CLAIMS MANAGEMENT

CLAIMS MANAGEMENT OF GENERAL INSURANCE

[2009]

SRIDEVI SEKAR T.Y (BANKING AND INSURANCE) S.I.E.S COLLEGE OF ECONOMICS AND COMMERCE

CLAIMS MANAGEMENT

CH APTER 1
INTRODUCTION TO CLAIMS
The Greeks and Romans introduced the origins of health and life insurance c. 600 AD when they organized guilds called "benevolent societies" which cared for the families and paid funeral expenses of members upon death. Separate insurance contracts (i.e., insurance policies not bundled with loans or other kinds of contracts) were invented in Genoa in the 14th century, as were insurance pools backed by pledges of landed estates. These new insurance contracts allowed insurance to be separated from investment, a separation of roles that first proved useful in marine insurance. Insurance became far more sophisticated in post-Renaissance Europe, and specialized varieties developed . The first insurance company in the United States underwrote fire insurance and was formed in Charles Town (modern-day Charleston), South Carolina, in 1732. Benjamin Franklin helped to popularize and make standard the practice of insurance, particularly against fire in the form of perpetual insurance. In 1752, he founded the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. Franklin's company was the first to make contributions toward fire prevention. Not only did his company warn against certain fire hazards, it refused to insure certain buildings where the risk of fire was too great, such as all wooden houses. In the United States, regulation of the insurance industry is highly Balkanized, with primary responsibility assumed by individual state insurance departments. Whereas insurance markets have become centralized nationally and internationally, state insurance commissioners operate individually, though at times in concert through a

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national insurance commissioners' organization. In recent years, some have called for a dual state and federal regulatory system (commonly referred to as the Optional federal charter (OFC)) for insurance similar to that which oversees state banks and national banks.

CLAIMS
DEFINITION The claim is a request for reimbursement filed by insured addressed to
the insurer Finally, claims and loss handling is the materialized utility of insurance; it is the actual "product" paid for, though one hopes it will never need to be used. Claims may be filed by insured directly with the insurer or through brokers or agents. The insurer may require that the claim be filed on its own proprietary forms, or may accept claims on a standard industry form such as those produced by ACORD. 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 over the validity of claims or claims handling practices occasionally escalate into litigation; see insurance bad faith.

CONCEPT OF CLAIM
Concept of claim with reference to the insurance contract differs from the angle of the parties to the contract. The insurer is under an obligation or the responsibility to perform the contract as per the terms of the promise made. The insured is in an advantageous position once the premium as demanded by the insurer paid. The payment of insurance premium and acceptance of the contract by the insurer creates contractual obligation upon the patties to perform some of the duties before or after the claim is made or on happening of the loss is suffered by one of the party to the contract.

MEANING OF CLAIM

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Claim is a right of the insured to receive the amount secured under the policy of insurance contract. It is a promise made by the insurer to pay the compensation to the insured on happening of some uncertain event resulting in loss or damage to the asset insured. The claim is right of insured in all classes of insurance contract. The payment consideration is linked to the insurable interest. The claims payment and compensation payable as indemnity to the insured are related and are synonymous in the context of claims management of the insurance policy. Claims are to be paid either to the insured or the nominees of the insured by the insurer under the agreement. The important terms of the insurance contract are the payment of the insurance claims either on happening of the event or on the date of maturity. The payment of insurance on the date of maturity even without suffering the loss is confined to life insurance policies and annuities whereas in general insurance contract, the payment of the amount arises only on the happening of the event. As such the claims can be paid on happening of the event. The claims under fire insurance, marine insurance, motor vehicle insurance contract differ from life insurance and health insurance and liability insurance claims. The claim is a request for reimbursement filed by insured addressed to the insurer. The claims cannot be paid without the request of the insured and with out the incident of loss of the asset due to happening of event. The claims cannot be accounted for unless it is asked for. The knowledge of the loss or happening of the evening of event resulting in the damage of the asset to the insurer does not relieve the insured from filing the claims petition. Loss is the occurrence of insured event that result in a financial disadvantage to the insured.

ESSENTIAL ELEMENTS OF CLAIMS

The payment of insurance amount is based on the principles of good faith. An insurance contract embodies an implied covenant of good faith and fair dealing. The claim contract must contain following important elements. The claimant should have an insurable interest on the subject matter, which is lost and for which claims is made. There should be loss or damage to the subject matter. The subject matter of the insurance policy should suffer loss due to risk mentioned in the contract

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The insured and insurer have to show their efforts to mitigate the loss and the intension to save the other. The disclosure should have concerned with subject matter and contract of insurance. The loss suffered should be actual but not constructive.

PARTIES TO THE INSURANCE CONTACT

The parties to the insurance contract are the insured or the assured and the insurer. a) Insurer The insurer undertakes to compensate the other party from the loss of asset or loss of income generated from the asset on happing of event. b) The Insured The insured is an individual or body corporate who has applied to purchase a policy as per the offer made by the insurer to the general public. c) The Agent The agent is intermediary undertaking the responsibilities of insurance business on behalf of the insurer or insurance company. d) Loss Assessors and surveyors They play an important role in assessing the asset and liabilities of the insurer. The loss suffered due to the risk assessed and certified by these officers. e) Risk Retention Groups Such groups of insurer or individuals undertake the business of assuming and spreading the liability risks of its members. They are formed for the purpose of retaining or pooling risk f) The Premium

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The premium is a price paid adequate to the risk. It is a consideration of the contract. The premium is an amount paid by the insured to the insurer to save him from the risk faced . g) The Insurance Policy The insurance policy is a document in a standard printed format of insurance contract that stands as an evidence to show the existence of contract of insurance.

CLAIMS MANAGEMENT PROCESS

LOSS
OCCURS

NOTICE OF
LOSS IS GENERATED

CLAIMS IS
FILED

TELEPHONE

INSPECTION
CUSTOMER INTERNET
OF LOSS CLAIMS

PAYMENT

CLAIMANT
ACCEPT THE OFFER

AGENTS

CLAIMS IS
CLOSED

DISPUTES OF
PAYMENT

LEGAL
ACTION

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CH APTER 2
CLAIMS MANAGEMENT
INTRODUCTION Claims management is an expert system which generates the rules and regulation for the assessment of general damages using the key information contained in medical reports, surveyor reports, loss assessor report, claimant petition and the procedure and warranties contained in the policy. The claims management regulates the payment of general damages. The claims management department is responsible to interpret and advice to company as to its meaning when loss occurs. It also plans and suggests the methods to reduce the gap between the claimants and insured when there is a huge difference in the valuation of damages.

Claims handling and settlement are characterized by active care management, transparency, objectivity, precision, thoroughness, efficiency, skills and expertise. The payment of claims and claims management requires the scrutiny of the policy document, the time period, commencement of the insurance cover, payment of the premium, including and excluding clauses available in the policy and other term and conditions of contract

CLAIMS MANAGEMENT

The payment of claims and assessment of the loss depends upon various factors and differs from insurance to insurance. Claims in life insurance differ from that of general insurance. Payment of claims is an obligation of the insurer under the contract. It is the consideration of the contract.

The consideration of the insurance contract form the angle of the insurer is the promise to compensate the insured from the loss suffered on certain amount known as premium. The insured has to pay the premium and the insurer has to prepare the policy as token of acceptance of the contract and delivers the same to insured. In some insurance, the insurer delivers cover note instead of insurance policy.

