Chapter 1: Introduction to General Insurance Claims

Chapter 1: Introduction to General Insurance Claims

1.1 What is General Insurance?

General insurance provides protection against financial loss other than death. It includes products like motor insurance, fire insurance, marine insurance, health insurance, and travel insurance. These policies cover risks arising from unexpected incidents such as accidents, thefts, natural disasters, illnesses, etc.

1.2 Meaning of an Insurance Claim

An insurance claim is a formal request made by a policyholder to an insurance company for compensation for a covered loss or policy event. It is the process through which the policyholder receives the financial benefit promised under the insurance contract.

1.3 Importance of Claims in Insurance

• Customer Trust: A prompt and fair claims settlement strengthens customer trust and brand loyalty.

• Reputation: An insurer’s claim settlement efficiency is a major factor in its market reputation.

• Regulatory Compliance: Claim processing must comply with IRDAI guidelines and standards.

1.4 Types of General Insurance Claims

• Motor Insurance Claims: Involving accidents, thefts, and third-party damages.

• Health Insurance Claims: Related to hospitalization, surgeries, and medical treatments.

• Fire Insurance Claims: Involving damage to property due to fire or related perils.

• Marine Insurance Claims: Covering cargo losses, vessel damages, etc.

• Liability Insurance Claims: Arising from legal liabilities to third parties.

1.5 Basic Terms in Insurance Claims

• Policyholder: The insured person or entity.

• Insurer: The insurance company providing the coverage.

• Premium: The amount paid by the policyholder for the insurance coverage.

• Sum Insured: The maximum amount the insurer will pay for a claim.

• Deductible: A fixed amount the policyholder must pay before the insurer pays.

1.6 Role of the Claims Department

• Receiving claim intimation and verifying policy validity.

• Appointing surveyors or investigators.

• Coordinating with service providers like garages, hospitals, etc.

• Ensuring timely and transparent communication with policyholders.

• Processing and settling the claim as per policy terms.

1.7 Key Players in Claim Settlement

• Claims Manager/Officer: Oversees the entire claim process.

• Surveyor: An IRDAI-licensed professional who inspects and assesses the loss.

• Third-Party Administrator (TPA): Handles health insurance claims on behalf of insurers.

• Legal Advisors: Handle litigation and legal compliance in complex cases.

• Grievance Officers: Address customer complaints and escalations.

1.8 Customer Expectations from Claims

• Quick settlement process.

• Clarity on documentation and procedures.

• Transparent communication.

• Fair assessment without unnecessary deductions.

1.9 Regulatory Framework

The Insurance Regulatory and Development Authority of India (IRDAI) has laid down guidelines for:

• Timely intimation and settlement of claims.

• Grievance redressal mechanisms.

• Disclosure of claim settlement ratios.

• Fair practices in loss assessment and fraud detection.

1.10 Challenges in Claims

• Lack of awareness among policyholders.

• Incomplete or fraudulent documentation.

• Disputes over coverage or assessment.

• High turnaround time for complex claims.

• Balancing customer satisfaction with risk control.

1.11 Case Study

Example: A customer had a car insurance policy. After a major accident, the claim was settled within 7 days because the documents were complete and the surveyor acted quickly. The insurer earned customer goodwill, and the claimant renewed his policy with them the next year.

1.12 Summary

Insurance claims are the core function of general insurance services. Efficient claim handling builds customer trust and helps insurers grow sustainably. It’s important to understand the roles, procedures, and principles behind claim servicing.

Review Questions

1. What is the importance of claims in general insurance?

2. Who are the key players involved in claim settlement?

3. What challenges are commonly faced during the claim process?

4. What are the expectations of policyholders regarding claim servicing?