Index: Claims Settlement Procedure in General Insurance Companies

Claims Settlement Procedure in General Insurance Companies
Index
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SR NO TOPIC PAGE NO
1. Introduction of insurance in India 6-8
2. Brief history of insurance sector 9-11
3. Introduction to general insurance 12-13
4. Claims in insurance 14-15
5. Claims management 16-17
6. System of claims management 18-19
7. Stages of claims system 20-21
8. Management structure of General insurance company 22
9. Basic structure of General insurance company 23-25
10. Claim management department 26-27
11. Guidelines for claim settlement by IRDA 28-31
12. Procedure of settlement of claims 32-34
13. Important terms in claims 35-36
14. Factors affecting claims settlement 37-39
15. Delays in claim settlement 40-43
16. Role of agents in claim settlement 44-45
17. Role of agents in insurance company 46-47
18. Role of surveyors and assessor in claim settlement 48-50
19. Impact of claims on underwriting 51-53
20. Frauds in claim settlement 54-56
21. Some important highlights of General insurance company 57-58
22. Survey 59-70
23. Sample of Questionnaire used 71-73
24. Findings (Swot analysis) 74
25. Conclusion 75-76
26. Bibliography / Webliography 77

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Abstract
The field of insurance has taken a giant leap at the threshold of twentieth
century. Insurance have become an integral part of life of man all over the
globe. The proverb ‘Need is the mother of invention’ is proving equally correct
in case of insurance. Insurance have already had a considerable impact on many
aspects of our society. Claims management is another important aspect on
insurance. It is complex in nature that is true but it is a driving force to plant
confidence in the hearts of people.
Claims Management is one of the most challenging business processes in

the insurance industry. With the number of stakeholders involved, the
dependencies and the logistics, there is a need is to eliminate manual
interventions. For many organizations, claim management and administration is
viewed solely as a service operation. Claim management is expected to run the
claim process efficiently and keep expenses low, but little attention is given to
leveraging high-impact opportunities afforded through effective data
management. In fact, the data captured in the claim process, which all too often
are underutilized, are rich in valuable information for those who know how to
extract and analyze it.
Claims management is an expert system which generates the rules and

regulations for the assessment of general damages using the key information
contained in medical reports, surveyor report, loss assessor’s reports, claimant’s
petition and the procedures or conditions and warranties contained in the policy
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document. The claims management regulates the payment of general damages

and also payment of the loss of future earnings.
This project is just a gist about how the insurance companies settle the
claims, the procedure that is followed, the intermediaries that are involved in
the process and so on. This project throws light on various aspects on claims
management and the problems faced by them.
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Definition of Insurance:
Insurance in its basic form is defined as “A contract between two parties whereby one
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party called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party called insured a fixed
Introduction to Insurance in India