ELEMENTS OF CLAIMS MANAGEMENT Claims management

Claims management means and includes all the managerial decisions and processes concerning the settlement and payment of claim in accordance with the term of insurance contract. It includes carrying out the entire claim process with a particular emphasis on monitoring and lowering the claims costs. The important elements of claims management are: Claim Preparation Claims Philosophy Claims Processing Claims Settlement.
A)

The claims philosophy:-

It is a method or a document or a defined procedure or a specified approach to settle the claims. It contains the claims management principles and also claims handling methods or procedures. The claims philosophy includes the preparation of guide-lines regarding the receipt of claims from the insurers or claimants, analysis of the claims, consideration of the possible decision on the particular issues and

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disputes, evaluating the impact of the claims cost and expenses, relation of claims to the consumer satisfaction, monitoring the claims payment and improving the efficiency of the claims settlement and payment systems and finally the plans for improving the quality of services and avoiding unnecessary disputes of claims In India, the concept of claims philosophy has not grown to the extent required. The claims philosophy has external and internal advantages. It will impress the consumers of insurance business and help business to develop. Internally a detailed systematic claims process is created and delay in settlement of the claims can be avoided. The claims philosophy has a relation with the terms of service promotion, prices and people concerning insurance. It influences the nature of claims that are received by the insurance company, time period taken by the company to settle the claims or process them and the extent to which the claims are cost and service effective.

B)

The claims process:-

It includes the basic claims procedure and handling of claims. The handling of claims includes the monitoring of situations 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, or the process 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 the notice of claim or loss to the insurer, providing sufficient proof of the loss to the insurer or his agent or the loss assessor and surveyors. The insurer, on receipt of the claim from the insured, has taken certain immediate precautions and also proceeds on methods such as verifying the claim, reviewing the claim application, respond to the claimant, and carry out claim investigation, claims negotiation, claim settlement and claims payment. c) Claims settlement Claims settlement is the mission of the insurance company. Every insurer wants that the claims be settled and honored in accordance with the terms and conditions of the insurance policy document. The insurer never wants to get in to a dispute by rejecting the claims if they are filed by the insured along with sufficient proof of the loss or the damage. The quality of services in the claims settlement will reflect on the business of the insurer. The claims settlement is also claims handling and has two phases. The first phase is in the hands of the insured and the second phase is in the hands of the insurer. The first phase of the claims settlement or claims process starts from the date of happening of event or from the date of maturity in case of life insurance policies. On

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the day of happening of risk or the event, if the insured subject matter suffers damages and the insured has lost the economic use of the asset and is under economic loss of income generation, the insured initiates the process of the claims settlement. The second phase of the insurance settlement is in the hands of the insurer. As soon as the application or claim form is received by the insurer from the claimant, he should acknowledge its receipt and quickly respond to the claim and arrange the payment if there is no hitch or if the claim is in accordance with the terms of the contracts and the insured has already submitted the required data. Immediate settlement of claim and a satisfied consumer are the tools of insurance business and marketing. The other option available to the insurer apart from the payment of claim is rejection of the claim, which results in claims disputes. On appeal, the insurer may reconsider the appeal and the claim may be settled by way of a compromise or negotiation. If the claimant refuses to compromise or negotiate, the option of filing a suit is available to the insured.

NEED TO HAVE A CLAIMS MANAGEMENT SYSTEM

The following elements express the need of effective claims management system

a) Sharing b) The

of data and information within the organization by different departments like underwriting staff, premium collection staff, and claims management staff, claims payment staff and others. claimant, requirement for information, the extent of processing of their claims, information regarding particular policy can all be fulfilled only if a proper claims management system exists.

c) It also helps to reduce fraudulent claims, exaggerate and repeated claims and
hence helps to avert frauds at the initial stage

d) This

system is necessary to updated information, and for proper analysis and for decision making.

EFFECTIVE OF CLAIM MANAGEMENT SYSTEM

A system is scientifically decided and arranged group of activities having similar functions and relative advantages to achieve the common objective, having a set of rules and principles adopted for the purpose. It is a coordinated body of methods or a scheme or a plan of procedure and is a formulated, regular or special method or

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plan of procedure. The organization is a form consisting of independent or coordinated parts for united action or for accomplishment of common objectives. The insurance business having different phases of business and functions cannot be run by, a single individual or single department or division. It requires specialized and skilled personnel to deal with the individual cases and suit individual environments and situations. The claims management system is effective only when it is able make timely decisions of the following elements.
A) Decision relating to the use of information technology- the extent of

use of the computers in place of human work force, cost factor of establishment, sharing of information stored by the servers or the computers of certain department such as marketing, underwriting, staff and public relations department with that of claims management. Storing the data in a place, this can be accessed by all the persons. The available can be utilized by different department for different purposes.
B) Decision relating to the use of services of outsourcing, particularly for

the settlement of the claims. The organization may not possess some expert personnel needed for certain purposes. To benefit from such expertise personnel, the organization depends on some other persons engaged in similar lines.

C) The insurance organization is required to pay the claims and enter in to

the agreement with some people. Some disputes may need are to resolved. Thus the organization may be the required to use the offices of some person like agents, staff, professionally skilled and licensed personnel like loss assessors or surveyors or loss adjusters to settle the claims.

D) Customer relations management is one of the important factors of

the organization. The organization should be so planned that the management system should emphasize on retention of the customers for future business. Satisfied customer relations not only improve the business of the organization but also avoid the complications and complexities of claim settlement. All the customers are not bad customers and many need immediate settlement as they face disturbed situation on happening of the event insured. As such the claims management system and department of

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claims should be so planned that they are not only provide these services but also settle customer grievances as soon as they are received.

ORGANAISATIONAL STRUCTURE

Organizational Structure and Allocation of Duties

The organization is the form having independent or coordinated parts for united action for the accomplishment of common objectives. The organizational structure is based on the objectives or mission of the business organization. It may have a division based on functions of the organization or the division of the work, areas of business. It may also division of work or duties with a chain of command and control.

The insurance business is concerned with the function of marketing of the insurance products and it is related functions like premium collections and premium fixing, accepting the insurance proposals, issuing policy documents, main ting the records relating the policies issued every day in chronological order, and also payment of claims.

HEAD OFFICE

ZONAL OFFICE

BRANCH OFICE

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AGENT

AGENT

AGENT

The organizational structure is also concerned with the fixing and allocating the duties to units of working at each level to find out the effective results. the branch office, depending upon its business, is headed by a manager and each function of insurance business like marketing , underwriting of policies, accounts , claim payments ,staff and administration matters are identified as department of the branch office with responsible officials such as administration and accounts officers. The AAO are assisted by, other clerical staff of the organization. The managerial decisions are based on the information supplied by the AAO, the functional head at root level.

All the functions of claims will be settled at the branch level.. If branch is smaller, all the types of claims will be dealt by one AAO and if the branch is bigger with good number of claims, they will be settled by, separate officials. 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 the head office or corporate office. The branches are reportable to their respective divisional office. The divisional office after receiving the papers, verifies them, applies legal knowledge and skills, or seeks advice from skilled persons and tries to solve the problem, as every problem has a solution. The divisional office will have a department to settle such claims. 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 the submit to the same as required by statute or otherwise under any law to the government. The structure of the general insurance business is of similar nature. Depending upon the value of the businesses particular classier type of the business, a separate section or division with the skilled personnel is established. If a branch, specialized person from the field of marine insurance will be appointed. In a place where there

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is an airport, the business of aviation insurance will be more and concerned personnel will be appointed to with the situations. Depending on the quantum of business, agents or officials deal directly with the branch manager, divisional manager or the zonal manager of the area.

THE ROLE OF INFORMATION TECHNOLOGY IN CLAIMS SETTLEMENT a) Advent of the Information Technology in Claims Management
Information technology involves the use of computer system, digital electronics and telecommunications to store, process and transmit the information. In the context of claims management, it involves the storage, processing and transmission of information relating to settlement of insurance claims. Information Technology (IT) plays an important role in the present insurance and reinsurance scenario. Its role is expected to be further strengthened in future. The insurance companies are expected to harness new developments in claims management. This results in better distribution channels to policyholders, effective service to the customers and reduction of operating costs. All the information is generated from the various field concerned will expedite and increase the quality in claims manage

b) Use of Information Technology in Claims Settlement

Although till recently the Internet was used to a limited extent as a way to cell certain classes of insurance policies, now claims are also being transacted through the internet. One of the most significant developments in the past couple of years has been the growing emergence of java based technologies. These can be improved to provide well developed insurance software components with distinct insurance functionalities such as, underwriting, reinsurance, claims managements and payment processing. For many of consumers, the greatest amount of interaction is during the process of making a claim. The way in which this is handled is likely to dictate the attitude of the customers towards the insurer during renewal the following year. From the point of view of the insurer it is this area where costs are incurred in physical settlement of the claim and the associated administration of the claim. It is this area which provides the largest potential for cost reduction and improved service provision.

