I still remember one of the Claims Presentation I had attended way back in 2005. The first slide was “Pay the Claim, if you Can”. I am also a firm believer in this approach. As an Insurance Professional with more than 25 years of experience, my approach to the Claims is simple – “if the Subject matter is insured, premium has been received and Insured has suffered a loss. All things should be effectively managed to indemnify the Insured on immediate basis”. “Future Xpress +” by Future Generali is one such good initiative, which enables you to get your Claim amount before your vehicle is repaired.
Time has come to move forward from the present system of Claims Handling to Claims Management. Around 15% General Insurance policies result in claim and this 15% define the quality of Services provided by our Industry. General Insurance being a market driven Service Industry, we cannot afford any deficiency in Services during the Claims process.
Realty Check :
IRDA guidelines on “Protection of Policyholders interest” stipulates certain obligations on the part of Insurance company including time limit for claim settlement.
Delayed claim settlement generally result in higher claims cost & higher dissatisfaction. A dis-satisfied customer is a bad publicity.
Unpleasant decisions conveyed timely with proper justification of the decision is better than procrastination as it is bound to create more problems and unpleasant situations at later stage.
Proper Underwriting is essential as Defective Underwriting results in complication at the time of settlement of claims.
Out of the total outgo on account of claims, it is estimated that around 10 to 15 % is because of leakages, frauds and inflated claims. Reduction in such cases will result in more competitive pricing for the Customers but it should not create more hurdles for genuine Claimants.
Provision of Outstanding Claims is an important part of the overall claim management process. A study in USA of the insurance companies going “bust”, 34% (highest) was on account of insufficient reserve.
Solvency of Insurance Companies is another aspect, which determines the Claim paying ability of Insurers.
Way Forward:
Risk Inspection in Property Insurance must be mandatory prior to acceptance of risk as it serves as an effective loss control measure.
Underwriting and claims department should work in close coordination. Quality Check of all documents being issued should be mandatory for all Insurers.
Analysis of claims trend can help to timely initiate remedial action. e.g. restricting a particular class of business.
Every Insurer must analyse the average time taken for the settlement of Claim with other Insurers.
Comparison of Claim Settlement Ratio with other Insurers can assist us in analysing the efficiency of our Claims process.
Comparison of Average Claim size with Other Insurers also assist us in checking the leakages, frauds & inflated claims. AOG Claims & One-Off Claims should be excluded from the purview at the time of Comparison.
Annual Audit report of all Insurers should focus on correct provision for outstanding Claims.
Regulator should publish “Insurers Solvency Ratios” on regular basis as it will create better Client awareness and ensure survival of better players in the market.
Optimum use of IT enabled Services will be game changer in the days to come as it will drastically reduce the visit of Claimants to the Office. Few Companies like ITGI are effectively using IT enabled services for Claims Intimation, providing update of Claims Status & final Claim Calculation. The present low productivity paper intensive system must be replaced with IT enabled Services to keep up with the modern day requirement.
Claims Department needs Competent and well trained Staff with right Attitude to ensure treatment of Claimants with empathy and settlement of Claims gracefully.
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