MOTOR INSURANCE

CLAIMS

Claims

· What is a Claim?

· A Claim is a request for reimbursement (or compensation) by the insured

and addressed to the insurer.

· A claim can be made (i.e. notified) without an insured loss event is

happening. In such a case, the claim would be invalid.

Claims…

· What is a loss?

· A loss is the occurrence of an insured event, such as an overturning of

the insured motor vehicle which results in financial disadvantage for the
insured.

· It is the time where the value of the cover and the claims service is put in
to test.

· Motor insurance, particularly private motor, is sold largely by price

nonetheless a bad experience of claims handling can affect the decision of
insurers whether or not to renew with their current insurer.

Claims…

· The roles of the claim department are to:

· provide a swift, efficient and technically knowledgeable claims service

· indemnify the policyholder in accordance with the cover purchased

· ensure that only valid claims are paid

· consider and if appropriate, deal with third party claims whilst protecting
the policyholder's interest

· protect the central pool of premiums against overpayment, fraud and

expenses incurred due to inefficient claims -handling processes.

Claims process

( 1 ) Event giving rise to the claim;

( 2 ) Claims Notification;

( 3 )Claim Review;

( 4 )Response to Claimant;

(5 ) Claims Investigation;

( 6 ) Claims Negotiation;

( 7 )Claims Settlement;

(8 ) Claims Recoveries;

(9 )Review of Performance

Claim process
Claims Process:

The various stages in the claim process are:

( 1 ) Event giving rise to the claim:

· As stated above this may or may not be an insured loss event.

Claims…

( 2 ) Claims Notification:

· This is the reporting (in the prescribed format, e.g. by filling in the claim
form supplied by the insurer) of the claim by the insured to the insurer.
Ideally, the claim details will be sufficient to meet the needs of the insurer and
all appropriate documentation will be enclosed.

· The purpose of this condition is to enable the insurer to take steps to

investigate claims in order to minimize its exposure under the policy

Claims notification

· It enables loss adjusters and lawyers to be appointed and

generally allows the circumstances to be investigated so that
detailed evidence is not lost.

· It also gives insurers the opportunity of investigating possible

recoveries from third parties (the third party refer to anyone
other than the insured who is involved in a loss event).

( 3 )Claim Review:

This involves the analysis of the claim by the insurer in the light of such
things as:

· the appropriateness of the amounts claimed

· the proposal form, e.g. whether the claim contradicts earlier statements.

· the exact terms of the policy

· legal requirements

Claims review

· economic considerations such as the internal cost of pursuing

extra documentation of entering in the correspondences with
the insured compared to paying a small claim

· market practice

· As can be seen, some factors may conflict with each other such
as the exact term of the contract and economic considerations;
legal requirements and market practice.

· Claims review is therefore a key stage in the process.

( 4 )Response to Claimant

The initial response from the insurer to the insured may be only an
acknowledgement and a request for further information.

Depending upon this further information, the insurer must then convey their
"Claim decision' which can be one of three choices:

payment, i.e. acceptance of the claim in broad terms;

Response to claimant
 · negotiation, i.e. the offer of a lower amount than that claimed or
an offer to enter into negotiations with the insured with no
amount initially named. In this situation, liability is accepted
by the insurer and the quantum of the claim is the only point in
dispute

· rejection, i.e., liability is not accepted by the insurer.

Response to claimant

· In the case of both negotiation and rejection, the full reasons for the
decision should be stated.

· This allows the insured to understand the decision and to challenge it

if the arguments are flawed.

(5 ) Claims Investigation

In many cases, such as motor accidents, the insurer will not be in a position
to make a claim decision before the full facts surrounding the claim are
available.

In order to establish such facts, it may be necessary to instruct an internal

claims inspector to under take further investigations or they may appoint
loss adjusters who undertake an independent investigation into the claim
and write a report of their findings for the insurer.

(5 ) Claims Investigation
 · Once the insurer has finished their investigation they are expected to
send their response to the claimant.

( 6 ) Claims Negotiation

· Armed with the full facts of the case, the insurer may decide that a
lesser amount should be offered than that originally claimed. For
example, the insurer may believe that part of the damage to the car
was caused prior to the occurrence of the insured event.

( 7 )Claims Settlement

This stage may quickly follow the response to the claimant in the case of
simple claims, liability for which is immediately accepted by the insurer.

On the other hand, claim settlement may be delayed for some time in the case
of claims where liability is initially denied, then subsequently negotiated.

(8 ) Claims Recoveries

· Following payment of the claim, it is often the case that the insurer will be
able to recover part of the outlay from other sources:

· From third parties considered liable for the insured event by exercising
their subrogation rights

· from reinsurers if the claim fall above the priority.