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The following are the issues to be tackled in the area of claims management; The insurer aims at settling the claims as quickly and efficiently as possible and reduced costs by minimal interaction with the customer and the outside third parties. The insured desires that the claim be settled as quickly and as painlessly as possible. Failure to meet these requirements at the claim stage will significantly reduce the chance of his renewal with the same insurer. Hence time is of essence in such case. Often insurers offer to replace goods and services rather than make settlement in cash. This may result in reduction in cost. Through the e-enabled insurance the insurers can pre-negotiate discounts with suppliers and cut down on fraud and inflated claims.

Clearly the long-term objective of the insurers should be to have a seamless claims settlement process. The customer at each stage of the claims settlement shall be fully kept informed of the progress of the settlement process. The third parties such as car repair shop are automatically notified of the work that they need to undertake and especially when they are able to work to pre- negotiated limits and timescales.

ADVANTAGE

OF AN

INFORMATION TECHNOLOGY

IN CLAIMS MANAGEMENT

Elimination of duplication:- Once all the details regarding the insurance policies issued are entered electronic data entry system, the data can be stored and made it available to multi use so that it eliminate the duplication of both data and effort. Reduce paper work: - In this system the files are created electronically. Supporting docs and images of damages and reports of loss assessors can also be stored. Communication:- It leads to quicker communication of the organization o frisk and occurrence of loss

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Authoritative:-Electronic authorization, accompanied by payments made through central settlement system results in expediting the claims payment. Cost:- It helps in reducing the administration cost. Speed:- Faster agreement of valid claims and faster settlement of claims leads to a greater satisfaction of insured Automation: - An automated check against fraudulent and repeated claims enables smooth function. Payment: - Expediting payments to be made to brokers, loss adjustors etc... Data :- Information on finger tips for decision making purpose is available

DISADVANTAGES

OF INFORMATION

TECHNOLOGY

IN CLAIMS MANAGEMENT

These systems are less flexible, difficult to operate. IT is rapidly changing and the pace is so fast that even experts in this field are finding it difficult to cope up with. this results in hardware and software becoming obsolete in ridiculously short period of time. Default may arise in finding the right type of personal to handle the system and data. The use of electronic communication coupled with the centralized claims function result in a biased approach to the delivery of service.

The application of the system must be accompanied by a review of claims procedures and practices. This is also increase cost and work. A powerful, flexible, adaptable computer system is valuable but it is not a substitute to experienced people. Changes in technical and business environment will pressurized the need to upgrade the system and processes which entails expenditure. Security and safety of the data, information and the system are necessary to ensure the success, which is lagging today

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GUIDE LINES FOR CLAIMS MANAGMENT

GOOD PRACTICE 1: CLAIMS REPORTING

The insurance company draws the attention of the policyholder/claimant/beneficiary1 both when he/she signs a policy (for policyholders only) and when he/she reports a loss on his/her duties related to claim reporting which include: To try to minimize losses; To report claims in a timely fashion; To co-operate in the investigation by providing the company with all relevant information and, in particular, copies of official documents regarding the damage (accident, loss, etc.); To authorize the company to handle necessary inspections and assess the extent of the damage prior to any repairs or replacement; To ensure that the claims reporting phase proceeds as smoothly as possible, the insurance company sends to the policyholder/claimant/beneficiary within a reasonable period of time (beginning from when the loss is reported): An appropriate claim form (when the loss reporting is made in writing) for the type of policy The information necessary to help them to report the claim.

GOOD PRACTICE 2: RECEIPT OF CLAIMS BY

THE COMPANY

The company claim department and/or the intermediary (if applicable) are as accessible as possible for the claimant. If an intermediary is an initial contact for claimants, claims should be sent to the company claim department within an appropriate time period. The insurance company contacts the policyholder/claimant/beneficiary or sends an acknowledgement of receipt as soon as the claim is received.

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Depending on the context, one or all of these potential counterparts may be relevant. Subsequently, if it appears that the claim cannot be settled rapidly, the company notifies the policyholder/claimant/beneficiary and indicates that he/she will be re-contacted within a reasonable time limit.

GOOD PRACTICE 3: CLAIMS FILES AND PROCEDURES

Once a claim has been filed and, when applicable, after any additional documents that are required to process the claim have been received, the file established by a company contains the following documents: Claim filing number; Policy number; Name of the policyholder/claimant/beneficiary; Summary sheet showing development / review of the claim; Date of loss; Description of the claim; Information on claimants; Assessment date; Estimated cost of damage; Dates and amounts of payments; Date of file closure; Documents recording contacts with the policyholder/claimant/beneficiary.

GOOD PRACTICE 4: FRAUD DETECTION AND PREVENTION

In order to curb the growth of fraudulent claims and the rise in premium costs that results from them, companies take the following steps: They establish compliance programs for combating fraud and money laundering appropriate to their exposure and vulnerabilities.

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In the claim filing phase, they discourage fraudulent practices by making the policyholder/claimant/beneficiary aware of the consequences of submitting a false statement which in particular could be liable to prosecution) and/or an incomplete statement. Where legally possible, companies participate in relevant databases where claims susceptible to be fraudulent would be reported. Besides, companies provide their claims department staff with adequate training on fraud indicators.

GOOD PRACTICE 5: CLAIMS ASSESSMENT

Any method of taking into account specific factors such as depreciation, discounting or negligence on the part of the victim is clearly outlined in the claim file. Any loss evaluation methods used by the company are reasonable and coherent. The insurance company uses internal methods for assessing claim values based on the applicable law of the jurisdiction.

GOOD PRACTICE 6: CLAIM PROCESSING

A companys claim procedures are gathered together in a manual for internal use. At least, one staff member should be responsible for ensuring that the manual is kept up to date and additions/amendments are made when necessary. Companies claims department staff possesses proper qualifications. To this end, companies encourage ongoing internal or external training of their claim staff.

Regular internal audits are carried out for all claims not settled in their entirety. Internal audits apply to all stages of the claims management process. Peer reviews (where the claims department staff review each others files) could also be carried out. In case of claim settlement procedures involving several insurance companies, policyholder indemnification is a priority: the claim should be compensated in

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an appropriate time period while potential disputes between insurers are resolved at a later stage.

GOOD PRACTICE 7: TIMELY CLAIM PROCESSING

In accordance with applicable insurance law, companies may specify in the contract the most likely period of time for responding to correspondence from policyholders/claimants/beneficiaries. Once policyholders/claimants/beneficiaries have filed a claim: They are informed of the acceptance or denial of the claim within a reasonable amount of time after the receipt of the notification. The insurance company contacts any other company that is involved in the claim within a reasonable amount of time, and resolves inter-company claim disputes as quickly as possible. The insurance company endeavors to settle the claim as soon as possible and advises in writing the policyholder/claimant/beneficiary on the reasons for any delay.