The insurance sector in India has come to 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 sells 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.
Brief history of the Insurance sector
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mount of money on the happening of a certain event."
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.
➢ 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 crore
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.
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➢ 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 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
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and 15 non-life insurance companies in the market. The potential for growth
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, India’s 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.
life insurance
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Definition of General
Insurance:
General Insurance means
to
Claims
“Cover
Settlement Procedure in General Insurance Companies
the risk of the
financial loss from any natural
calamities viz. Flood, Fire, Introduction to
Earthquake, Burglary, etc.. i.e.
the events which are beyond the General Insurance
control of the owner of the
goods for the things having Human life is subject to risks due to
insurable interest with the natural and accidental causes. When human
utmost good faith by declaring
life is due to accident or any natural
the facts about the
calamity or any other uncertain event, there
circumstances and the products
by paying the stipulated sum , a is a loss of income to the household. The
premium and not having a family is put to hardship. Sometimes,
motive of making profit from the survival itself is at stake for the dependants.
insurance contract.” Risks are unpredictable. Life is full of
uncertainty and it happens when one least expects it. An individual can protect
himself or herself against such contingencies through General insurance.
With the help of an General insurance contract one cannot avoid the loss but
can certainly protect him self from such losses hence in general 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 general 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 event. Insurance
substitutes this uncertainty by certainty. The primary purpose of general
insurance is the protection of the insured’s property. Insurance in its various
forms protects against such misfortunes by having the losses of the unfortunate
few paid by the 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.
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There are a variety of general insurance products to suit to the needs of various
categories of people—Businessmen, Employees, Taxi drivers, and many more.
General insurance products could be purchased from registered insurers notified
by the IRDA. Insurers appoint insurance agents to sell their products. Public
who are interested to buy general insurance products should receive proper
advice from insurance agents/insurer so that a right product could be chosen to
suit particular financial needs.
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Claims in Insurance
Definition of claims:
Claim is a right of
An insurance claim is the actual application insured to receive the
for benefits provided by an insurance company. amount secured under
the policy of insurance
Policy holders must first file an insurance claim contract promised by
before any money can be disbursed to the hospital Insurer.
or repair shop or other contracted service. The
insurance company may or may not approve the
claim, based on their self assessment of the circumstances. Individuals who take
out home, life, health, or automobile insurance policies must maintain regular
payments called premiums to the insurers. Most of the time these premiums are
used to settle another person's insurance claim or to build up the available assets
of the insurance company.
When claims are filed, the insured has to observe the settled rules and
procedures and the insurer has also to reciprocate in a similar manner by
undertaking appropriate steps for speedy disposal of claims. It is true that claims
settlement is complex in nature, but it is the driving force to plant confidence in
the hearts of people, in general and beneficiaries in specific. Insurance claim is
a right of insured under a contract of insurance. Insurance contract is a contract
by which one party called the insurer promises to save the other party, the
insured on payment of consideration known as the premium. The insurer
promises to save the insured are nominees/assignees of the insured on
happening of event or risk insured. Disputes crop up in the payment of claim
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when the insurer and the insured understand the process of claims payment in a
different way. Claims settlement is an integral part of the insurance business
which is a service industry and its growth is interwoven with the people, the
customers and consumers of service. It is inevitable for the insurance company
to protect and guard the interests of the policyholders. An insurance claim is the
only way to officially apply for benefits under an insurance policy, but until the
insurance company has assessed the situation it will remain only a claim, not a
pay-out.
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Claims Management
Many insurers have recognized the need to improve the efficiency of their
claims management process. They have streamlined processes, eliminated
paper-based forms and redistributed work to match the demands to skills. The
objective of their efforts is to lower costs, while also increasing overall
throughput. Efficiency improvements make tasks quicker and less costly to
execute. However, to realize even greater improvements in the claims handling
process, insurers must also focus on the effectiveness of their claims decisions.
Claims handling costs typically represent 10% to 15% of net earned

premium; in contrast, claims payouts represent 40% to 65%. Insurers that
expand their focus to include effective as well as efficient claims processing
will find a far larger pool of savings opportunities. Technology can play a
significant role by providing integrated channels for communication and
collaboration. This would help the insurance company increase employee
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productivity by reducing cycle time and defect rate and also increase employee
participation and compliance.
Claims Processing sometimes involves collating and sharing large

amounts of information among multiple parties involved in a claim, from body
shops to adjusters to investigators to lawyers and doctors to claimants and
regulators. And it involves the knowledge of experienced adjusters to determine
the fair and appropriate outcome of a claim. In fact, losses and loss expenses
absorb 80% of premium collected by carriers.
Service representatives and claims adjusters need to access data from

multiple sources when processing or assessing a claim, which delays settlement
time and increases costs. Manual steps reduce transparency of the claims
process and raise the risk of fraud, manipulation or simply human error.
Customer retention is also a challenge – experts say that 75 percent of
customers leave their insurer due to claims issues.
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System of claims management

