Insurance Management MOD 5 B

MODULE-5
CLAIM PROCEDURE
Insurance Claims -Meaning
An insurance claim refers to a formal request by a policyholder to an insurance company
for coverage or compensation for a loss or policy event. It is the amount payable by the insurance
company to the insured as per the insurance contract. In life insurance business, claims shall
arise either on the death of the insured or on the maturity of the policy by expiry of the period.
It cover everything from death benefits on life insurance policies to routine and
comprehensive medical exams. In many cases, third parties file claims on behalf of the insured
person, but usually, only the person listed on the policy is entitled to claim payment.
Types of claims/ Different forms of claims:
1. First party insurance claims
First party insurance describes an insurance policy purchased by an individual
directly from an insurance provider. When a policyholder experience an illness or injury
incurs damage to an insured piece of property, he can submit a claim for payment.
2. General claims
There may be dispute over the scope of coverage, the amount of payment due and
missed or late payment on the part of the insured. Dispute may also occur over
misrepresentation made at the time of the policy’s sale, or the amount of coverage
provided by the insurer.
3. Vehicle insurance claims
Anyone who owns or drives a vehicle is required to take an insurance policy
connected with it. If one files a first party coverage claim after a vehicle accident, he
expects his insurer to cover his costs promptly. Sometimes insurers may reject or delay
payment of claims, stating that the loss is not within the scope of the policy’s coverage. If
insurers do not adequately investigate claims or unfairly deny legitimate claims, insured
parties may file a claim against them.
4. Health insurance claims
Health insurance is taken to protect oneself in the event of a severe accident or
illness. Monthly insurance premiums are usually high, but it is worthy, if a person is
hospitalized and faces exorbitant medical bills. If an insurance company delays or denies
payment of a legitimate claim, an insured individual can file a claim.
5. Homeowner claims
Most homeowners protect themselves against financial loss due to property damage
caused by fire, wind, natural disasters, etc. by taking a residential property insurance. After
the occurring the event of loss the insured expect to get full value on his claim. But insurers
may delay the claim or limits the amount of claim. Failure to investigate and pay the claim
fairly may cause the insured to file a first party insurance claim against an insurer.
6. Natural Disaster claims

Many people carry insurance policy to protect them from damages caused by
earthquakes, windstorms, and other natural calamities. If an insurance provider unfairly
delays a covered claims, parties insured against natural disaster damages may file a first
party insurance claim.
Importance of settling Insurance claims
1. To verify the loss.
2. To pay the claim promptly and fairly
3. To provide personal assistance to the insured.
4. To fix claim settlement ratio(CSR)-
Claim Settlement Ratio is the percentage of claims that an insurance provider
settles in a year out of the total claims.
5. To ensure companies credibility
CLAIM SETTLEMENT PROCEDURE