GOOD

PRACTICE

8: COMPLAINTS AND DISPUTE SETTLEMENT

Complaints/Disputes: When the policyholder/claimant/beneficiary files a complaint, the company: Acknowledges receipt of the complaint within a reasonable period of time; Provides policyholders/claimants/beneficiaries with explanations on how their complaints will be handled and on the procedures to be followed; Provides information to policyholders/claimants/beneficiaries on internal and external Dispute settlement procedures;

GOOD PRACTICE 9: SUPERVISION OF CLAIMS-RELATED SERVICES

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The insurance supervisory authorities may conduct examinations on claims management services especially where problems are suspected. In these cases, the following elements are taken into account: Possible access to non-confidential claims data for all open and closed files within a specified time frame (e.g. for the current year and the two preceding years); Maintenance of sufficient and appropriate information on claims files; Use of the appropriate type of claim form for the type of insurance; Valuation of claims payments according to company procedures; Monitoring of the proportion of claims that result in litigation; Compliance with procedures for combating fraud and money laundering; Regular internal audit practices on claims files;

The claims management is very important for insurance. The guidelines are for proper management of claims in insurance sector. Information Technology (IT) plays an important role in the present insurance and reinsurance scenario. Its role is expected to be further strengthened in future.

CHAPTER 3

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MARINE INSURANCE CLAIMS MANAGEMENT

INTRODUCTION
The concept of Marine Insurance took birth in Italy and has been developed in England in the hands of Lloyds. The principles were codified in1906, and the Marine Insurance Act 1906, contains only those principles of that find application to marine insurance. In the absence of any legislation relating to marine insurance, the court in India had followed the principle of English Law and References were made to judgment of English cases. After Independence, the need to have a separate legislation was felt and the Indian Marine Insurance bill was tabled in 1959. The bill was finally passed on April 18, 1963 and operative as Indian Marine Insurance Act 1963. The Indian Marine Insurance Act 1963 is substantial reproduction of its English counterpart. The Indian Act is fine tuned to Indian condition and is a comprehensive legislation.

NATURE OF MARINE INSURANCE

The payment of insurance claims depends upon a number of factors of which the nature of the contract insurance and the risks covered are important. The knowledge of the insurance, class, concept and risk covered under individual policy will help the insured and insurer in the settlement of the claims. A Marine Insurance contract is an agreement where the insurer undertakes to indemnify the insured in a manner and to the extent agreed upon against marine losses, that is, losses incidental to marine adventure. A contract of marine insurance may be by its express terms and condition or by general trade practice and can be extended so as to include losses on inland waters or any land risk, which may be incidental to such voyage. Subject to a provision of act, every legal marine adventure can be a subject of marine insurance policy.

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Loss, in marine adventure, includes the damage as well as the actual loss of property arising from maritime perils. Maritime perils incidental or consequential to the navigation by sea, that is to say perils of seas, fire, war, rovers, brigands, seizure, capture, restrain, jettisons, barratry, and others, which may be designated in the policy. The expression perils of sea are used similarly as the expression danger on street. Thus, rain is not a peril of sea, but it is a peril on sea.

A marine adventure includes any adventure, in which Any insurable property, viz, ship, goods and other movables, that is exposed to maritime perils. The acquisition of any freight, commission, profit or security for any advances, loans or disbursements endangered by the exposure of insurable property to maritime perils. Any liability to third party that may be incurred by owners of insurable property by reason of maritime perils. It should be noted that what really insured is the pecuniary interest of the assured and in respect to the perils arising out of a maritime adventure, which will form the subject matter of insurance policy.

a) Insurable interest
The presence of insurable interest is essential to cover the in marine insurance. The payment of claim to the assured is dependent upon the presence of insurable interest of the assured in the subject matter of insurance. The clause which makes the policy itself proof of interest is called PPI; a policy without insurable interest is not necessarily a wager policy As per provision of Maine Insurance act, the essential feature of insurable interest are Every person who is interested in a marine adventure has insurable interest on insurable property. If a person stands in any legal relation to an insurable property, which is at risk from maritime perils, in consequences of which the insured might be benefited by the safety of insurable property. A defensible interest is also insurable as it the interest, which is contingent

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b) Principle of good faith

It has been thoroughly discussed that all the contracts of insurance are uberrima fides and require proper disclosure of the facts that can affect the risk pattern of the subject matter. In this regard full and fair disclosure should be made by the Assured and Agent affecting the insurance, including representation that is still to be made regarding the subject matter covered by the policy. Section 20 of the Marine Insurance Act states that Any circumstance, which reduces the risk. Any circumstance, which the insurer knows before hand or is presumed to known to insurer. Any circumstance, to which the information is waived by the insurer. Any circumstance which is not required to be disclosed by reason of expressed or implied warranty. Any particular circumstance which is not disclosed, be it material or not, in each case, a question of fact. The term circumstance includes any communication made to, or information received by the insured/assured.

c) The policy
Section 24 of the Act states that a contract of marine insurance will not be admitted as evidence unless it is embodied in MIP. MIP contains the following: The name of the assured The subject matter insured The voyage The sum insured The name of insurer

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d) Voyage clauses
A time policy made for any time exceeding 12 months is invalid Sec 28 of the Act, regarding the subject matter, contains provisions as follows: The subject matter insured must be designated in a marine policy with reasonable certainty The nature of the subject matter assured and the extent of insurance need not be specified in the policy Where the policy designates the subject matter of insurance in general terms, it shall be construed to apply to the interest intended by the assured to be covered. In the application of this section regard shall be had to any usage regulating designation of the subject matter insured.

e) Warranties
The term warranty in marine insurance is not the same as in other branches of the law of contract. The warranty in marine insurance is used to signify a condition precedent. It can be a condition which to be fulfilled by the insured or a limitation from doing something on the part of assured. A breach of warranty in insurance law is similar to a breach condition in branches of contract. A breach of warranty is excused as in section 36 of the Indian Act when By reason of change in circumstance the warranty ceases to be applicable to the circumstances of the contract or where the complain of warranty is unlawful Where the warranty is broken the assured cannot avail himself of the defense that the breach as been remedied and the warranty complied with before the laws Where it is waived by the insurer

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f) Subrogation
The doctrine of subrogation is necessary incident to the contract of indemnity and is applicable to contract of marine insurance. The important types of rights in which subrogation arises are the rights arising out of tort, contract or statute. As subrogation means substitution, where the assured himself cannot bring an action, the insurer also cannot claim anything by subrogation. Section 79 of the act deals with the insurer rights of subrogation. The section states Where the insurer pays for the loss, either of the whole, or in the case of goods or any apportionable part of the subject matter insured, he thereupon becomes entitled to takeover the interest of the assured whatever may remain of the subject matter so paid for, and thereby subrogated to all rights and remedies of the assured in and in respect of that subject matter as for the time of the casualty the loss. Subject to the provisions above, where the insurer pays for a partial loss, he does not acquire title to the subject matter insured, or such part as it may remain, but he is there upon subrogated to all rights and remedies of the assured in and in respect of the subject matter as from the time of the causality causing the loss.

THE RISKS COVERED UNDER MARINE INSURANCE

The risks that are covered under marine insurance policies have been classified in to three categories, better known as the Institute Cargo Clauses (ICC). These are called the ICC (A), ICC (B), ICC(C). The risks covered by the ICC(C) are Those were the damage of loss of the subject matter is attributable to the following reasons-

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Over turning Fire Discharge of cargo at the port of distress Collision of the vessel with any other object of the water The risk is covered under the ICC (B) are Damage caused by Entry of river, lake or sea water o the vessel Washing overboard Loss of package lost overboard Loss caused by lightning, earthquake The general average and salvage charges incurred to avoid the loss from any cause except for those excluded The risks by the ICC (A) are It covers all risks except those specifically excluded The general average and salvage charges incurred to avoid the loss from any cause except for those excluded Liability arising out of the contract of affrieghtment under both to blame clause.

TYPES OF MARINE INSURANCE POLICIES

The claims settlement depends upon the clause of the insurance and types of policy purchased. In the field of marine insurance a variety of policies are sold to meet different types of risks of the marine adventure. They not only cover the risk against the property, men and materials on the ship under voyage .

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As such claim settlement and management includes understanding of different types of policies warranties or conditions included in insurance policies.