Basis of claims management:
Claims management means and includes all the managerial decisions and
processes concerning the settlement and payment of claims in accordance with
the terms of insurance contract. It includes carrying out the entire claims
process with a particular emphasis on monitoring and lowering the claims costs.
The important elements of claims management are claims preparation, claims
philosophy, claims processing and claims settlement.
The claims philosophy is defined as procedure or specified approach to

settle the claims. It contains the claims management principles and also claims
handling methods and procedures. The claims philosophy includes the
preparation of guidelines regarding the receipt of claims from the insurers or
claimants, analysis of the claims, consideration of the possible decision on the
particular issues and disputes, evaluating the impact of the claims cost and
expenses, relation of claims to the consumer satisfaction, monitoring the claim
payment and improving the efficiency of the claims settlement and payment
systems and avoiding unnecessary disputes of claims.
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The claims process includes the basic claims procedure and handling of
claims. The handling of claims includes the monitoring of situation or events,
which cause the loss to the insured subject matter and give a cause to the
insured to make a claim. The claims process contains two fold procedures to be
followed by the insurer and insured. From the point of view of the insured, it
includes the suffering of loss or the damage, understanding and identifying the
cause of action, information or giving notice of claim or loss to the insurer,
providing sufficient proof of loss to the insurer or his agent or the loss assessor
and surveyors. The insurer, on the receipt of the claim from the insured, has to
take certain immediate precautions such as verifying the claims, reviewing the
claim application, respond to the claimant, and carry out claims investigation,
claims negotiation, claim settlement and claim payment.
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Stages in claims system:

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The claims handling is the integrated part of the claims management and
executes the decisions made by the claims management machinery of an
insurance company. Though claims management and claims handling are
generally the same externally, they are different in nature.
• Claims management:
Claims management is a managerial function in which the insurer has

a definite role to play in analysis of data, processing of application, decision-
making, budget planning, and business control and fund management. It is a
subjective concept. In claims management, the attention is on making
principles and guidelines for smooth and profitable settlement of claims in
the hands of the insurer.
Claims management includes the entire process of claims handling

and claims payment. This includes review of the claims performance,
monitoring of claims expenses’, legal costs, settlement costs, compromises
and planning for future payments and avoiding the delay and disputes in
payment of claims. It is a control system that has an important place in the
claims management. It also includes risk management techniques, loss
assessment, and business forecasting and planning.
• Claims handling:
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Claims handling is the procedural way of processing a claims

application. Claims handling involves utilization of the laid down principles
as yardsticks and the measuring methods in settling the issues before it
occurs. Claims handling is a traditional form of managing the claims
settlements. It includes handling of various stages of the insurance claims. It
is functional in nature such as claims review, investigation and
understanding the negotiating process. It does not include any managerial
outlook such as risk management, policy making and decision making.
Thus, it is concerned with the procedural methods and also

interpretations of the claims philosophy. Claims handling may change from
case to case depending on the merits of the claim, but it will not drastically
change every moment. It is a flexible as well as a rigid way of handling the
issues having interest of the insurer in mind. It is a systematic way of
receiving the claims and following other procedures required for quicker and
efficient payment of the claims. Every insurer has a standardized way of
claims handling which will improve quality and customer service. The
insurer’s commitment to the service of the customer is a part of the claims
management.
Management Structure of GIC
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From left to Right are the Members and Managing directors of GIC
Basic structure of GIC
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Today, most of functions, nearly 90%, related to the marketing and other
related activities of the insurance consumers are dealt and handled at the branch
level. The branch office, depending upon its business, is headed by a manager
and each function of insurance business like marketing, underwriting of
policies, accounts, claims payments, staff and administration matters are
identified as departments of the branch office with responsible officials such as
Administration and Accounts Officers.
The managerial decisions are based on the information supplied by the

administration and accounts officers, the functional head at root level. All the
functions of claims will be settled at the branch level. The administration and
accounts officers of life insurance business will deal with maturity and death
claims. If the branch is smaller, all the types of claims will be dealt by one
administration and accounts officers and if the branch is bigger with good
number of claims, they will be settled by, separate officials. At branch level,
these officials have to maintain cordial relations and establish a system of
sharing information with the other departments, relating to the policy
documents, payment of premium and using the staff or the agents for the
settlement of claims disputes. The branches maintain records relating to the
claims payment and claims rejections. They will submit the reports to the Zonal
Officer, who in turn will forward it to the Head Office or Corporate Office.
The branches report to their respective divisional office. If any branch

