This presentation gives the user a detailed research analysis on the settlement of unpaid claims in Insurance sector.This ppt is made after the analysis of recent articles and news on unpaid claims and its settlement process for insurance policy holders

1. Insurance Policy : An
overview of Unpaid
Claims Settlement
Process
By : Vijaya Meghana C

2. Insurance Claims
An insurance claim is a formal request to an insurance
company
asking for a payment based on the terms of the insurance
policy.
The insurance company reviews the claim for its validity and
then pays out to the insured or requesting party (on behalf of
the
insured) once approved.
The non-life insurance industry is witnessing shifting trends
across policy administration, and claims—the two core
functions in insurance.
The claims process is the defining moment in a non-life
insurance customer relationship. To retain and grow market
share and improve customer acquisition and retention rates,
insurers are focused on enhancing customers’ claims
experience.
In a highly competitive insurance market, differentiation
through new and more effective claims management practices
is
one of the most important and effective ways to maintain
market
share and profitability.
In particular, insurers can transform the claims processing by
leveraging modern claims systems that are integrated with
robust business intelligence, document and content
management
systems. This will enhance claims processing efficiency and
effectiveness. It can benefit the insurers both operationally and
strategically by enabling them to reduce claims costs to
improve
their combined ratio, improve claims processing efficiency, and
drive customer retention and acquisition.
Today in any insurance office the claim process is built on
• Claim document & content management tool
• Mobile based & smart phone based technology solutions
the
key• STP processing to minimize
delay• Modern claim processing platform which is seamless &
robust
Normal claim process followed by General Insurers
• An insured or the claimant shall give notice to the insurer of
any loss arising under contract of insurance at the earliest
or within such extended time as may be allowed by the

3. insurer.
• On receipt of such a communication, a general insurer shall
respond immediately and give clear indication to the
insured on the procedures that he should follow. In cases
where a surveyor has to be appointed for assessing a
loss/
claim, it shall be so done within 72 hours of the receipt of
intimation.
• Where the insured is unable to furnish all the particulars
required by the surveyor or where the surveyor does not
receive the full cooperation of the insured, the insurer or
the surveyor as the case may be, shall inform in writing
the
insured about the delay that may result in the assessment
of the claim.
• The surveyor shall be subjected to the code of conduct laid
down by the Authority while assessing the loss, and shall
communicate his findings to the insurer within 30 days of
his appointment with a copy of the report being furnished
to the insured, if he so desires. Where, in special
circumstances of the case, either due to its special and
complicated nature, the surveyor shall under intimation to
the insured, seek an extension from the insurer for
submission of his report.
• In no case shall a surveyor take more than six months from
the
date of his appointment to furnish On receipt of the survey
report or the additional survey report, as the case may be,
an insurer shall within a period of 30 days offer a
settlement of the claim to the insured. If the insurer, for
any reasons to be recorded in writing and communicated
to
the insured, decides to reject a claim under the policy, it
shall do so within a period of 30 days from the receipt of
the survey report or the additional survey report, as the
case may be.
• Upon acceptance of an offer of settlement by the insured,
the
payment of the amount due shall be made within 7 days
from the date of acceptance of the offer by the insured.
In
the cases of delay in the payment, the insurer shall be
liable to pay interest at a rate which is 2% above the
bank

4. rate prevalent at the beginning of the financial year
in
which the claim is reviewed by it.How to Make a Claim under Motor insurance
A claim under a motor insurance policy could be
• For personal injury or property damage related to someone
else. This person is called a third party in this context)
or
• For damage to insured own vehicle. This is called an own
damage claim and insured is eligible for this if he is
holding what is known as a package or a
comprehensive
policy.
Third Party Claim
In a third party claim, where insured vehicle is involved, it is
important to ensure that the accident is reported immediately
to
the police as well as to the insurance company. On the other
hand, insured is a victim, that is, if somebody else’s vehicle
was
involved, he must obtain the insurance details of that vehicle
and make intimation to the insurer of that vehicle.
Own Damage Claim
In the event of an own damage claim, that is, where insured
vehicle is damaged due to an accident, insured must
immediately inform insurance company and police, wherever
required, to enable them to depute a surveyor to assess the
loss.Insured must not attempt to move the vehicle from the
accident spot without the permission of police and insurer.Theft Claim
If P H own vehicle is stolen, he must inform the police and the
insurance company immediately. In addition you must keep
the
transport department also informed. As soon P H receives the
policy document, he must read about the procedures and
documentation requirements for claims.
If P H has to make a claim, he must ensure that he collects all
the required documents and submit them along with the
requisite claim form duly filled in, to the insurance company.
There may be certain specific documentation requirements for
specific types of claims. For instance in respect of a theft
claim,
there is a special requirement that P H should surrender the

