This document discusses the claims administration and claims process for insurance companies. It outlines the key steps as notification, processing, and settlement of claims. It emphasizes the importance of proper claims handling for customer satisfaction and retention. The claims department works with various stakeholders and has policies governing responsibilities, guidelines, approvals, and dispute resolution.

1. CLAIMS ADMINISTRATION
The underwriting process creates an
obligation to be fulfilled by the insurer.
Hence, the manner an insurer handles a
claim is critical to insured satisfaction.
This implies that poor handling of claims
will mean losing the client and the
attendant poor publicity of the company.
Thus, the claims department is an
essential part of the insurance process.

2. CONT.....
The claims department relates with many
stakeholders apart from the insured e.g.
lawyers, police officers, private investigators,
surveyors, loss adjusters etc..
These stakeholders have diverse influence on
both the insurer and insured depending on
the relationships created.
As part of its corporate policy, the claims
department plays a role of public relations

3. CORPORATE POLICY STATEMENT
A claims department of any insurance company
must develop a claims policy that will govern
the process in terms of:
Level of responsibilities: Details of the officer
who will deal with various types of claims in
terms of value or type of claim
Processing of claims: Guidelines as to the
processing of any claims from the time
notification and payment is received and
payment is finally made respectively
There should be a policy on each one of the
following:

4. CONT....
– Approval of payments
– Settlement of disputes
– Time within to settle
– Subrogation procedures/ recovery procedures
– Contribution procedures
– Salvage procedures
– Valuation of loss procedures
– Replacement values- new market values, landed
values etc
– Interest Policy

5. CLAIMS PROCESS
 A claim form is the means by which claims are
intimated.
 The insured submits claims personally or through
an authorized agent acting on his behalf such as
solicitor or an insurance broker.
 Similarly different persons may act on behalf of the
insurer when dealing with the claims:
– Insurers' employees - claims department.
– Loss adjusters - professional claim
investigators/quantifiers.
– Solicitors, brokers to agree settlement on their
behalf.

6. CLAIMS PROCEDURE
The are three stages:
Claims Notification - Insurers need to be
notified of a claim as soon as possible usually
within, a period of 48 hours, why?.
It helps to investigate the claim while
evidence is still fresh in the minds of persons
involved and easy location of eye witnesses.
All events, which may give rise to a claim in
due course, must be immediately be
communicated to the insurer, why?.

7. CONT…….
Investigations may have to be made to:
–Verify the loss
–May be prejudiced by delay
–High chances of recovery from a negligent
party if inquiries are made within a
reasonable period.
Most insurance policies require policyholders
or their legal personal representatives to
notify the insurer of a possible claim within a
stipulated period.

8. CONT.....
In life assurance, the procedure involves the
use of courts because the cause of death of
the assured must be ascertained
There should be a system in force for the
insurer to receive proper proof of death i.e.
proper legal identification of the recipient of
any proceeds incorporating any wills and
assignments that may have been made.

9. CONT….
Step 2: Claims Processing – The claims
department must be satisfied that:
– Cover was in force at the time of the loss.
– Policy covers the peril.
– Insurer has taken reasonable steps to minimize
the loss.
– Conditions have been complied with by the
insured.
– No exceptions to the peril.
– The value of the loss is reasonable.

10. CONT...
The duty of providing full particulars and
proof of loss rests squarely on the insured.
Must prove to the insurer that a loss has been
caused by an insured peril.
Insurers allow a liberal interpretation of what
constitutes proof, and unless there are
reasons for suspecting the integrity of the
insured, the insurer will virtually pay all
claims.

11. CONT......
Since the insurer is holding the insurance
fund on behalf of all policyholders, any
payments should be completely warranted.
Thus, careful investigations and reasonable
proof of the insurer's liability and the amount
involved must be certified.
The services of a loss adjusters/assessors are
necessary in claims processing.

12. CONT……
From the onset to the conclusion of the
claim, loss adjusters being professionals are
involved in preserving the interests of the
insurer which include:
– Checking that the cover was in force.
– Adequacy of the cover at the time of
loss.
– Measures taken that minimizes the
extent of the loss.

13. CONT....
–Providing possible settlement
amount.
–Full description of the loss.
–Steps in handling the claim were
followed i.e. to enable the claims
department to verify the details
provide an equitable settlement

14. CONT….
Step 3: Claims Settlement - The guiding principle
is that there should be careful attention to detail
and thorough investigations
If liability is established, payment of the claims
should be made forthwith.
Any uncalled for delay will only result into loss
of goodwill and possible future loss of business.
Prompt and fair claim payment has greater
advertising value to the insurer

15. CONT...
The settlement amount depends
on the following factors:
–Nature of the cover
–The adequacy of the cover and
–Conditions that may limit the
amount payable

16. CONT....
The amount payable in the event of a claim is
not subject to negotiation at the time of claim.
It depends on whether:
– It's a partial or total loss
– Where partial, the extent of the damage/
destruction
– Amount claimed
– Excesses applicable
Ordinarily, life claims are straight forward and
clearer than general insurance claims, why?.

17. METHODS OF SETTLEMENT
Cash: Most suitable method and for liability and
life claims it’s the only practicable method
available.
Replacement – Replacing the subject matter of
insurance rather than paying cash. Usually
applied in glass claims, jewellery and furs.
Repair - An adequate repair constitutes an
indemnity. Common, in motor vehicle claims.
Reinstatement (provides "new for old") - Found
in fire insurance and concerns the restoration or
rebuilding of premises (not necessarily on the
same site) to their former condition.

18. DISPUTES SETTLEMENT
Few claims give rise to disputes as to:
–Extent of liability of the insurer to
settle the claim
–Amount and speed of settlement
 Methods of Dispute Settlement
–Courts of law
– Arbitration

19. CONT…..
Disputes referred to courts of law are
those where the insured disagrees with
an insurer about:
–Whether a claim is covered by a policy
and
–Extent of liability of the insurer to pay.
After casing, the courts' ruling will be
binding to both parties.

20. CONT.....
Policies do carry an arbitration condition that
specifies:
– Disputes on he amount payable should be
referred to an arbitrator.
An arbitrator is an independent professional
who evaluates details of the amount
disputed and makes a judgment.
The judgment is not final and in case of
disagreement the case shall be referred to
the legal courts for determination.