gets a claim and there is a problem in identifying the correct claimant among
the claimants, or otherwise, a dispute of risk crops up, which will be forwarded
to the divisional office with its comments. The divisional office after receiving
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the papers, verifies them, applies legal knowledge and skills, or seeks advice
from skilled persons and tries to solve the problems. The divisional office is
responsible to settle the claims referred by the branch office and also report the
same to the zonal office, which in turn will consolidate the data and submit the
same as required by the statute or otherwise under any law to the government.
The government will put the same for the approval of the both the houses.
At the division office level, the claims department generally deals with
the claims, which are pending with the branches because of some disputes, or
some claims which are of high value. The investment portfolio and
establishment and maintenance of reserves for the purpose of claims payment or
otherwise required under the law is the important function of the central office.
Thus the organizational structure of the insurance business is most flexible and
decided, based on the above said factors.
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Claims Management Department

The claims department is one of the key departments in an insurance
company. The claims department has the following functions to perform:
 To provide the customers of insurance and reinsurance companies with

high quality of service. This role gives a long-term edge to the company
and hence is referred to as the strategic role.
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 To monitor the claims and see that whether the benefits of insurance
exceed the costs of claims. This role is referred to as the cost-monitoring
role of the claims department.
 To see that the expectations of the customers are met with regard to
speed, manner and efficiency of the service. This is called the customer
service role of the claims department.
 To meet the standard of service, to keep up to the customers expectations

and still operate within the budget. This is the managerial role of the
claims department.
Both the quality of the service and cost of claims is the responsibility of the
claims department. The department has to look after the proper mix of the two.
The cost of claims must not exceed a given level in trying to render a very good
service to the customer. So the claims department should work with due
diligence to balance the two parameters. The estimation of future liabilities is
just as important as control over the claim payments. As the claims department
is in direct touch with the customer, it has to ensure the quality of service.
The claims department has the sole responsibility of managing claims.

Claims management by far is the most complex issue in an insurance company.
The people in the claim department should have good interpersonal skills. If
they are not able to irk in harmony the customers will not receive quality
service. There should be sufficient number of people as managers so as to
simplify job and proper human resource systems in place so that such persons
are recruited whose philosophy goes with the mission and vision of the
organization. It has become imperative for the claims department to provide
quality service to the customers so that the corporate goals are achieved. The
claims department, in effect, acts as an interface between the customer service
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quality and insurance company’s objectives. It has to be given the proper weight
age and motivation so that the business as a whole functions well.
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Registration Certificate of GIC as
per IRDA guidelines
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Certificate Claims
Renewal of Registration
Settlement Procedure in General Insurance Companies
GIC as per IRDA guidelines
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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 fees of charge, within 30 days of the acceptance of a
proposal, a copy of the proposal form.
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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 the Act. Any proposal form seeking information for grant of
any cover may prominently state therein the requirements 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. 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 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.
2. 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.
3. 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.
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Claims procedure in respect of a General life insurance policy:
1) A General 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 General 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.
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3) A claim under a General 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 of the
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).
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
Settlement of maturity claims:
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Under GIC, claims can arise on maturity of policy of the policyholder.

The processing of claims by maturity is normally undertaken by Divisional
Office of GIC about two months before the date of maturity. . The GIC 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 GIC 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 GIC 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 GIC, the form of
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Discharge (Form No. 3825) to be executed by the policyholder, is also

sent along with the Maturity Intimation.
4) G.I.C. accepts following documents as valid age proofs:
a. Horoscope of the assured
b. Certificate relating to the baptism ceremony among Christians
c. Birth certificate from the Municipal Corporation
d. High School Certificate
e. Service book.
1) 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 GIC from which it was issued. The
signature must be on a revenue stamp and must be attested by a witness.
2) 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 GIC. 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.
3) Existence certificates in case of children’s Deferred Assurance & Pure

Endowment Policies.
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4) In due course, GIC sends a cheque to the policyholder for the money due
to him as per the terms of the policy.
GIC upon the receipt of the claim form will act in the following manner:
➢ GIC 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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IMPORTANT TERMS IN CLAIMS
Maturity claims
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
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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.
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.
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• 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
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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.
 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.
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 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 loses 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.
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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.
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.