5. vehicle keys to the insurance
company.
Property insurance claimThere could be several types of policies that cover property
and
the property itself could be stationery - like a building, or
moving around - like your household goods being transported.
P h on receipt of policy document must familiarize himself with
the documents required for a claim as well as the procedures
to
be followed.Whether or not a claim arises P H must follow the various
dos
and don’ts in respect of his property for the duration of the
policy. These dos and don’ts are termed warranties and
conditions in the policy document. In general, losses and
damages, including those due to theft, fire and flood need be
intimated to the relevant authorities such as the police, the
fire
brigade and so on. It is important to ensure that P H must
intimate insurance company to enable it to send a surveyor
for
surveying and assessing the loss.
Travel insurance
claimTravel insurance policy is generally a package policy that
includes different types of covers like hospitalization, personal
accident, loss/ damage to baggage, loss of passport and so
on.
The procedure and documents required for a claim would vary
from cover to cover.
For ease of procedure and convenience, insurers normally
attach
the claim form with the policy document. This will contain the
list of documents required in case of a claim and also the
contact
details including phone numbers of the claims administrator
either in the destination country to which you are traveling or in
another country that is designated to receive and process your
claim intimation.
Formalities for a health insurance claim
P H can make a claim under a Health insurance policy in
two
ways:
1 Cashless basis and
2 Reimbursement basis

6. On a Cashless basis: For a claim on cashless basis,
treatment
must be only at a network hospital of the Third Party
Administrator (TPA) who is servicing your policy. P h must
seek authorization for availing the treatment on a cashless
basis
as per procedures laid down and in the prescribed form. He
must
read the policy document as soon as he receives it, to
understand
claim process and not read it at the time claim arises.
Claims on reimbursement basis: P H must read the clause
relating to claims in policy document as soon as he receives it
to
ensure that he understands the procedure and the documents
required for making a claim on reimbursement basis. When a
claim arises he should inform the insurance company as per
procedures required. After hospitalization, he has to ensure
that
he obtains and keep ready documents such as claim form,
discharge summary, prescriptions and bills that he should
submit for a claim.
Every insurer in their website clearly provide all relevant
information relating to
• How to lodge a claim
• What documents to be kept in possession
• Whom to be contacted to lodge a claim
• What information needs to be provided in lodging a claim
• Claim process adopted by the insurer
• How to follow up on claims lodged
• Help desk details to support customer service
This information are also included as part of policy document
in
every sales brochure or communication.
Claims closed
Non-life insurance companies classify claims closed as those
claims that are unpaid for want of more documents from the
insured person or where the policyholder hasn’t pursued the
claim further. Insurers consider this different from claims
rejected because claims are rejected after examining the case
and all the relevant documents. On the other hand, claims
closed
are cases where a claim is initiated but not followed up on.

7. This could be in case of cashless health insurance policies,
where a claim is intimated for pre-authorisation but is not
followed up because the insured didn’t get hospitalised, or
under
reimbursement, where the insured doesn’t follow up with
sufficient documents.
It’s not just in health insurance, but in other lines of businesses
too that insurers report claims closed. But this dilutes the
number of claims settled versus claims rejected which is what’s
relevant from the customer’s standpoint.Claims settlement
In rating health insurance plans under the Mint SecureNow
Mediclaim Ratings, we look at the claims settlement rate as a
percentage of claims on which a decision was taken. Hence,
the
claims settlement rate takes the number of claims settled in
the
numerator and claims on which a decision was taken (sum of
claims settled, closed and rejected) in the denominator. In
fact,
even the Insurance Regulatory and Development Authority of
India, in its Health Insurance Regulations of 2016, made it
clear
that no claims shall be closed in the books of insurers.
Following that, some insurers have stopped reporting claims
closed for health insurance policies separately and have
started
clubbing it under claims rejected. However, some insurance
companies continue to report closed claims as a standalone
bucket.
What should you
do?If you are looking at the claims settlement record of an
insurance company, you would do well to not overlook claims
closed. Club this under claims rejection, as is the industry
practice, and then look at the numbers. Also, remember that
insurers are required to stipulate a period within which all
necessary claim documents should be furnished by you, after
which they need to either reject or accept the claim in 30 days.
But the time period to furnish documents is not cast in stone as
a
delay doesn’t automatically mean rejection. If you have valid
grounds for delay, the insurer will have to process your claim.
So if you haven’t followed up with your insurer yet, you can
still do it.