Following are some of the marine insurance policies

a) Valued policy
A valued policy is one which specifies the value agreed of the subject matter insured. Subject to the provisions of the Act and in goods fails, the value stated in the policy in conclusive of insurable value of the subject matter to be insured, as between the insured and insurer, the question whether the loss is total or partial is not taken into consideration. The value fixed in a marine insurance policy is not conclusive for the purpose of determining whether there has been a constructive total loss, actual total loss unless the policy otherwise provides. Gross over valuation if not disclosed amount to fraud. The effect of valuation is merely to fix the value if the merchandize.

b) Unvalued policy
In an unvalued policy the compensation must be ascertained by evidence, whereas in a valued policy, the agreed value is conclusive. An unvalued policy is a policy which does not specifies the value of the subject matter of insurance, but the subject to the limit of the sum insured, leaves the insurable value to the subsequently ascertained, in the manner agreed upon.

c) Floating policy
The floating policy is dealt in SEC 31 of Act. This sec states that A floating policy is a policy which describes the insurance in general terms and leaves the mane of the vessels and other particulars to be filled. The declaration must be made in the order of dispatch

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The subsequent declaration may be made by endorsement Where a declaration of value is not made until notice of loss or arrival, the policy must be treated as unvalued policy

LOSS & ASSESSMENT IN CLAIMS SETTLEMENT

Loss occurs when there is damage to a person or property in which the assured has an insurable interest. Loss is compensated in terms of insurance policy only when the event occurs and the person or property insured are covered by a valid MIP. A valid MIP means that the policy is effective at the time of happening of the event. The treatment of loss is by way of indemnity. Loss in the case of MIP is explained by SEC 6 of Indian MIPA 1963. It states that: A loss may be a total or partial. A loss other than a total loss is partial A total loss may be either actual or constructive total loss. Unless and otherwise stated in the policy, insurance against total loss includes both constructive as well as total loss. Where the assured claims for total loss and the evidence proves only partial loss, the insurer is entitled to indemnify the partial loss unless the contrary is proved

SEC 60 of the Act defines the constructive of total loss. It state that There is said to be a constructive total loss when the subject matter insured is abandoned on account of its total loss being unavoidable or that it could not be preserved from actual loss without expenditure. In case of constructive total loss it is the voluntary session by the assured to the insurer of whatever remains of the subject matter insured, together with al proprietary rights and remedies

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It is used as equivalent to the notice of abandoned. It denotes cession of transfer which takes by operation of law.

TYPES OF LOSSES IN MARINE INSURANCE

a) Total Loss b)
Partial Loss

a) Total loss may be actual or constructive loss

Actual total loss

It occurs when the subject matter is destroyed or is damaged as to cease to be a thing of the kind insured where the assured is deprived of it irretrievably. When the subject matter is destroyed there is o actual total loss. If the vessel is destroyed beyond repair or damaged by fire or otherwise then it amounts to total loss.

Constructive loss
It says that it is type of loss where the actual total loss is unavoidable or the expenditure that has to be incurred exceeds the saved value.

b) Partial loss
Any loss other than total loss is partial loss. The losses under this category are partial average and general loss

CLAIMS SETTLEMENT IN MARINE INSURANCE

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Marian insurance claims are of indemnity in nature and require the insurer to analyze and answers such questions as what is the cause of loss or damage? And subsequently quantify it. The essence is that every claims adjuster in a marine insurance is required to answer the following questions What is the proximate cause of loss? Is the proximate cause an insured peril? Subject to above, what is the correct measure of indemnity?

The first question can be answered by the claims adjuster after having a look at the damaged goods and other things on which a demand for claim is made. For answering second question the claims examiner to be conversant with the scope of various insurance covers. Then the claims examiner has to quantify the loss so that a proper amount of indemnity can be proved for. When a claim is intimated the following should be checked for Whether there is a valid insurance policy in existence, Whether the salutary provisions of payment of the premium have been complied with, Reason for delay intimation of claims and Whether the date of insurance was in close proximity to the date of loss; if so this what kind of investigation dose this require. The insurer generally requires the following documents for the settlement of marine insurance claims. These are Original insurance policy/declaration under the policy duly endorsed by the claimant. Original or singed copy of the sales invoice along with the packing list. Copy of bill lading. Copy of bill entry. Counter guarantee or original cash deposit receipt with the letter of transfer, in case of general average.

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Where recovery from carriers is possible, a letter of subrogation duly stamped, Special power of attorney, where loss has taken place during loading or discharge

The claims settlement depends upon the clause of the insurance and types of policy purchased. In the field of marine insurance a variety of policies are sold to meet different types of risks of the marine adventure.

CHAPTER 4
FIRE INSURANCE CLAIMS MANAGEMENT
INTRODUCTION
Fire has been serving the human race and at the same time it is destroying both property and people. Because of threat of fire, insurance against fire was developed on lines of property and liability insurance. Many of these clauses, condition and practices used in other property and liability insurance today were first incorporated in fire insurance policies. Fire insurance has its origin in Germany where it was introduced in municipalities for providing compensation to owners of the property. The fire insurance in its present form started after the most disastrous fire in human history known as the Great Fire in London, which had destroyed several buildings. It drew the attention of the public and the first fire insurance commercially transacted in 1667. The Industrial Revolution (1720-1850) gave the much required impetus to fire insurance. The Nineteenth Century marked the development of fire insurance. The development of fire insurance in India has taken place on the foundation of fire insurance in England. Fire insurance business has been defined in section 2 of the insurance act,1938 as the business of affecting, other wise than incidentally to some other class of insurance business, contract of insurance against loss by or incidental to fire

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or other occurrence customarily included among the risks insured against in fire insurance policies.

FIRE INSURANCE
A contract of fire insurance is a contract of indemnity. The loss suffered by the insured is indemnified in case of fire. It does not extend to any loss caused by any other cause other than fire. Any fire caused during the explosion of a substance which comes into contact with fire with whatever the magnitude is not considered as fire in the popular sense of the word used in the fire insurance contract. It is a difficult task to identify and assess the fire caused by the explosion as the fire caused by ignition or not as such it is difficult and becomes a basis of argument to include it in the fire insurance contract.

RISKS COVERED UNDER FIRE INSURANCE

The loss or the damages in the following cases is covered by a fire insurance policy even though the loss is not directly caused by the fire or elements of the fire the ignition and combustion. Loss of property blown up to prevent fire from spreading. Damage to the property by water used for extinguishing fire. Loss to the property by the acts of fire brigade in controlling the fire. Damage by smoke and scorching caused by fire within the meaning of the policy. Loss to property removed from a burning building caused by rain, theft or damage during removal provided that the removal was justified and was made in an honest attempt to mitigate loss.

NATURE OF FIRE INSURANCE CLAIMS

The claims payment in fire insurance is subject to the presence of the essential elements of the fire insurance in the contract. Without presence of the elements, the claim made by the party can be repudiated. A fire insurance policy is a policy taken against the risks to save the property of the assured and hence it is a personal insurance.

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In case of actual loss, the amount to be paid depends upon whether it is constructive or total loss. The method in computing the amount of indemnification differs in the two processes.. A constructive total loss occurs when the subject matter insured is abandoned on account of its total loss being unavoidable, or that it could not be preserved from its actual loss without expenditure which would exceed its value in case that expenditure is incurred.

a) Warranties and conditions

A fire insurance contract, just as other insurance contract, has some special conditions and warranties and some conditions are generic, which find applicability in all insurance contracts. Some of these conditions and warranties relate to the questions of principles and others to details of practice. Warranties are undertakings by the insured or the insurers on certain state of affairs of the insurance contract or the business. The warranties may be of the intentions of the parties, date of the policies, genuineness of the facts relating to the contract, or commitments of the parties.

b) Alterations
The policy shall be avoided in case of material alteration of the facts of the insurance contract. The question what amounts to be material alteration depends on the type and class of individual contract. Removal of any clauses, already incorporated in the policy without the knowledge or the consent of the other party, changing the terms of risk insured or description of the property, changing the insureds or insurers interest in the contract is treated as alteration. But, any alteration caused to the contract by the operation of law is not an alteration and cannot be avoided. The alterations should be admitted by a memorandum signed by or on behalf of the insurer then only the alterations are admitted. .

c) Contribution and average

The right to Contribution and average is conferred upon the insurers by this condition. The condition brings out the ratable proportion of liability of the insurer in case of property is insured with two or more insurers .

d) Subrogation

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This condition is a necessary sequel to the principle that contract of insurances contract of indemnity.

e) Proximate cause
Proximate cause can be defined as the active or efficient cause that sets in motion a chain of events, which brings about result, without the intervention of any new force started and working actively from a new independent source. The practical effect of this principle is to keep the scope of insurance within the limits intended by the insured and insurer, when the contract was made. In the absence of this rule, every loss could be claimed by the insured and every loss could be rejected by the insurer. Thus, the principle serves not only to define the scope of coverage under the insurance contract, but also to protect the rights of the parties to the contract.