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 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.
 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
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46
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.
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 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.
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.
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Role of agents in claims settlement
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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 GIC 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. The Concomitant and 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. 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
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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 the 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.
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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.
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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 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.
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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 GIC claims the insurance company tries to reject the claims
without knowing the cause
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-à-vis insurers and insureds, and the
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insured’s rights and duties vis-à-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:
i. 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.
ii. Maintaining confidentiality and neutrality without jeopardizing the
liability of the insurer and claim of the insured;
iii. 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;
iv. Conducting spot and final surveys, as and when necessary and comment
upon franchise, excess/under insurance and any other related matter;
v. Surveying and assessing the loss on behalf of insurer or insured;
vi. Assessing liability under the contract of insurance;
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vii. Pointing out discrepancy, if any, in the policy wordings;

viii.Satisfying queries of the insured/insurer and of persons connected thereto
in respect of the claim/loss;
ix. Giving reasons for repudiation of claim, in case the claim is not covered
by policy terms and conditions;
x. Taking expert opinion, wherever required;
xi. A surveyor or loss assessor shall submit his report to the insurer as
expeditiously as possible, but not later than 30 days of his appointment.
Provided that in exceptional cases, the afore-mentioned period can be
extended with the consent of the insured and the insurer.
Surveyors and Loss assessors Report:
The report of surveyors and loss assessors will be the authentic report.
The report contains the investigations and results of the investigations,
recommendation and assessments of the surveyor and assessor. The surveyors
will state the causes of the loss whether remote or direct, the extent of actual
total loss, insurance policy amount, value of salvage and assessment of payment
of claims. The report of the loss assessors will be a solid ground to settle the
claims. If the insurer is of the opinion that the loss assessor or the surveyor has
acted under some personal interests then the insurer may decide to re-
investigate the matter and on receiving the report can decide the claims
payment.
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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 people’s eyes glaze over. But underwriting is one of
the most important parts of the insurance process. And knowing what an
underwriter does — and why it’s 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.
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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
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 underwriter’s 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;
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• The Medical Information Bureau (MIB); and
• The producer or insurance agent.
General 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 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 accident (and natural calamities if any).
They include the applicant's answers to a series of questions such as:
(1) Age, sex (except in several states that require "uni-sex" rates,
(2) Height, weight, and previous history (and often family health history --
parents and siblings and soundness of the person),
(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),
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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
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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

• 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 violable 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.
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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. Made payable 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 for a receipt as evidence of
payment of premium.
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5. Do not sign a blank insurance application, or insurance claim form.
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.
Claims settlement
Claims settled during the year
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Maturity
Year Number Amount
2007-08 134.22 31,873.35
2006-07 129.29 32,101.92
2005-06 115.58 24,724.58
Current data of GICre
outflow 2008-09 2007-08

Payments to Rs in crores
poliyholders
Claims by maturity
Numbers(in lakhs) 144.22 132.29
Amount 41,955.18 35,093.90
Claims by Accident
Numbers(in lakhs) 9.73 6.02
Amount 7,250.40 4,443.32
Some performance highlights (as at 31/03/2007) :

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1. Total Income : Rs. 1,76,559.28 crores
2. Total Premium Income : Rs. 1,12,307.77 crores
3. Total life fund : Rs. 5,72,602.80 crores
4. Total Assets : Rs. 6,74,514.78 crores
5. Total Investment : Rs. 6,12,705 crores
6. Investment in : Rs. 71,017 crores

Infrastructure
7. Policies in force : 21.79 crores

(31/03/2006)
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Survey Results
I. Do you feel the necessity of having general insurance covers:-
○ Yes
○ NO
If yes, then which company will you prefer:-
○ ICICI Lombard
○ TATA AIG
○ IFFCO TOKIO
○ Others
As from the above chart it is very clear the all of the respondents
have an insurance of the ICICI LOMBARD and few more
companies etc.
The reason behind this is the growing popularity of ICICI
LOMBARD, its brand name and good repo with its customers
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I. How many general insurance are you having:-

