The actual procedure of handling claims varies according to the class of business, the type of cover and the amount of loss. the points discussed below are the the main steps in the claim procedures.
Claim Notification
This is the reporting of the claim by the insured to the insurer. It is a policy condition that all losses must be reported to the insurers without delay.
A claim can be reported by:
- Telephone
- Email – recommended as it acts as an evidence that the insured reported the claim
- Text messages
- Visiting the insurers offices
Completion of the Claim Form
After the insured has reported the claim, a blank claim form is issued to the insured for completion. The claim form, which is in form of a questionnaire, is designed by the insurer for the purposes of extracting details surrounding the loss from the insured. The legal duty of disclosure requires requires the insured to disclose all material facts pertaining the loss event.
When a claim form is completed, the details are compared with the proposal form and the policy document. If it is evident that the insured did not disclose some material facts, the insurer can avoid the claim or cancel the contract.
Claim Registration
If the details in the claim form are valid, the insurer will open a claim file, the details in the claim file include:
The name and the address of the insured.
- Claim number
- Policy number
- The period of insurance
- The sum insured or limits of liability
- The estimate of loss, or claim reserve
- Other insurances, if any
In the claim form, the insured will give an estimate of loss, the amount being claimed determines how insurers will deal with the claim. For small claims, it normal for the insurer to to appoint a claim official to assess the extent of the loss.
Claims Review
This involves analysis of the claim by the insurer. They will analyze information provided in the claim form against that which is provided for in the proposal for to confirm whether the insurer is liable.
Claims Assessment/ investigation
For large claims, it is normal for the insurer to appoint a specialist to advise them on the cause and extent of the loss and the best method of indemnifying the insured. The main experts who could be engaged are discussed below.
Loss Adjuster
For large claims the insurer will engage the services of a loss adjuster. Loss adjusters are independent claims specialists who take instructions from the insurer. They only take instructions from the insuring public if there is a special arrangement between the insurer and the insured, where the latter appoints a loss adjuster in case of a loss.
Loss adjusters have a distinct advantage over most claims officials because they deal with claims from different insurers making their experience quite wide. Their main job is to investigate the cause of the loss in a bid to ascertain policy liability. In the process, they confirm that policy conditions and warranties are complied with and advise the insured on the way and means of reducing a loss.
In summary, loss adjusters:
- Investigate the cause of a loss
- Report upon circumstances of a loss, nature and extent of damage
- Advise on the mitigation of a loss, protection and disposal of salvage
- Advise on, procedures to be followed and actions to be taken.
- Check whether the conditions and warranties are observed
- Advise on interpretation and of wordings
- Collect evidence and advice on subrogation rights
- The sums insured
- Advise their principals upon their policy liability
- Recommend amounts payable
Motor Assessors
Motor assessor are appointed by insurers to assess the extent of damage to motor vehicles. Although motor assessors are independent, some companies employ their own motor assessors to deal with motor claims. They are mainly retained in motor policies where the cover is comprehensive to assess the extent of damage advice on the method of settling the claim. The ultimate decision lies with the insurer. As experts, they assist insurers by detecting exaggerated claims, advice where the damage is not consistent with the insureds statements and must also work within timelines.
Investigators
Investigators are mainly appointed in liability claims by insurers to investigate independently circumstances surrounding deaths of injuries to third parties. They do not restrict themselves to insurance matter to insurance matters only, for they also deal with matters such as bank fraud, and marriage cases. Like loss adjusters, they prepare reports to their principals. They also be called as witness in courts of law, because their reports which are normally very detailed, can be used in courts.
Claim Negotiation
When the insurer receives reports from the experts, they ascertain whether they are liable.
They will also compute the amount that is payable to the person making a claim. Disputes may arise with regard to liability and quantum. This will require the parties to engage in negotiation to resolve the dispute.
A claim may be invalid if:
The peril causing the loss is not covered under the policy
- The insured cause the loss deliberately
- It was discovered the insured that the insured colluded with others to occasion the loss
- The insured did not suffer any loss, for example where the insured had sold the property
- There is non- compliance with policy conditions and warranties
- The insured had no insurable interest in the subject matter of insurance
- The insurance cover was invalid and does not cover the specific event causing the loss.
A claim valid if:
- The peril was covered under the policy
- The insured had insurable interest
- All policy conditions and warranties are complied with
Claim settlement
Once loss adjusters have completed their investigations, they issue reports to insurers for settlements
Methods of settling claims
Claims should be settled efficiently and speedily as a way of building confidence in the company.
Once payment has been agreed upon, the insurer will make payment either by:
- straight forward payment to the insured in settlement of the loss
- payment to another interested party where there is financial interest, e.g. mortgagee or hire purchase company.
- To third parties in liability insurance claims
Reinstatement of the property
This applies where when there is a reinstatement clause in the policy. It applies mostly in fire insurance. It may be used where the insurer suspects fraud which they are unable to to prove.
Replacement “as new for old”
As per the policy terms, New for Old is mostly used in household claims but insurers may also agree to replace accident vehicle, which is not more than two years old from the date of manufacture. Others will put a condition that the insured must be the first owner. Replacement also applies to glass insurance and windscreen.