8. The amount of unclaimed insurance money has been
increasing.
According to a report of PTI, as much as Rs 15,167 crore of
policyholder's money was lying unclaimed with 23 life insurers
as on March 31, 2018.
Compared to this, for the year 2012-13, Rs 4,865.81 crore
was
the unclaimed amount for the entire industry. This is a 25
percent increase annually over the past five years in
unclaimed
money by policyholders.According PTI, the Insurance Regulatory and Development
Authority of India (Irdai) data, out of the total unclaimed
amount, insurance behemoth Life Insurance Corporation (LIC)
is sitting on Rs 10,509 crore, while the 22 private sector
insurers
account for the remaining Rs 4,657.45 crore. Among the
private
insurers, ICICI Prudential Life Insurance has 807.4 crore of
unclaimed insurance claims followed Reliance Nippon Life
Insurance (Rs 696.12 crore), SBI Life Insurance (Rs 678.59
crore), and HDFC Standard Life Insurance (Rs 659.3 crore).What happens to unclaimed
amount?In July 2017, the Irdai had asked all insurers having unclaimed
amounts of policyholders for a period of more than 10 years
as
on September 30, 2017 to transfer the same to the Senior
Citizens' Welfare Fund (SCWF) on or before March 1, 2018.
The fund shall be utilised for such schemes for the promotion
of
the welfare of senior citizens in line with the National Policy on
Older Persons and the National Policy on Senior Citizens.Why claims go
unclaimedNominees not aware of the policy: The nominees may not
be
aware that the policyholder had such an insurance policy or
whereabouts of the policy document. Thereafter, on the death
of
the policyholders, the dependants may not be in a position to
claim the amount. To avoid such a scenario, the nominees
should not only be aware but they should also be in the know
of

9. where the policy document is. Also, make sure to
update
nominations in the policy.
Change in address: Where the settlement of claims happens
through payments made by cheque, any change in the
address of
the policyholder/claimants will delay the process. To avoid this,
ensure that the address is updated in the insurer's records.
Cheque misplaced: Cheque payments can become time-
barred
or misplaced leading to delays. Most insures have initiated
claims payments through electronic transfer of funds, hence
make sure to enrol for it in all the existing policies. For new
policies issued after 2014, insurers insist on electronic
transfer
of funds and thus asking for blank cancelled cheque at the
time
of application itself.
How to find
Irdai had asked the life insurance companies to provide a
search
facility on their websites to enable policyholders or
beneficiaries
or dependents to find out whether any unclaimed amounts due
to them are lying with these companies.Policyholders/beneficiaries are required to enter the details
like
policy number, PAN of the policyholder, name of the
policyholder, date of birth or Aadhaar number, in a window
provided on the website of the insurer to find out the
unclaimed
amount. The insurers have to update information regarding
unclaimed amounts on their websites on a half-yearly basis.
Sometimes life insurance benefits are left unclaimed after a
policyholder dies. This is an unfortunate problem under any
circumstances, but especially now, when many people are
struggling financially. What is more, this is an easily
preventable outcome.1. The life insurance company and the policy owner have
lost
track of each other

10. The main mode of contact between you and financial
institutions (banks, credit card companies, insurance
companies,
investment management companies, etc.) is by “snail” mail. As
with anyone with whom you wish to keep in contact after you
move, you must tell them your new mailing address or they will
lose track of you. The U.S. Post Office will only forward first-
class mail for a year to a forwarding address, and the sender
is
not aware that the mail is being forwarded to a new address
as
the Post Office does not inform the financial institution of the
change.
If you move, immediately inform every financial institution
directly of your new mailing address, including your life
insurer.
Of course, the same principle applies to other forms of
communication: tell the life insurance company of new phone
numbers (including your mobile number), email address, etc.
2. The life insurance company doesn't know the insured has
died
Life insurance companies typically do not know when a
policyholder dies until they are informed of his or her death,
usually by the policy’s beneficiary. Even if a policy is in a
premium-paying stage and the payments stop, the insurance
company has no reason to assume that the insured has died.
Moreover, there are policies that have benefits called cash
values, with an Automatic Premium Loan (APL) feature. An
APL policy borrows money from the cash value to pay a
premium due if the money does not come in by the end of the
grace period; thus preventing an unintended lapse of the
policy,
which would have the disastrous effect of loss of the entire
death benefit should the insured die after premiums due were
not paid. Under an APL, the policy would continue in full force
until all of the cash value had been borrowed, at which time it
would lapse.
Also, many policies are in a stage in which no premiums are
due. Some life insurance is bought with a single premium or
a
small number of premiums due (such as 10 or 20 annual
payments), but the insured might live a long time after the