○ 1
○ 2-4
○ >4
From the above pie diagram we come to know that people who have
awareness about insurance policy insure themselves just for name sake (70%)
people have insured themselves for name sake while other 30% have insured to
protect them from uncertainties by using combination of many insurance policies.
This included many shop owners and business houses while 70% of insured
included working people insured against theft and fire insurance.
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I. Are you aware about the schemes offered by General Insurance Companies?
○ Somewhat aware
○ About all
○ Not aware
From the above chart we come to know that many people (50%) are not yet
fully aware about insurance companies, While 10% included people who didn’t
knew what the main purpose of insurance is.
I. Do you feel that General Insurance Companies offers customer centric product:-
○ Highly Agree
○ Agree
○ Neither Agree nor Disagree
○ Disagree
○ Highly Disagree
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From the above chart we come to know that many people agree with the
products of General Insurance Companies are useful and only 1% people
disagree saying insurance company’s main motto is to “loot people”
I. The service provided by General insurance companies are :

○ Excellent
○ Very Good
○ Good
○ Moderate
○ Poor
○ Very poor
From the above chart we come to know that General insurance company has
improved it service and has earned a good name for it but only 10 % people say
that all the service is very poor
I. You came to know about General Insurance Companies from :-

○ Ads( print/ digital)
○ Insurance Agents
○ Friends and agents
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○ Others
The means of communicating with the people is media and from the above chart
General insurance companies are successful in reaching the minds of the
customers. The popularity of General Insurance Companies is increased through
Word of Mouth strategy used by agents.
I. What is your opinion about the yearly premium? Is it :-

○ Very High
○ High
○ Reasonable
○ Low
○ Very Low
The Above question’s answer is unavailable since all the people had same
opinion and due to the same opinion of the respondents graphical representation
is not possible (Answer opted by respondents were reasonable)
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I. What is your satisfaction level towards the policy taken? You are:-
○ Highly Satisfied
○ Satisfied
○ Neither Satisfied nor Dissatisfied
○ Dissatisfied
○ Highly Dissatisfied
From the above charts we come to know that 45% of people are dissatisfied
with General insurance companies
I. Have you taken the policy from an insurance agent?

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○ Yes
○ No
The pie diagram represents that people buy policy from respective policy
agents.
I. Which factor influence you the most in choosing an insurance company:-

○ Reputation
○ Service
○ Accessibility
○ Good scheme
○ Low premium
○ Experience of others
○ Claim settlement
From the above diagram we come to know 25 % people select a company based
on the claim settlement policy. While average no. of people select the company
based on its premium, reputation, service.
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I. Which type of general insurance cover do you prefer the most:-

○ Auto/Car Insurance
○ Travel Insurance
○ Shopkeeper’s Insurance
○ Health Insurance
○ Accidental Insurance
The main customers of General Insurance Companies are the business units and
the shopkeepers who opt for General insurance
Questionnaire
NAME:
GENDER:-
○ Male
○ Female
AGE:-
I. Do you feel the necessity of having general insurance covers:-

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○ Yes
○ NO
If yes, then which company will you prefer:-
○ GIC
○ ICICI Lombard
○ TATA AIG
○ IFFCO TOKIO
○ Others
I. How many general insurance are you having:-

○ 1
○ 2-4
○ >4
I. Are you aware about the schemes offered by GIC?

○ Somewhat aware
○ About all
○ Not aware
I. Do you feel that GIC offers customer centric product:-

○ Highly Agree
○ Agree
○ Neither Agree nor Disagree
○ Disagree
○ Highly Disagree
I. The service provided by GIC is :
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○ Excellent
○ Very Good
○ Good
○ Moderate
○ Poor
○ Very poor
I. You came to know about GIC from :-

○ Ads( print/ digital)
○ Insurance Agents
○ Friends and agents
○ Others
I. What is your opinion about the yearly premium? Is it :-

○ Very High
○ High
○ Reasonable
○ Low
○ Very Low
I. What is your satisfaction level towards the policy taken? You are:-
○ Highly Satisfied
○ Satisfied
○ Neither Satisfied nor Dissatisfied
○ Dissatisfied
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○ Highly Dissatisfied
I. Have you taken the policy from an insurance agent?