· Review of Performance

· This will only be carried out in respect of sample of claims, plus any large
or particularly problematic claims. The idea is to ensure that:

· Standards of service are being maintained

· Internal decisions were correctly made

· Any reserves still attaching to claims reflect the current positions of the
claim in line with the corporate reserving policy

· To see if anything can be learned from the experience.

Own Damage Claims

· It is in this area where claims service is at its most critical. Vehicle, some
of which may be used for business, may be out of commission. In any
event, policyholders do not want their expensive vehicles to be unsightly
due to body damage and will expect speedy repair or replacement.

· The repair process starts with one or more (other than the Company's
Survey) repair estimates from local repairers.

Own Damage…

· Approved Repairers

· Insurers have always been aware of the repairers in any locality that
are likely to give a quality and speedy service at a reasonable price.

· They will also know which repairs can be trusted.

· Over the last decade or so insurers have endeavored to formalize this

situation by providing recommendation and/or approval to a panel of
repairer.
 Own Damage…

· In order to assist in their marketing and to enhance their credibility,

repairers are keen to obtain approved status from as many insurers as
possible.

· However, in many ways a blanket approach does not provide the true
benefits that can be obtained from such an arrangement.

Own Damage…

· The benefits of working with approved repairers are:

· a close working relationship

· agreed price and standards

· guaranteed workshop availability

· guaranteed courtesy cars

· a steady flow of work for the repairer

Own damage…

· Panels of Approved Repairers

· The size of the panels of repairers is critical.

· There need to be sufficient numbers and geographical spread in

order to satisfy the needs of the insurer's portfolio of motor
policies.

· If there are too many repairers on the panel, then the work will
be dissipated and the benefits or volume business will be lost.
 · Repairers must work to certain standard and possess all essential
equipment in order to carryout repairs to manufacturer's tolerances.

Own Damage…

· Repairer need to have a customer focus which should manifest itself in the
presentation and quality of their premises and in their willingness to
submit to quality standards

· Usually there would be a contract between the insurer and the repairer
within which labor rates would be agreed.

· Labour costs are quoted

· Parts are charged in accordance with the cost to the repairer plus, of
course, a reasonable profit margin.

· Lump sum quotation –labour plus parts

Own Damage…

· Repairers can and do negotiated discounts from dealers and much will
depend upon volume purchases.

· Insurers might insist upon part of that discount being passed on to them.

Own Damage…

· Courtesy Cars

· Most reasonable sized repairers now offer some form of alternative

transport while they have a customer's vehicle in for repair and these
are commonly known as courtesy cars.
 · Most insurers insist upon availability of courtesy car from their
panel of approved repairers and indeed then use this fact in their
publicity materials.

Own Damage…

· The Repair Invoice

· Once repairs are completed, the policyholder will be asked to sign a

form.

· Traditionally, this form has been termed a 'satisfaction note', but

latterly it has been renamed a collection note.

· The objective is to obtain the policyholder's acceptance that the

vehicle has been returned in a satisfactory state and they have
cheeked and approved the repair.

Own Damage…

· However, in acknowledging the lay status of the majority of

policyholders, there would not be a bar to the insured returning the
vehicle later if they find fault in the cold light of day.

· Up on collection of the vehicle, the policyholder will be required to

pay:

· excesses as shown in the policy

· any private work carried out at the same time as the main
repair

· any contribution for betterment

Own Damage…
· The Role of the engineer

· On a day-to-day, case-by-case basis, the cost of repairs is controlled

by insurance engineers.

· Many insurers employ engineers on their own staff. They will

obviously act in the best interests of their employer, but this will
normally involved a customer focus as well as a cost control function.

Own Damage…

· Engineers will agree method and cost with garage estimator and will
provide repair authority.

· They will be available for consultation should something change

during the course of repair and will sign off the final invoice.

Own Damage…

· The costs calculated by engineers will determine whether or not any

particular repair is worth while, taking into account the over all value
of the damaged car.

· If the repair is not economically viable then the engineer will declare
the vehicle an insurance write-off.

· They will then go on to calculate the pre-loss value of the vehicle.

Theft Claims

· The handling of theft claims differ from other own damage claims in
important ways.
· This arises from the fact that there is a tendency for many vehicles,
reported as stolen, to be recovered with in a matter of days or weeks of the
theft.

· If the vehicle is recovered in a damaged state the insurer will proceed with
the settlements of the claim in the usual way.

· If the vehicle is not recovered there may be some doubt as to the pre-theft
condition of the vehicle.

Theft Claims…

· It is always necessary for the theft to be reported to the police (by the
terms of the policy).

· Insurers will customarily wait for a period of approximately six to twelve

weeks before treating the theft as permanent.

· Once the claim is settled a discharge form is required from the insured
stating that if the vehicle is subsequently recovered it will either be treated
as salvage belonging to the insurer or the claims money will be returned
and the vehicle revert to the insurers ownership.

· Before insurers pay cash to the insured for total loss vehicles or stolen
vehicles, it is very important to check finance details by requesting a hire
purchase information.