SPECIAL DOCTRINES
The payment of claims in fire insurances are subject to use of the special doctrines. The claims of fire insurance are settled by using the principles laid down by the special doctrines.

a)

Doctrine of reinstatement

Doctrine of reinstatement has very important role to play in claims settlement . the compensation payable for the damages of the fixed assets or the assets which can be replaced with ease and can be repaired with less efforts attracts the doctrine of reinstatement and are to be replaced or repaired instead of payment of the compensation. Reinstatement in its simple meaning is replacement. In certain circumstances and as per the clauses of the insurance contract, the insurer may be entitled to reinstate or replace the property damaged or destroyed, rather than pay a sum of money to the insured.

b) Doctrine of subrogation

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The principle of subrogation says an insurer, having indemnified the assured for his loss, is entitled to step into the shoes of the assured and may commence proceedings in the assureds, name against the third party who has caused the assureds, loss. The sum recovered may be then retained by the insurer. The concept of subrogation is applicable to all insurance contracts, which are contracts of indemnity, and does not apply to life insurance.

c) Doctrine of Contribution
Contribution is based on the principle of the indemnity. This doctrine is applicable for the property insurances. The doctrine is defined and explained in North British and Mercantile vs. Liverpool and London Globe (aka king and queen granaries) case as-contribution exists where the thing is done by the same person against the same loss, and to prevent a man first of all recovering more than the whole loss or if he recovers whole loss from the one which he could have recovered from the other, then to make the parties contribute ratable. This doctrine is applicable when the insured has insured property with more than one insurer and more than one risk or the similar risks for different amounts.

TYPES OF POLICIES IN FIRE INSURANCE

a) Valued policies
This policy applies to bullion, curious, work of art, monoscript, machinery and the like-subject to the valuation certificate being acceptable to the insurer. The amount of compensation on the case of loss is paid as per amount mentioned there in document.

b) Long term policies

No insurance may be granted for along period than 1 year except for dwelling as provide under the provision. Building in course of construction may be covered under contractors all risks insurance policy.

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c) Mid term cover

It not permissible to grant mid term cover fro earthquake or strong tempest flood etc. group of perils. Insurer must receive specific advice from the insured accompanied by payment of required additional premium. Cover shall commence 15 days after the receipt of the premium. The prescribed premium rates shall be charged on short period scale on full sum insured for the balance period i.e. up to the expiry of the policy There are some policies in fire insurance which are special to fire insurance contract by their very nature. These policies, special to fire insurance, are also called as special policies. These policies are explicitly applicable in case if ire insurance contract only.

These are
Floating policies Declaration policies Reinstatement policies

I.

Floating policy
It allows the insured to cover the stock stored in various godowns under one sum insured. Under this policy the insured declares the total value of goods in all godowns required to be insured but not separate values for each godowns. The policy can be issued only for stocks and not in respect of any immovable property. The policy cant be issued in respect of premises of transport contractor and clearing and forwarding agents whether in their own name or other party name II.

Declaration policy

Declaration policies are issued to take care of fluctuation of stock values. Under the declaration policies the insured has to fix a provisional sum insured, which represents the highest value of he stocks at any point of time during the policy period.

III. Reinstatement value

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Reinstatement value insurance may be granted on buildings, machinery, furniture and fittings only subject to the terms incorporated in the policy

CLAIMS DISPUTE AND PROCEDURE

The management of claims is considered as the most important factor in an insurance contract. The efficiency and fairness with which claims are handled by an insurer decides the customer satisfaction. A large number of satisfied customers will recommend the insurer to others and thus will result in a wider customer base . The claims procedure in a normal situation involves The notification of transfer of insured to the insurer, completion of claim forms providing evidences of the loss and receives a cheque. But most of the times this procedure may not function in a smooth manner. In those cases the insurer needs either investigation by professional surveyors or other special procedure to solve the disputes. An efficient claim settlement requires a thorough knowledge of various laws, principles and practices relevant to insurance contracts.

On receipt of intimation of claim the first is to verify that Whether the policy is in force The peril covered under the policy are the same as reported due to which the loss occurred The interest involved is the same as referred to in the policy The property effected and location involved are both covered under the policy

If the above conditions are satisfied then the registered and a claim number is allotted which is to be used as reference for any future correspondence. After the registration of claim, a claim form is issued to insured for completion and return. The following information is required by a claim form-

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Name of the insured policy number and address Date time cause and cir cum stance of fire Details of damaged property Amount claimed after deduction of salvage value. Situation and occupancy of premises in which the fire occurred . Capacity in which the insured claims, whether as owner or mortgagee or the like.

The procedure that is usually followed for the settlement of claims is Determine the amount of loss. Determine the method of settlement. Explain the decision to relevant parties. Generate payment Complete relevant documentation

The procedure that is to be followed by the insured incase of occurrence of loss which is covered under the policy, that is The insured/ assured sends and application to the insurer notification him of the loss, along with the documents in support of loss. The assured also sends a copy of FIR, obtained from the police station where the assured immediately after the occurrence of the event made the complaint.

The insurer sends acknowledgement to the assured stating the receipt of the application of loss and stating that he will carry out necessary enquiries into the matter and get back to the insured.

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The insurer first look whether the loss is covered as per the policy document or not If the loss is covered as per the policy document the insurer with the help of loss surveyor and loss assessors tries to find out the extent of the loss and whether the loss is partial or total in nature.

With the opening up of private sector fire insurance is also bound to see competition. Today fire insurance policies are coupled with other attractive features such as burglary, riots, theft etc. to make it more comprehensive in hand of users.

CHAPTE R5 MOTOR INSURANCE CLAIMS MANAGEMENT

INTRODUCTION
The important classes of insurance business are life and property insurances. Any insurance policy where the subject matter is other than the life cover comes under general insurance. The motor vehicle insurance policy is in the ordinary course, a combination of personal and property insurances, as the both the assured , the

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third-party and the property damaged due to motor vehicle is compensated. A motor vehicle insurance policy insures (i) damages of motor vehicle, its accessories, (ii) death or injury to the assured himself or others and it also insures the motor vehicle against (iv) the risk of liability of injury to the third party. Motor vehicle insurance is governed by the motor vehicle act, 1988. This act has a long history. Initially it was known as the motor vehicle act, 1939. This act had a largely reproduced the provisions of the English law stated in the road traffic act, 1930 and 1934 ,the road transport lighting act, 1937 and the third parties act,1930, which is now consolidated in road traffic act, 1960 and replaced by road traffic act,1972. A new concept called Liability without fault was introduced under the Amending Act, 1982. Thus the entire act was repealed and replaced by the current motor vehicles act, 1988. Like, comprehensive motor car insurance policy indemnifies the assured against the occurrence of the events like Accidents Fire External explosion Lighting Frost Burglary Malicious acts, etc

MOTOR VEHICLE INSURANCE

A motor vehicle is defined as a, mechanically propelled vehicle adopted for use upon roads where the power of propulsion is transmitted thereto from an external or internal source and includes a chassis to which a body has not been attached and a trailer but not a vehicle which is running on fixed rails.

SETTLEMENT OF CLAIMS UNDER MOTOR VEHICLE INSURANCE

The ever increasing numbers of claims are related to the number of ascendant caused, which has the ultimate relation to the increasing number of the vehicles

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used. The presence of a vehicle has become symbol of the status. The motor vehicle insurance forms major part of the insurance business and also claims under this class or more. The payment and settlement of claims under motor vehicle insurances are directly related to the following concepts. The settlement of claims and the quantum of the compensation payable are dependant on these factors.

A)

Types of the Policy

The motor vehicle insurances include the insurance policy as per the procedure laid down in the insurance act 1938. The other important element is that the policy should be valid at the time of accident. The policy should be issued by an authorized insurer. An authorized insurer is one defined by the insurance act, 1938. The policy should be issued in favor of the person by whom it is affected. It should include a certificate of insurance as defined by the act. It should be in the prescribed form of format. It should contain the prescribed information and conditions of the subject matter of insurance, the risks covered under the policy, and the description of the vehicle. It may contain further information as agreed upon by the parties. It should state whether the insurance is limited to third-party insurances or the comprehensive insurance covering the vehicle and third-party damages.

b) Risks Covered
A motor vehicle insurance policy has all the elements of general insurance contract, viz. , indemnity , insurable interest, uberrima fides and the like. Thus , a motor insurance policy serves three purpose- (i) it covers the damage caused to property, (ii) it covers the loss of life or (iii) and injuries to a person and it also covers the damage caused to life and property of the third-party. It covers (iv) the loss of a motor vehicle from fire, explosion, accident etc. not only this , it also covers (v) the loss of life of the driver and the third-party

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c) Premium
Any insurance policy cannot be affected until the premium is paid. The cover note and the policy are not effective until the premium is paid. The question whether the premium has been paid has to be established by the claimant.

d) Warranties
Motor vehicle policy has some warranties the non- compliance of which by the insured would exempt the insurer from their liability. An important warranty relates to the age and the condition of the vehicle. it is important to the insurer find out whether the car is more liable to the accidents and breakages than any other vehicle . a false statement in this respect would make the contract void even though it was made by inadvertence. As in the case of marine insurance there is implied warranty that the vessel is seaworthy., where there is no such warranty in case of motor insurance policy. The insurer can , however, the liability by an express warranty in the policy to any accident that the vehicle is not roadworthy and was unsafe for driving .

e) Driving License
A driving license is an essential requirement to a motor insurance policy. Holding a driving license and or being a qualified and competent driver is one thing and being employed as a driver is another thing .a person who does not having a valid driving license is not eligible to claim indemnity from the insurer.

f) Permit
A permit is an approval/ permission granted by the government authorities for a particular purpose. A permit for a vehicle means that it is permitted to ply on such routes and with such load and subject to such other conditions as specified in the permit. Permit is granted for vehicles used for commercial purposes. The permit is for a specified period of time and is renewable. It is the statutory authority to take into consideration all the relevant factors which considering application for grant of licenses.

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g) Res Ipsa Loquitor

Res Ipas Loquitor means that where there is sufficient evident and the happening of the accident speak of itself. The maxim of Res Ipas Loquitor is applicable in cases covered by the Fatal Accident Act. The meaning of word negligence should be understood in the light of the aforesaid maxim for proving such negligence. A mere understanding of the event that the cause of the event is unknown does not prevent the plaintiff form claiming damages. If proper inference can be drawn from the circumstances of the event, which can bring out a conclusive proof as to the negligence of the driver.

For proving the tortuous act of negligence various factors need to be taken into consideration. The basic elements of this tort are three in number. They are Act of omission on the part of defendant , Intention of negligence or the breach of the duty on the part of the defendant, Damages resulting to the plaintiff by not so remote acts of the defendant.

h) Passenger Traveling By a Goods Vehicle

The task in respect of the owner of the good traveling in goods vehicle is required to be compulsory covered by the insurance policy and the insurance company is liable to pay such compensation for a claim arising out of an injury to such passages. If the driver of the goods vehicle had collected fares from the passengers traveling by a such a vehicle then in the case of accident the passengers have the right to claim and the owner of the vehicle can ask for indemnification in contract of employment in a vehicle which is compulsory insured dies or suffers a bodily injury makes the insurer liable for indemnification of such injuries of the death as the case may be.

CLAIMS UNDER MOTOR VEHICLE INSURANCE

The motor vehicle insurance is a combination of property and personal insurance. It insures the damages to motor vehicle, its accessories, liability for damage to property, liability for death and disablement ( whether temporary or permanent),and the risk of injuries or death of any third-party ( who may not be a party to contract). Thus broadly the motor vehicle insurance covers the following three aspects.-

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Property accident aspect Comprehensive insurance. Personal accident aspect - Comprehensive insurance Third- party liability Compulsory insurance

Comprehensive insurance
a) Property accident
If a motor vehicle is insured, the insured will be indemnified for any kind of loss or damage caused it by accident. The contract being one of the indemnified, the insured is entitled to indemnity only and that too in the manner as specified by the policy. He can get medical expenses also, but subject to a limit. If the insured car suffers damage the insurer is entitled at his option to replace or repair the car any part of the insured car may amount of the loss damage is not exceeding the amount insured or the vehicle at the time of loss whichever is less.

b) Personal accident
Besides insuring the personal safety the extension clause indemnifies the insured for the injured caused to him whilst he is driving motor car not belonging to him or hired by him and any person driving the insured car by the general knowledge and the permission of the assured. Further paying the extra premium, coverage can be had for the risks covering wife of the assured child of the assured other relatives as specified earth quacks floods

Compulsory insurance --Third party liability

a) Insurable Interest
A motor policy may extend the right and indemnity to any person who is driving the vehicle of the insured with the knowledge and consent. It may be noticed that

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such a person is not a party to the contract and cannot enforce the policy for his benefit. Such a clause confers no right on such person unless there is intimation on the part of the assured to create such a trust. The nature of third party insurance derives its effect from the fact that in the law of torts when a driver drives a vehicle and causes injuries to a third part. The driver might be a servant of owner of the car. Third-party insurance is compulsory in case of motor vehicles. The contract in this type policy, like other insurance contracts, is one of the indemnities. The objective in this type of policy is to protect the insured against the liability to third parties arising out of an accident caused by the use of a motor vehicle on a public road and hence it is made compulsory. The persons required insure are One who use a motor vehicle except as a passenger, i.e., the driver of the vehicle, and One who causes or allows any other person to use motor vehicle. He may be the permanent owner of the vehicle, one who is in possession of a vehicle under a contract of loan or hiring, or even owner in due course.

CLAIM PROCEDURE
The insured under obligation to follow all procedures of giving notice to the insurer relating to The place of accident Time of accident Cause of accident Particulars of insurance coverage.

All the precaution s to be taken to mitigate the loss should be taken by the insured and insurer as to follow the procedure that follows like Appointment of surveyors providing the claim is more than Rs. 20,000 Assessment of the loss by primary enquiry

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Analysis of the cause of damage Verification of the facts with those attributed by the policy documents. And if the insurer satisfied with the claim made by the beneficiary or insured or the third party, it can make a decision and communicates its acceptance or rejection of claim. If it is rejects it should mention the reasons for the rejection. The insured after receiving the communication of acceptance or rejection, if not satisfied can file a petition with the claims tribunal.

The increasing population and the ever rising use of motor vehicles have made necessity of a comprehensive legislation inevitable. A motor vehicle in public place is a lethal weapon. Rising number of accidents due to use of motor vehicles has created hue and cry. The Motor Vehicles Act 1988 has been instrumental in achieving its avowed objective of providing fast claims management

PRIMARY DATA

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NAME: COMPANY: -

K. S. KRISHNASWAMY (ASSISTANT MANAGER) NEW INDIA ASSURANCE COMPANY

Q1)

The claims incurred under Marine, Fire and Motor insurance from the year 2005-2008?

Ans

MARINE - Rs4000cr to Rs5800cr, FIRE - Rs4000cr to 7700cr MOTOR - Rs7500cr to Rs8000cr

and

Q2)

The premium earned under Marine fire and motor insurance from the year 2005-2008?

Ans

MARINE Rs 4300cr to Rs7000cr FIRE - Rs3780cr to Rs8000cr MOTOR Rs7500cr to Rs9900cr

and

Q3)

In which area claims is maximum? Marine, fire or Motor?

Ans

The claims are maximum in Motor insurance sector

Q4)

How many days are required for settling the claims under Marine, Fire, Motor?

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Ans

Maximum of 30 days depending upon the complexity of claims and

documents made available.

Q5)

The procedure of claims management for Marine, Fire, Motor

insurance

Ans

First a claim is intimated. surveyors

Then we register it. Appointment of surveyor, Once claim is approved,

report with assessment details, based on survey report the

insurer decides about the admissibility of claim. disbursement made.

Q6)

Does your company possesses separate machinery for claims

management?

Ans

Yes.

We have separate Departments like Fire, Marine, Motor and

Miscellaneous for handling claims

Q7)

Documentation is done through technology or the traditional method of sending letters?

Ans

Of late through technology. However, traditional method of sending letters is also being followed based on clients requirements.

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Q8)

How technology has helped in claims management? Cite 1 example

Ans

Because of technology, communication has become easy and speedy due to which overall response time is greatly reduced and some claims are settled within 2 days. Like recently, Claims Hubs have been opened in all major metro cities which is exclusively catering for claims with up-to-date software facilities.

Q9)

What are the changes that your company has made in the claims management system?

Ans

Company has started using latest technology for the last 2/3 years and our experience is very good. Formation of a separate cell for claims has

enabled our company in speedy settlement of claims.

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ANALYSIS OF PRIMARY DATA

NEW INDIA ASSURANCE COMPANY

In 1919 The New India Assurance Company Ltd was first incorporated in Bombay, now known as Mumbai in India, initially as composite company for both life and general insurance business. As of 1956 New India Assurance converted to an Exclusive General Insurance Company and today is the leading worldwide general insurance brand catering to the communities of 27 countries with a large network of offices staffed by committed and enthusiastic workforce that aims to please. Till now there has been a tremendous increase in the premium and the claims amount of the company. The statistical representation of premium structure show the earnings of he company touching the sky.

A) PREMIUM
12000 10000 8000 6000 4000 2000 0 2005-2006 2006-2007 FIRE MARINE 2007-2008 MOTOR

From the above it is clear that the premium earned in motor insurance sector is highest than others. The New India Assurance Company is expecting the growth in premium in next 3-4 years nearly Rs 16000.

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B) CLAIMS
The Company has also incurred claims in past years. Through the analysis it can be seen that the maximum amount of claims are incurred in Motor Insurance.

8000 6000 4000 2000 0

2005-2006

2006-2007 FIRE MARINE

2007-2008 MOTOR

From the above graph over the past three years claims in Fire has increased from nearly Rs4000cr to 7700cr.Marine insurance has also seen a marginal increase in the claims that is from Rs4000cr to Rs5800cr and last but not the least there is a little but noticeable increase in Motor sector that is from Rs7500cr to Rs8000cr. But if the comparison is made between three sectors Motor Insurance field has maximum amount of claims

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C) DAYS TO SETTLE THE CLAIMS:New India Assurance Company with it sophisticated technology settles the claims with in 30 days depending upon the complexity of claims and documents made available.

D) THE PROCEEDURE FOR CLAIMS MANAGEMENT:-

First a claim is intimated

Then we register it

Appointment of surveyor, surveyors report with assessment details

Based on survey report the insurer decides about the admissibility of claim

Once claim is approved, disbursement is made

The process starts with intimating the claim to the insured which then gets registered by the insurer in the claims book where all the claims are recorded. After the intimation of claims the Company appoints a surveyor who access the place of incident and accordingly prepares his report in which al the details of incident is mentioned i.e. amount of loss, date and of time loss, the reason behind the incident etc. Based on the survey report the insurer decides about the admissibility of claim. The information is passed on to higher level where scrutiny of the insurers required

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documents is done. Then it is intimated to insurer. Then once claim is approved, disbursement is made.

E) TECHNOLOGY
The adaptation of technology has made the company to see the sky. Because of technology, communication has become easy/speedy due to which overall response time is greatly reduced and some claims are settled within 2 days. E.g. Recently, Claims Hubs have been opened in all major metro cities which are exclusively catering for claims with up-to-date software facilities. Of late, through technology. However, traditional method of sending letters is also being followed based on clients requirements. IT components-servers, storage, application and support are scalable. Distinct features of the partnership include flexibility of the scale-up model embraced, decision support, data analytics, data security, privacy of patient information as per HIPPA standards.

F) CHANGES MADE TILL NOW..

Company has started using latest technology for the last 2-3 years and our experience is very good. Formation of a separate cell for claims has enabled our company in speedy settlement of claims. Claims are settled within a weeks time even for high value claims. It would also be possible for us to get the information on policies/claims lodged anywhere in India through the latest software. August month of every year has been declaring a Claims Clearance Month when Third Party Damage Claims were also encouraged to be settled

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through Lok Adalat and Conciliation Committee in order to minimize compensation and interest outgo

CONCLUSION

Claims management although is complex in nature but it is important for the survival of an Insurance Company. The New India Assurance Company has its claims management system in place which helps them to settle the claims faster and quicker. It is considered to be one of most efficient Insurance Company in India.

From the analysis it can be seen that the premium earnings have been increasing from past three years. The claims incurred also grown in three years. The area in which maximum number of claims is reported is Motor insurance field. As the company started progressing the days needed to settle claims got reduced. Previously it was 14 months but as of present situation it only 30 days.

The process of claims settlement has become simpler. New India Assurance Company has separate machinery for claims management which consists of detailed information on the claims. Information Technology has made he Company see a drastic change in the method of working of the company. Documentation is done through technology rather than sending letters. The communication has become easy and speedy due to which overall response time is greatly reduced and some claims are settled within 2 days. Formation of a separate cell for claims has enabled our company in speedy settlement of claims. These are some of growth that has happened from past 2-3 years.

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Lastly New India Assurance Company has ushered in all the field is it in premium earnings or IT or claims settlement or claims processing or claims management.

RECOMMENDATION

Following are the recommendation based on the study

A) Focus has to be shifted from Claims Processing to Claims Management. B) Introduction of standardized billing format C) Standardization procedures D) Reducing the claims processing time from one week to a day E) Cost leadership implies tight control systems, minimization of overhead costs, and F) pursuit of economies of scale. of rates for different ailments and

PDA (Personal Digital Assistant) enabled claims assessment and reporting for speedy settlement of claims

G) H)

Out sourcing of claims management. Tie up with IT companies that helps in adopting in newer technology which will reduce the claims management period and the cost.

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BIBLIOGRAPHY
The Project has been successfully completed by compiling information from various sources like books, internet, and etc. Here have been mentioned below.

A)BOOKS:
1) Authors: K Jawaharlal Seethapathi, A V Narsimha Rao and U

CLAIMS MANAGEMENT VOL I Published by: ICFAI PRESS

2) Authors:, K Jawaharlal

Seethapathi,

Narsimha

Rao

and

CLAIMS MANAGEMENT VOL II Published by: ICFAI PRESS 3) Authors: A Sundara Siva Rao and Zaheda Majid Khan CLAIMS MANAGEMENT VOL III Published by: ICFAI PRESS 4) Authors: Jawaharlal K Seethapathi, A V Narsimha Rao and U

CLAIMS MANAGEMENT VOL IV Published by: ICFAI PRESS

B)

WEBSITES:

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1.

http:// www.irda.com http:// www.insurance.tech.com http:// www.gicindia.com http:// www.nia.co.in

2. 3.
4.