11. premium payments end. Thus the life insurance company
would
stop sending premium notices after all premiums were paid.
Moreover, there is no master list of who is alive and who is
dead. The Social Security Administration has the closest thing
to such a list—a file on its income beneficiaries (those
receiving
retirement or disability income from Social Security) to record
those who are alive and who have deceased, so as to avoid
making payments that are not legitimate—but this does not
cover everyone. Millions of people, in fact, are not covered by
Social Security (federal employees, state employees in four
states, railroad employees, etc.), and therefore would not
appear
on this list.
Employers who sponsor group life insurance to active
employees will notify the life insurer if a covered employee
dies. And, it is possible that the deceased would also have
individual life insurance policies with the same company that
issues the group policy, but this becomes less likely when
people switch jobs but do not switch individual life insurers.
Remember to provide your beneficiaries with the name
and
contact information for your life insurance company, so
they
can report your death and file a claim.
3. The life insurance company is unable to locate the
policy’s
beneficiariesThere might be one or both of two problems in this scenario.
The first is that the descriptions of the beneficiaries might be
insufficiently precise for the life insurance company to locate
them. This would be the case, for example, if the beneficiary
designation says “my wife” or “my children” without naming
them specifically and, ideally, providing a Social Security
number and a current address for each one.
Be sure to provide detailed personal identification
information about every beneficiary to each life insurer
from whom you have coverage for death benefits so that
they can easily be located and their identity confirmed.
The other problem is that, even if the company knows who it is
looking for, it may be very difficult to track down a beneficiary,

12. especially as it may be many years, or even decades, since
the
policy was taken out. Keep in mind that, for privacy reasons,
until the death occurs, the life insurer cannot even respond to
a
beneficiary’s inquiry as to whether they are a beneficiary or
not.
4. Beneficiaries don't know that a life insurance policy
exists
under which they are beneficiariesIt may come as a surprise, but sometimes beneficiaries do not
know that they are covered by the insured’s individual or group
life insurance policy. The insured may have a variety of
reasons
for keeping this information secret from the beneficiaries, but
an
unfortunate consequence is that the benefits could end up
unclaimed because no one actually realized that they could
make a claim. I
Tell the beneficiaries of your life insurance (both
individual
policies and group coverages) that when you die they will
be
entitled to death benefits. And provide them with the name
and location of the life insurance company as well as the
policy number.
5. The original life insurance company no longer exists
or
cannot be locatedThe name of the company that sold the original life insurance
policy may have changed, possibly making it more difficult for
the beneficiary to locate the insurer in order to make a claim.
Life insurance companies are not any different from
companies
in any other industry in this respect—but the multi-decade
length of the contract can transform this type of normal
corporate development into an extra hurdle for beneficiaries.
Some will not know where or how to look for the new insurer,
leaving the benefits unclaimed when the insured dies.
Typically,
an insurer that is changing its name or location will notify its
policyholders of such a change.Conclusion
Despite the clear guidelines by Irdai in 2014 and a strict
monitoring of unclaimed amount every six months, the
figures

13. are rising. Insurers need to ensure that every amount goes to
the
rightful claimant at the right time as intended by the
policyholder at the time of buying it. Policyholders, too, need
to
make sure that the family members are well aware of the
policy
details and their rights as nominees.
References:
1.https://economictimes.indiatimes.com/wealth/insure/crore
s-
lie-unclaimed-with-insurers-heres-how-to-find-out-if-any-is-
yours/articleshow/65211655.cms?from=mdr
2. https://www.justinian.com/en/insurance-law
3. https://www.surranoinsurancebadfaith.com/happens-
life-
insurance-policy-unclaimed-unpaid/
4.
https://www.naic.org/sap_app_updates/documents/055_t.pdf
5. http://www.dgaalaw.com/dgaablawg/illinois-unpaid-
insurance-claims
6.
https://reports.swissre.com/2012/financialreport/financialstate
m
ents/notes1-
11tothegroupfinancialstatements/8unpaidclaimsandclaimadjus
t
mentexpenses.html
7. https://www.miamiherald.com/news/politics-
government/state-politics/article234323522.html8. https://www.moneymarketing.co.za/life-
insurance-
beneficiaries-bullets-and-r17bn-in-unpaid-claims/
9. https://www.iii.org/article/unclaimed-life-insurance-benefits
10.
https://lautorite.qc.ca/fileadmin/lautorite/formulaires/profession
nels/assureurs/instructions-tsip_an.pdf

14. 11. https://www.zadehfirm.com/practice_areas/you-can-
sue-
your-insurance-company-for-unpaid-claims.cfm