(A) Claim Settlement procedure followed by general insurance/ non-life insurance
1. Notice to the insurer
2. Immediate response by the insurer
3. Appointment of surveyor
4. Communicate the findings by surveyor
5. Offering of settlement claim
6. Making payment
(B) Claim Settlement procedure followed by Life insurance
1. Death claim settlement
a. Intimation to the insurance company about the claim
b. Document required:
 Death certificate
 Age of the life insured
 Original policy document
 Agents report
 Any other document
c. Submission of documents for claim processing
d. Settlement of claim- The insurer is obligated to settle a claim within 30 days of the
receipts of all the documents.
2. Maturity and Survival claim
The payment made by the insurance company on completion of terms of policy or
maturity period is called maturity or survival claim. The amount consist of sum assured
plus any bonus or incentives.
(C) Claim Settlement procedure under Motor Insurance
1. Third party claim- Personal injury or property damage to someone else.
2. Own damage claim- Damage to insured’s own vehicle
3. Theft claim- In case of the policyholder’s vehicle is stolen
(D) Claim Settlement procedure under medical insurance
1. On cashless basis- For a claim on cashless basis , treatment must be only at a network
hospital of the third party administrator who is servicing the policy.
2. On reimbursement basis
(E) Claim Settlement procedure followed by Travel Insurance
Travel insurance policy is generally a package policy that includes different types of
covers like hospitalization, personal accident, loss or damage to baggage, loss of passport and so
on.
INTEGRATED GRIEVANCE MANAGEMENT SYSTEM (IGMS)
The Integrated Grievance Management System (IGMS) is an online consumer complaints
registration system created by IRDA. All insurance companies have integrated their online
complaint logging systems to the IGMS maintained by IRDA.IRDAI has launched the Integrated
Grievance Management System (IGMS) in the year 2010.
Apart from creating a central repository of industry-wide insurance grievance data,
IGMS is a grievance redress monitoring tool for IRDAI. Policyholders who have grievances
should register their complaints with the Grievance Redress Channel of the Insurance Company
first. If policyholders are not able to access the insurance company directly for any reason, IGMS
provides a gateway to register complaints with insurance companies. Complaints shall be
registered with insurance companies first and only if need be, be escalated them to IRDAI
(Consumer Affairs Department).
IGMS is a comprehensive solution which not only has the ability to provide a centralized
and online access to the policyholder but complete access and control to IRDAI for monitoring
market conduct issues of which policyholder grievances are the main indicators. IGMS has the
ability to classify different complaint types based on pre-defined rules. The system has the ability
to assign, store and track unique complaint IDs. It also sends intimations to various stakeholders
as required, within the workflow. The system has defined target Turnaround Times (TATs) and
measures the actual TATs on all complaints. IGMS sets up alerts for pending tasks nearing the
laid down Turnaround Time. The system automatically triggers activities at the appropriate time
through rule based workflows.
IGMS provides a standard platform to all insurers to resolve policyholder grievances and
provides IRDAI with a tool to monitor the effectiveness of the grievance redress system of
insurers.
INSURANCE OMBUDSMAN
Insurance Ombudsman is an alternate Grievance Redressal platform which has been
setup with an aim to resolve grievances of aggrieved policyholders of all personal lines of
insurance, group insurance policies, policies issued to sole proprietorship and micro enterprises,
against Insurance Companies
The institution of Insurance Ombudsman was created by the Government of India in
Notification dated 11th November, 1998 for the purpose of quick disposal of the grievances of
the insured customers and to solve their problems involved in redressal of those grievances.
Insurance Ombudsman is of great importance for the protection of interests of policy holders.
Appointment:
The governing body of insurance council issues orders of appointment of the insurance
Ombudsman on the recommendations of the committee comprising of Chairman of IRDA,
Chairman of LIC, Chairman of GIC and a representative of the Central Government
Operations of Ombudsman
 In case of a grievance, the complainant first has to approach his/her insurance
company.
 If the insurance company did not respond within a period of one month or if the
complainant is not satisfied with the response of the company then in that case he
can approach the ombudsman.
 Such complaint has to be made to the ombudsman within one year from the time
the insurance company has replied.
 Initially the ombudsman will act as a mediator and arrive at a fair recommendation
based on the facts of the dispute. Such recommendations shall be made within a
period of one month from receiving the complaint by an ombudsman.
 If the settlement by recommendation does not work then the ombudsman will pass
an award within a period of three months from the receipt of the complaint and such
award will be binding on the insurance company.
 If the policy holder is still not satisfied then he can approach to Consumer Forums
and Courts of law for redressal of their grievances.
Grounds of complaint
 Delay in settlement of claims, beyond the time specified in the regulations,
framed under the IRDAI Act, 1999.
 Any partial or total repudiation of claims by the life insurer, general insurer
or the health insurer
 Any dispute about premium paid or payable in terms of insurance policy
 Misrepresentation of the terms and conditions of the policy at any time in the
policy document or policy contract, etc.
FEATURES OF INSURANCE OMBUDSMAN/ ROLE / FUNCTIONS:
1) Any aggrieved individual who has taken an Insurance Policy on personal lines (or if
deceased, the legal heir(s) under such policy) can approach Ombudsman.
2) A representation should be made to the Insurance Company and either an unsatisfactory
reply should have been received or the representation should stand as un-replied for at
least 1month
3) The complaint must be lodged within 1 year of the events
4) The total relief sought must be within an amount of Rs.20 lakhs
5) The subject matter of the complaint should not currently be or have earlier been before a
Court/Consumer Forum.
6) No fees / charges are required to be paid
7) If the Ombudsman deems it fit in the circumstances of the case, he may award ex-
gratiapayment.(it is a type of payment made by an organization to an individual for
damage or claims without recognizing any legal obligations)
8) Complaints pertaining to repudiation of claims totally or partially, delay in settlement of
claims, any dispute on the legal construction of the policies in so far as such disputes relate
to claims, disputes regarding premiums paid / payable and non-issue of insurance
documents etc.
RECOVERY OF CLAIM
Insurance Claims Recovery is a legal phrase that refers to an insurance company accepting
its insured's right to pursue a claim against a wrongdoer. If an insurance company pays for
property damage caused by an accident, the party that caused the accident will be held liable.

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MODULE-5

6. Natural Disaster claims

CLAIM SETTLEMENT PROCEDURE

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