Theft Claims…

· Before insurers pay cash to the insured for total loss vehicles or stolen
vehicles, it is very important to check finance details by requesting a hire
purchase or collateral information.
 Salvage

· If a claim is settled on total losses basis, then the insurer will invariably
retain the salvage and will sell it to defray costs.

· The market for salvage is vast:

· many of them are broken for spares or crushed,

· a great number of other vehicles are successfully passed through

trade, repaired and put back on the road in a safe condition.

Salvage…

· Motor vehicle salvage is unfortunately an opportunist’s source for fraud:

· The identify of broken or crushed vehicles may be taken and used on

stolen vehicles;

· vehicles may be cheaply and unsafely repaired before being sold on

with the history hidden

· salvage may be re-used in insurance accident or theft claims.

Salvage…

· It is for these reasons that the insurance industry in conjunction

with salvage buyers and government departments has sought to
control the disposal of salvage.
 Third party propery claims

· It is evident that where damage to two or more vehicles is involved, the

question of liability for causing the accident is important, especially in the
absence of an agreement.

· When receiving notification of a claim of this type, the first step the insurer
will take will be to investigate the circumstances surrounding the accident.

Third party Property…

· The insurer will, wherever possible, seek statements from independent

witnesses.

· At this stage, the claims official should attempt to clarify any conflict of
evidence that might exist.

· He should also inspect the scene of the accident.

· If the accident has been reported to the police and there is a third party
claim, it is important to obtain a copy of the policy report if possible, in
order to compare the statements given to the police with those given to the
insurer.

Third Party Property…

· Accidents tend to be of two different types:

· Those where one driver was wholly responsible.

· Those where the negligence of two or more drivers probably

contributed.

· In multi-vehicle accidents, insurers will usually encourage each

policyholder insured comprehensively to claim under his own
policy and then, privately settle the question of liability between
them.
 Third Party Property…

· In doing that, they will be concerned to do two things:

· not to prejudice any action which their own policyholder may be

taking in respect of his own uninsured losses: his policy excess, the
cost of hiring a vehicle whilst his being repaired and the like.

· to form an opinion on the effect of the claim on their own

policyholder’s NCD. If their policyholder successfully recovers his
uninsured losses in full, insurers will not allow the claim to prejudice
NCD.

Third Party Property…

· Once liability has been established, the next stage is to translate this
into a monetary amount for repair.

· The procedure for approaching repair estimates may follow a similar

pattern to own damage claims.

· Third party claims should be settled by cash.

Third Party Personal Injury Claims

· Third party personal injury claims are more complex and expensive to
settle than other type of motor claims.

· Once the degree of negligence has been established, the next stage is to
ascertain the extent of the injury, the prognosis and the number of
dependants.

Motor Claims Handling Procedures

· a “notification of Motor Accident Form” shall be completed.

Please refer to Claims Notification Form

UNDERWRITING VERIFICATION

· Claims officer shall register and complete verification form and pass it
to the underwriting department for their validation of the existence of
a valid cover

CLAIM PROCESSING

· Traffic Policy Report and Travel Advance request

· Assigns an Inspector immediately to handle the case whenever the

claim necessitates his attendance.

Inspector Report

· Towing Service Requisition Form

· The Inspector who has been assigned to follow up a claim shall give a
detailed report using the “Motor Accident inspection Report.”

Inspector Report
· Insured or his/her Agent or Inspector as the case may be shall hand
over damaged vehicles necessitating a towing service to a tower using
“Damaged Vehicles handing over Form”

Inspector Report

· The assigned Inspector shall hand over the damaged vehicle to the
Recovery Department on the date of its arrival to the Recovery Department
against signature of handing and taking over document. And present the
copy to claims department

External assessment by surveyor

· The assigned surveyor after the damaged vehicle reached in Recovery

compound. Should conduct preliminary assessment

· List of parts to be repaired and changed shall be prepared and signed

by the surveyor and posted on the vehicle and copies of lists shall be
sent to the claims department.

TENDER HANDLING

· As soon as list of parts to be changed or repaired are posted on the

damaged vehicle the claims department shall immediately invite
garages to submit their bids for body two repair.

· The Client will be allowed to nominate two garages

TENDER HANDLING

· The assigned Surveyor shall prepare and submit body assessment

report .The report should include list of damaged body parts to be
replaced, repaired, cost of parts, labor charges, salvage and pre
accident values and whether the vehicle can be economically repaired
and also indicate time required fro repairing.

TENDER HANDLING
· The original body and mechanical damage assessment reports shall be
deposited in the bid box maintained at claims department after being
registered and rubber stamped by the claims manger secretary

TENDER HANDLING

· The garages shall submit their bids in sealed enveloped within five days
after receipt of invitation.

· All sealed envelopes shall be opened

· Bids analysis

· bids committee approval form

TENDER HANDLING