrender value claim 5 10
Total 50 100

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Interpretation
From the above chart & graph we can understand that 30% of the respondents says death
claim is very easy, 40% respondents says maturity claim is very easy. 20% respondents says
partial maturity is easy to claim, 10% respondents says surrender value claim is very easy.

8. Any disputes in the claims are been solved by the manager

a. Yes b. No

Particulars Respondents Percentage

Yes 40 80
No 10 20
Total 50 100

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Interpretation
From the above chart & graph we can understand that 80% of the respondents says that manager
involves to solve the disputes in the claim & only 20 percent respondents says that manger will
not involve in solving the disputes arises in the claim

9. What is the help done by the insurance manager when you are claim for your insurance?
a. Full extent b. some extent c. not at all

Particulars Respondents Percentage

Full extent 29 58
Some extent 20 40
Not at all 1 2
Total 50 100

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Interpretation
From the above chart & graph we can understand that 58% of the respondents says that manager
helps in claims of insurance policy in full extent & 40% respondents says that manger will helps
in claims of insurance policy in some extent & only 2% respondents says that manager will not
help in the claims of insurance policy.

10. Have you claimed any insurance plan?

a. Yes b. No

Particulars Respondents Percentage

Yes 38 76
No 12 24
Total 50 100

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Interpretation
From the above chart & graph we can understand that 76% of the respondents has been claimed
the insurance policies & only 24% of respondents has not been claimed the insurance policies.

11. Which insurance company is providing best claims procedure?

a. LIC b. Zen Insurance c. HDFC d. ICICI Prudential

Particulars Respondents Percentage

LIC 30 60
Zen Insurance 10 20
HDFC 5 10
ICICI Prudential 5 10

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Total 50 100

Interpretation
From the above chart & graph we can understand that 60% of the respondents say that LIC
provides best claims, 20% respondents says Zen insurance provides best claims, 10%
respondents says HDFC provides best claims & 10% respondents says ICICI prudential provides
best claims.

12. How are the insurance plans in Zen Insurance?

a. Excellent b. Very good c. good d. Average e. Poor

Particulars Respondents Percentage

Excellent 30 60
Very good 10 20
Good 5 10
Average 4 8
Poor 1 2
Total 50 100

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Interpretation
From the above chart & graph we can understand that 60% of the respondents says the insurance
plans in the Zen insurance is excellent & 20% respondents says very good, 10% respondents says
good, 8% says average & 2% says poor.

13. How would you rate Zen insurance when you compare to other insurance company
a. Excellent b. Very good c. good d. Average e. Poor

Particulars Respondents Percentage

Excellent 25 50
Very good 15 30
Good 5 10
Average 3 6
Poor 2 4
Total 50 100

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Interpretation
From the above chart & graph we can understand that 50% of the respondents rated the Zen
insurance as excellent & 30% respondents says very good, 10% respondents says good, 6% says
average & 4% says poor.

14. Was your agent able to promptly and accurately assist you in evaluating and processing
your claim?
a. Yes b. No

Particulars Respondents Percentage

Yes 40 80
No 10 20
Total 50 100

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Interpretation
From the above chart & graph we can understand that 80% of the respondents says that agent
was promptly assisted in the claim & only 20 percent respondents says that agent was not
promptly assisted in the claim

15. Did Zen Insurance Company or its Claim Adjuster contact you promptly to discuss
and/or adjust the claim?
a. Yes b. No

Particulars Respondents Percentage

Yes 46 92
No 04 08
Total 50 100

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Interpretation
From the above chart & graph we can understand that 92% of the respondents says that claims
adjuster was promptly to discuss the claim & only 08% respondents says that claims adjuster was
not promptly to discuss the claim

16. Was the settlement reasonable and fair?

a. Yes b. No

Particulars Respondents Percentage

Yes 38 76
No 12 24
Total 50 100

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Interpretation
From the above chart & graph we can understand that 76% of the respondents says settlement
was fair & reasonable & only 24% of respondents says that settlement is not fair and reasonable.

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CHAPTER V
FINDINGS
&
SUGGESTIONS

FINDINGS

Insurance companies are found to offer a better claim services compared to other
services. It is understood that claims service is first about empathy for a customers
loss. Details like how, where & how much are just details.

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Claims & loss handling is materialized utility of insurance; it is the actual product
though one hopes it will never need to be used. Claims may be filed by insured
directly with the insurer or through brokers or agents.

Claims departments play a vital role in managing fraudulent claims.60% of the

respondents says the insurance plans in the Zen insurance is excellent & 20%
respondents says very good, 10% respondents says good, 8% says average & 2% says
poor.

60% of the respondents say that LIC provides best claims, 20% respondents says Zen
insurance provides best claims, 10% respondents says HDFC provides best claims &
10% respondents says ICICI prudential provides best claims.

76% of the respondents has been claimed the insurance policies & only 24% of
respondents has not been claimed the insurance policies.

58% of the respondents says that manager helps in claims of insurance policy in full
extent & 40% respondents says that manger will helps in claims of insurance policy
in some extent & only 2% respondents says that manager will not help in the claims
of insurance policy.

80% of the respondents says that manager involves to solve the disputes in the claim
& only 20 percent respondents says that manger will not involve in solving the
disputes arises in the claim

30% of the respondents says death claim is very easy, 40% respondents says maturity
claim is very easy. 20% respondents says partial maturity is easy to claim, 10%
respondents says surrender value claim is very easy.
96% of the respondents know about IRDA & only 04 percent respondents dont know
about IRDA.
80% of the respondents know which body regulates the insurance sector. & only 20
percent respondents dont know who regulates the insurance sector.
70% of the respondents know how to claim the insurance policy. Only 30% of the
respondents dont know how to claim the insurance policy.

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50% of the respondents rated the Zen insurance as excellent & 30% respondents says
very good, 10% respondents says good, 6% says average & 4% says poor.

80% of the respondents says that agent was promptly assisted in the claim & only 20
percent respondents says that agent was not promptly assisted in the claim

92% of the respondents says that claims adjuster was promptly to discuss the claim &
only 08% respondents says that claims adjuster was not promptly to discuss the claim

76% of the respondents says settlement was fair & reasonable & only 24% of
respondents says that settlement is not fair and reasonable.

The claims department assists in claiming different types of losses .It provides
detailed information relating to the process of filing a claim & the benefits that he can
derive out of the loss/damage that occurred.

SUGGESTIONS

Well managed claims operations will track multiple metrics gauging the effectiveness
of claims management.
Better claims management avoids bad faith allegations in excess loss situations.

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The claims management is not yet in the game plans of all insurance companies.
Therefore there is need for the insurance companies to have well advanced claims
management system.
Though LIC is profitable insurance player than any other insurance company there is
need for LIC to have well improvised claim settlement processes and claims
management technology.
For better claims management in LIC, they should conduct training & development
programs to employees to become a professional & improve efficiency in their
working process.
For easy claims processing insurance companies have to follow the rules and
regulations that are framed by IRDA.
Insurance companies can reduce their expenses and costs by having minimum
standards of claims management operations.
To foster the claims settlement process & handling fraudulent cases its found to have
a better updated claims management technology.

CONCLUSION

The insurance business is major service oriented business in the world. The services offered by
the insurance industry are well recognized and utilized by the general public and commercial
sector of the world. Global players with strong brands in the insurance industry today set up their
back office operation in low cost countries, manage capital on a global basis, make use of their
special skills worldwide and use their superior managerial ability to secure leadership positions
in the industry.

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The claims management is an integral part of insurance. It involves the storage, processing and
transmission of information relating to settlement of insurance claims.

The use of Information Technology also plays a very important role in claims settlement. In
managing the claims handling function, insurers seek to balance the elements of customer
satisfaction, administrative handling expenses, and claims overpayment leakages. As part of this
balancing act, fraudulent insurance practices are a major business risk that must be managed and
overcome. Disputes between insurers and insureds over the validity of claims or claims handling
practices occasionally escalate into litigation which should be solved with due care. In this fast
developing scenario it will not be enough if companies have the futuristic strategies.
Implementation of the strategies, effectively adapting them to ongoing changes can spell success.

The success of claim management depends on the satisfaction of the customers. The customers
are attracted to an insurance company by its state of art claim service. Therefore, before
designing an IT system for claim management, customers expectations are to be taken in to
account. The customers, their needs, knowledge of how the market works, and what they want,
these are the things that are important for an insurance company for serving the customers in a
better manner through better technology.

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BIBLIOGRAPHY

Bibliography

The information is taken from various sources such as books, magazines, articles, internet etc.
Books:

1. Theories and Practices in Insurance.

2. Claims management in Insurance.

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Magazines:

1. Business world.

2. Business today

Websites:

1. www.insuremagic.com

2. www.licindia.com

3. www.icicprulife.com

4. www.insurancewatch.com

5. www.insuranceonline.com

6. www.wikipedia.com

Search engines:

1. www.google.com

2. www.ask.com

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ANNEXURE

Questionnaire
I, SUDHIR pursuing MBA IV-sem from VISHWA VISHWANI doing the survey on the
claims management. So please give your valuable information for the below questions.
Name:
Occupation:
Age:
1. Which type of insurance do you own?
b. Life insurance b. General insurance
2. Do you know the procedure of claims of the insurance
a. Yes b. No
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3. Do you know that which regulatory body regulates the insurance sector
a. Yes b. No
4. If yes do you know about the IRDA
a. Yes b. No
5. Which claim is very easy to claim
a. Death claim b. Maturity claim c. partial maturity claim d. surrender value
claim
6. Any disputes in the claims are been solved by the manager
a. Yes b. No
7. What is the help done by the insurance manager when you are claim for your insurance
a. Full extent b. some extent c. not at all
8. Have you claimed any insurance plan
a. Yes b. No
9. Which insurance company is providing best claims procedure
a. LIC b. Zen Insurance c. HDFC d. ICICI Prudential
10. How are the insurance plans in Zen insurance
a. Excellent b. Very good c. good d. Average e. Poor
11. How would you rate Zen insurance when you compare to other insurance company
a. Excellent b. Very good c. good d. Average e. Poor
12. Was your agent able to promptly and accurately assist you in evaluating and processing
your claim?
a. Yes b. No
13. Did Zen Insurance Company or its Claim Adjuster contact you promptly to discuss and/or
adjust the claim?
a. Yes b. No
14. Was the settlement reasonable and fair?
a. Yes b. No

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