○ Yes
○ No
I. Which factor influence you the most in choosing an insurance company:-

○ Reputation
○ Service
○ Accessibility
○ Good scheme
○ Low premium
○ Experience of others
○ Claim settlement
I. Which type of general insurance cover do you prefer the most:-

○ Auto/Car Insurance
○ Travel Insurance
○ Shopkeeper’s Insurance
○ Health Insurance
○ Accidental Insurance
Findings
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SWOT ANALYSIS OF GENERAL INSURANCE

CORPORATION (REINSURANCE)
• Strengths
➢ Good Customer service
➢ Good brand name
➢ Wide variety of products
➢ Large distribution network
➢ India’s no.1 Reinsurance company
• Weakness
➢ Less flexible Products
➢ Lack of professional management
➢ Un trained employee’s
• Opportunities
➢ Untapped market
➢ Banks ready to tie up for as a readymade distribution network
for a small fee.
• Threats
➢ Increasing competition of private players
➢ Fast acquisition of market by private players
➢ Need to reposition the brand name in the minds of customers.
Conclusion
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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. The life insurance
business has covered nearly 40% of the population 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.
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 insured’s 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, customer’s expectations are to be taken in
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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
The information is taken from various sources such as books, magazines,

articles, internet etc.
Books:
Theories and Practices in Insurance
Insurance watch
Business world
Business today
Webliography
www.insuremagic.com
www.gicindia.com
www.icicilombard.com
www.insurancewatch.com
www.insuranceonline.com
Search engines:
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www.google.com
www.ask.com
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81

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Index: Claims Settlement Procedure in General Insurance Companies

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Claims Settlement Procedure in General Insurance Companies

1. Introduction of insurance in India 6-8

2. Brief history of insurance sector 9-11

3. Introduction to general insurance 12-13

4. Claims in insurance 14-15

5. Claims management 16-17

6. System of claims management 18-19

7. Stages of claims system 20-21

8. Management structure of General insurance company 22

9. Basic structure of General insurance company 23-25

10. Claim management department 26-27

11. Guidelines for claim settlement by IRDA 28-31

12. Procedure of settlement of claims 32-34

13. Important terms in claims 35-36

14. Factors affecting claims settlement 37-39

15. Delays in claim settlement 40-43

16. Role of agents in claim settlement 44-45

17. Role of agents in insurance company 46-47

18. Role of surveyors and assessor in claim settlement 48-50

19. Impact of claims on underwriting 51-53

20. Frauds in claim settlement 54-56

21. Some important highlights of General insurance company 57-58

22. Survey 59-70

23. Sample of Questionnaire used 71-73

24. Findings (Swot analysis) 74

25. Conclusion 75-76

26. Bibliography / Webliography 77

Claims Management is one of the most challenging business processes in

Claims management is an expert system which generates the rules and

document. The claims management regulates the payment of general damages

Introduction to Insurance in India

Today Insurance Companies in India have grown manifold. The

In simple terms it is a contract between the person who buys Insurance

Insurance is basically a protection against a financial loss which can arise

Brief history of the Insurance sector

➢ 1928: The Indian Insurance Companies Act enacted to enable the

➢ 1938: Earlier legislation consolidated and amended to by the Insurance

➢ 1957: General Insurance Council, a wing of the Insurance Association of

➢ 1968: The Insurance Act amended to regulate investments and set

➢ 1972: The General Insurance Business (Nationalization) Act, 1972

In 1993, Malhotra Committee headed by former Finance Secretary

Thereafter many changes have taken place in the insurance sector.

Claims handling costs typically represent 10% to 15% of net earned

Claims Processing sometimes involves collating and sharing large

Service representatives and claims adjusters need to access data from

System of claims management

The claims philosophy is defined as procedure or specified approach to

Stages in claims system:

Claims management is a managerial function in which the insurer has

Claims management includes the entire process of claims handling

Claims handling is the procedural way of processing a claims

Thus, it is concerned with the procedural methods and also

Management Structure of GIC

Basic structure of GIC

The managerial decisions are based on the information supplied by the

The branches report to their respective divisional office. If any branch

Claims Management Department

 To provide the customers of insurance and reinsurance companies with

 To meet the standard of service, to keep up to the customers expectations

The claims department has the sole responsibility of managing claims.

Guidelines for claims settlement by

Proposal for insurance: