claim mgmt hard copy

Claims Management in Life Insurance Corporation of India

INTRODUCTION TO INSURANCE IN INDIA

The insurance sector in India has come a full circle from being an open

competitive market to nationalization and back to a liberalized market again.

Tracing the developments in the Indian insurance sector reveals the 360-degree

turn witnessed over a period of almost two centuries.

Today Insurance Companies in India have grown manifold. The

insurance sector in India has shown immense growth potential. Even today a

giant share of Indian population nearly 80% is not under life insurance

coverage, let alone health and non-life insurance policies. This clearly indicates

the potential for insurance companies to grow their market in India.

In simple terms it is a contract between the person who buys Insurance

and an Insurance company who sold the Policy. By entering into contract the

Insurance Company agrees to pay the Policy holder or his family members a

predetermined sum of money in case of any unfortunate event for a

predetermined fixed sum payable which is in normal term called Insurance

Premiums.

Insurance is basically a protection against a financial loss which can arise

on the happening of an unexpected event. Insurance companies collect

premiums to provide for this protection. By paying a very small sum of money a

person can safeguard himself and his family financially from an unfortunate

event.

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ROLE OF AGENTS IN AN INSURANCE COMPANY

Full information must be provided to the proponent at the point of sale to

enable him to decide on the best cover or plan to minimize instances of

cooling off by the proponents.

An agent should be well versed in all the plans, the selling points and also

be equipped to assess the needs of the clients.

Adherence to the prescribed Code of Conduct for agents is of crucial

importance. Agents must, therefore, familiarize themselves with

provisions of the Code of Conduct.

Agents must provide the office with the accurate information about the

prospect for a fair assessment of the risk involved. The agents

confidential report must, therefore, be completed very carefully.

Agents must also possess adequate knowledge of policy servicing and

claim settlement procedures so that the policyholders can be guided

correctly.

Submission of proposal forms and proposal deposit to the branch office

immediately to avoid delays and to enable the office to take timely

decisions.

A leaflet or brochure containing relevant features of the plan that is being

sold should be available with the agents.

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If the agents are well conversant with the claim settlement procedure and

assist the claimants in completing the necessary requirements, it would not only

quicken the process of claim settlement and enhance their professional status

but also help the organization to improve upon their outstanding claim ratio.

This, while further boosting the image of the organization may provide them an

overflowing fountain for further business in those families. The performance of

agents will now depend on not how many hours he works but the quality of

service, his attitude to customers and the image that he will create for the entire

life insurance business. Thus the agent under the changing economic scenario

can achieve their objectives by practicing psycho-marketing strategies. Their

objectives are survival and growth. Maximization of business is an end to

achieve these objectives.

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BRIEF HISTORY OF THE INSURANCE SECTOR

The business of life insurance in India in its existing form started in India

in the year 1818 with the establishment of the Oriental Life Insurance Company

in Calcutta.

Some of the important milestones in the life insurance business in India are:

1912: The Indian Life Assurance Companies Act enacted as the first

statute to regulate the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the

government to collect statistical information about both life and non-life

insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance

Act with the objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies taken over

by the central government and nationalized. LIC formed by an Act of

Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore

from the Government of India.

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INTRODUCTION TO LIFE INSURANCE

Human life is subject to risks of death and disability due to natural and

accidental causes. When human life is lost or a person is disabled permanently

or temporarily, there is a loss of income to the household. The family is put to

hardship. Sometimes, survival itself is at stake for the dependants. Risks are

unpredictable. Death/disability may occur when one least expects it. An

individual can protect himself or herself against such contingencies through life

insurance.

Though Human life cannot be valued, a monetary sum could be determined

which is based on loss of income in future years. Hence in life insurance, the

Sum Assured (or the amount guaranteed to be paid in the event of a loss) is by

way of a ‘benefit’ in the case of life insurance.

It is the uncertainty that is risk, which gives rise to the necessity for some

form of protection against the financial loss arising from death. Insurance

substitutes this uncertainty by certainty. The primary purpose of life insurance is

the protection of the family. Insurance in its various forms protects against such

misfortunes by having the losses of the unfortunate few paid by the contribution

of the many that are exposed to the same risk. This is the essence of insurance –

the sharing of losses and substitution of certainty for uncertainty.

There are a variety of life insurance products to suit to the needs of various

categories of people—children, youth, women, middle-aged persons, old

people; and also rural people, etc. Life insurance products could be purchased

from registered life insurers notified by the IRDA. Insurers appoint insurance

agents to sell their products. Public who are interested to buy life insurance

products should receive proper advice from insurance agents/insurer so that a

right product could be chosen to suit particular financial needs.

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CLAIMS IN INSURANCE

An insurance claim is the actual application for benefits provided by an

insurance company. Policy holders must first

file an insurance claim before any money can

be disbursed to the hospital or repair shop or

other contracted service. The insurance

company may or may not approve the claim,

based on their own assessment of the

circumstances. Individuals who take out home,

life, health, or automobile insurance policies

must maintain regular payments called

premiums to the insurers. Most of the time

these premiums are used to settle another person's insurance claim or to build up

the available assets of the insurance company.

When claims are filed, the insured has to observe the settled rules and

procedures and the insurer has also to reciprocate in a similar manner by

undertaking appropriate steps for speedy disposal of claims. It is true that claims

settlement is complex in nature, but it is the driving force to plant confidence in

the hearts of people, in general and beneficiaries in specific. Insurance claim is

a right of insured under a contract of insurance. Insurance contract is a contract

by which one party called the insurer promises to save the other party, the

insured on payment of consideration known as the premium. The insurer

promises to save the insured are nominees/assignees of the insured on

happening of event or risk insured. Disputes crop up in the payment of claim

when the insurer and the insured understand the process of claims payment in a

different way. Claims settlement is an integral part of the insurance business

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Definition of claims:

Claim is a right of insured to receive the amount secured under the policy of insurance contract promised by Insurer.


which is a service industry and its growth is interwoven with the people, the

customers and consumers of service. It is inevitable for the insurance company

to protect and guard the interests of the policyholders. An insurance claim is the

only way to officially apply for benefits under an insurance policy, but until the

insurance company has assessed the situation it will remain only a claim, not a

pay-out.

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CLAIMS MANAGEMENT

Many insurers have recognized the need to improve the efficiency of their

claims management process. They have streamlined processes, eliminated

paper-based forms and redistributed work to match the demands to skills. The

objective of their efforts is to lower costs, while also increasing overall

throughput. Efficiency improvements make tasks quicker and less costly to

execute. However, to realize even greater improvements in the claims handling

process, insurers must also focus on the effectiveness of their claims decisions.

Claims handling costs typically represent 10% to 15% of net earned

premium; in contrast, claims payouts represent 40% to 65%. Insurers that

expand their focus to include effective as well as efficient claims processing

will find a far larger pool of savings opportunities. Technology can play a

significant role by providing integrated channels for communication and

collaboration. This would help the insurance company increase employee

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productivity by reducing cycle time and defect rate and also increase employee

participation and compliance.

Claims Processing sometimes involves collating and sharing large amounts

of information among multiple parties involved in a claim, from body shops to

adjusters to investigators to lawyers and doctors to claimants and regulators.

And it involves the knowledge of experienced adjusters to determine the fair

and appropriate outcome of a claim. In fact, losses and loss expenses absorb

80% of premium collected by carriers.

Service representatives and claims adjusters need to access data from

multiple sources when processing or assessing a claim, which delays settlement

time and increases costs. Manual steps reduce transparency of the claims

process and raise the risk of fraud, manipulation or simply human error.

Customer retention is also a challenge – experts say that 75 percent of

customers leave their insurer due to claims issues.

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SYSTEM OF CLAIMS MANAGEMENT

Basis of claims management:

Claims management means and includes all the managerial decisions and

processes concerning the settlement and payment of claims in accordance with

the terms of insurance contract. It includes carrying out the entire claims

process with a particular emphasis on monitoring and lowering the claims costs.

The important elements of claims management are claims preparation, claims

philosophy, claims processing and claims settlement.

The claims philosophy is defined as procedure or specified approach to settle

the claims. It contains the claims management principles and also claims

handling methods and procedures. The claims philosophy includes the

preparation of guidelines regarding the receipt of claims from the insurers or

claimants, analysis of the claims, consideration of the possible decision on the

particular issues and disputes, evaluating the impact of the claims cost and

expenses, relation of claims to the consumer satisfaction, monitoring the claim

payment and improving the efficiency of the claims settlement and payment

systems and avoiding unnecessary disputes of claims.

The claims process includes the basic claims procedure and handling of

claims. The handling of claims includes the monitoring of situation 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 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 notice of claim or loss to the insurer,

providing sufficient proof of loss to the insurer or his agent or the loss assessor

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and surveyors. The insurer, on the receipt of the claim from the insured, has to

take certain immediate precautions such as verifying the claims, reviewing the

claim application, respond to the claimant, carry out claims investigation,

claims negotiation, claim settlement and claim payment.

Stages in claims system:

The claims handling is the integrated part of the claims management and

executes the decisions made by the claims management machinery of an

insurance company. Though claims management and claims handling are

generally the same externally, they are different in nature.

Claims management:

Claims management is a managerial function in which the insurer has a

definite role to play in analysis of data, processing of application, decision-

making, budget planning, and business control and fund management. It is a

subjective concept. In claims management, the attention is on making

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principles and guidelines for smooth and profitable settlement of claims in

the hands of the insurer.

Claims management includes the entire process of claims handling and

claims payment. This includes review of the claims performance, monitoring

of claims expenses’, legal costs, settlement costs, compromises and planning

for future payments and avoiding the delay and disputes in payment of

claims. It is a control system that has an important place in the claims

management. It also includes risk management techniques, loss assessment,

and business forecasting and planning.

Claims handling:

Claims handling is the

procedural way of processing a

claims application. Claims

handling involves utilization of

the laid down principles as

yardsticks and the measuring

methods in settling the issues before it occurs. Claims handling is a

traditional form of managing the claims settlements. It includes handling of

various stages of the insurance claims. It is functional in nature such as

claims review, investigation and understanding the negotiating process. It

does not include any managerial outlook such as risk management, policy

making and decision making.

Thus, it is concerned with the procedural methods and also interpretations of

the claims philosophy. Claims handling may change from case to case

depending on the merits of the claim, but it will not drastically change every

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moment. It is a flexible as well as a rigid way of handling the issues having

interest of the insurer in mind. It is a systematic way of receiving the claims and

following other procedures required for quicker and efficient payment of the

claims. Every insurer has a standardized way of claims handling which will

improve quality and customer service. The insurer’s commitment to the service

of the customer is a part of the claims management.

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COMPANY PROFILE

LIFE INSURANCE CORPORATION OF INDIA

The Life Insurance Corporation (LIC) was established about 44 years ago

with a view to provide an insurance cover against various risks in life. A

monolith then, the corporation, enjoyed a monopoly status and became

synonymous with life insurance. Its main asset is its staff strength of 1.24lakh

employees and 2,048 branches and over 6lakh agency force.

LIC has hundred divisional offices and has established extensive training

facilities at all levels. At the apex, there are the Management Development

Institute, seven Zonal Training Centers and 35 Sales Training Centers. LIC of

India is one of India’s leading financial institutions, offering complete financial

solutions that encompass every sphere of life. From commercial banking to

stock broking to mutual funds to life insurance to investment banking, the group

caters to the financials needs of individuals and corporate. The LIC has a net of

over Rs. 1,800crore. With a presence in 82cities in India and it services a

customer base of over 20, 00,000.

At the industry level, along with the Government and the GIC, it has helped

establish the National Insurance Academy. It presently transacts individual life

insurance businesses, group insurance businesses, social security schemes and

pensions, grants housing loans through its subsidiary; and markets savings and

investment products through its mutual fund. It pays off about Rs 6,000crore

annually to 5.6 million policyholders.

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It has been started with the objectives of spreading Life Insurance widely

and in particular to the rural areas, meets the various life insurance needs of the

community that would arise in the changing social and economic environment.

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ORGANIZATIONAL STRUCTURE OF LIC

The organization is the form having independent or co-ordinate parts for unit

action for the accomplishment of common objectives. As such the organization

relating to insurance business is a form having different functional divisional

units with the ultimate aim of providing effective services to the customers of

the insurance products. An effective organization is essential to share

information and effectively execute the managerial decisions. The

organizational structure differs for different types of business. The organization

structure is based on the objectives or mission of the business organization. The

organization should be structured with an aim to coordinate, not only with

internal managers or groups, but also with the external world, the customers,

authorities and other persons directly or indirectly interested in it.

The insurance business is concerned with the functions of marketing of

insurance products and its related functions like premium collections and

premium fixings, accepting the insurance proposals, issuing policy documents,

maintain records relating t the policies issued everyday in chronological order,

and also payment of claims. The claims department is associated with the

receipt of claims and arrangement of claims investigations. After it is decided

whether to make payment to the assured or to defer it, the insurance company

may seek guidance from the panel of advocates. The insurance company needs

to protect the company from the claims litigations of the clients by defending

the claims in the courts and supervise other alternative dispute resolutions. Thus

the insurance organization is associated with the marketing of policies,

underwriting of policies, claims payment, claims defending and stff matters.

The delegation of duties to each unit with well-defined limitations,

responsibilities and decision making are all related to the organizational

structure and management.

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BASIC STRUCTURE OF LIC

Today, most of functions, nearly 90%, related to the marketing and other

related activities of the insurance consumers are dealt and handled at the branch

level. The branch office, depending upon its business, is headed by a manager

and each function of insurance business like marketing, underwriting of

policies, accounts, claims payments, staff and administration matters are

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8 Zonal officesBhopal,Chennai, Hyderabad,Kanpur, Kolkata, Mumbai, New Delhi, Patna105 DIVISIONAL OFFICES2048 BRANCH OFFICESSATELLITE OFFICESFOREIGN OFFICESUnited Kingdom,Mauritius, Fiji


identified as departments of the branch office with responsible officials such as

Administration and Accounts Officers.

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. The AAO of life insurance business will deal with maturity and

death claims. If the 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. At branch level, these officials have to maintain

cordial relations and establish a system of sharing information with the other

departments, relating to the policy documents, payment of premium and using

the staff or the agents for the settlement of claims disputes. 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 to the Head

Office or Corporate Office.

The branches report to their respective divisional office. If any branch gets a

claim and there is a problem in identifying the correct claimant among the

claimants, or otherwise, a dispute of risk crops up, which will be forwarded to

the divisional office with its comments. 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 problems. 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 submit the

same as required by the statute or otherwise under any law to the government.

The government will put the same for the approval of the both the houses.

At the division office level, the claims department generally deals with the

claims, which are pending with the branches because of some disputes, or some

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claims which are of high value. The investment portfolio and establishment and

maintenance of reserves for the purpose of claims payment or otherwise

required under the law is the important function of the central office. Thus the

organizational structure of the insurance business is most flexible and decided,

based on the above said factors.

CLAIMS MANAGEMENT DEPARTMENT

The claims department is one of the key departments in an insurance

company. The claims department has the following functions to perform:

To provide the customers of insurance and reinsurance companies with

high quality of service. This role gives a long-term edge to the company

and hence is referred to as the strategic role.

To monitor the claims and see that whether the benefits of insurance

exceed the costs of claims. This role is referred to as the cost-monitoring

role of the claims department.

To see that the expectations of the customers are met with regard to

speed, manner and efficiency of the service. This is called the customer

service role of the claims department.

To meet the standard of service, to keep up to the customers’ expectations

and still operate within the budget. This is the managerial role of the

claims department.

Both the quality of the service and cost of claims is the responsibility of the

claims department. The department has to look after the proper mix of the two.

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The cost of claims must not exceed a given level in trying to render a very good

service to the customer. So the claims department should work with due

diligence to balance the two parameters. The estimation of future liabilities is

just as important as control over the claim payments. As the claims department

is in direct touch with the customer, it has to ensure the quality of service.

The claims department has the sole responsibility of managing claims.

Claims management by far is the most complex issue in an insurance company.

The people in the claim department should have good interpersonal skills. If

they are not able to irk in harmony the customers will not receive quality

service. There should be sufficient number of people as managers so as to

simplify job and proper human resource systems in place so that such persons

are recruited whose philosophy goes with the mission and vision of the

organization. It has become imperative for the claims department to provide

quality service to the customers so that the corporate goals are achieved. The

claims department, in effect, acts as an interface between the customer service

quality and insurance company’s objectives. It has to be given the proper weight

age and motivation so that the business as a whole functions well.

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TYPES OF CLAIMS

Understanding the requirements for various life insurance benefits (claims)

is important for the customers. The overriding condition on claims is the

payment of premiums i.e. claims are only payable if premiums are paid up to

date. There are various types of claims under life policies. The most common

claims include:

The general requirements for each of these claims are briefly explained below.

DEATH CLAIMS:

This is a claim paid when then the person insured dies. For a death claim to

be paid the following basic conditions must be fulfilled.

The policy document, original death certificate, burial permit copy of the

ID of the deceased must be provided to the insurance company.

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A report from the doctor who treated the deceased must be presented to

the insurance company.

Claim forms must be completed

A report from the doctor who last treated the deceased person may be

required.

A police abstract report may be required where death occurs through an

accident.

The documentation required for payment of death claims are easily available

and claimants need to immediately inform the insurance company where

problems are encountered in securing the documents. The documents are

usually required so as to reduce on the possibility of paying fraudulent claims or

paying the wrong claimants. Many insurance companies will frequently waive

certain requirements under certain special circumstances.

Beneficiaries:

The claimants or the beneficiaries under the life insurance policies, paid on

the happening of the events which is death of the assured, are as follows:

The legal heirs of the policyholder.

The nominees, assignees and transferees

The wife and children of the assured under the Married Women’s

property Act

The creditor in whose name the policy has been endorsed

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Amount payable:

Amounts that can be paid under a life insurance policy are as follows:

The amount insured or the face value of the policy

Bonus if declared by the company, which is recoverable as an insurance

amount.

The share of profits in case of participation policy.

Surrender value, where the policy lapses due to non-payment of the

premium or where the assured surrenders the policy, the insurance

company may pay a percentage of the premium paid according to the

rules of the company.

MATURITY CLAIMS:

A maturity claim is paid out mostly on endowment and education insurance

policies whose duration has expired. For example in an insurance policy with

duration of 15 years, the maturity value will be paid on the 15 th anniversary after

affecting the policy. Payment of a maturity claim is a straightforward affair

where the customer returns the original policy document and signs a discharge

form. The claim cheque is usually released in a period of about two weeks once

all required conditions are fulfilled.

Beneficiaries in claims:

The claimant in life insurance policies at the time of payment of maturity

claims of life insurance policies can be the policyholder or the assignee to

whom the holder of the policy has transferred the policy. The persons entitled to

claim under these policies can be:

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The assured himself.

The payee, whose name appears in the benefit schedule of the policy as a

party interested.

The creditor who has been properly assigned and nominated to receive

the payment under the policy.

Amount payable:

The amount payable upon the maturity of the policy, i.e., non-happening of

the event is the sum assured plus profits and bonus that accrues with the policy.

The profits are paid on pro-rata basis, i.e., in the proportion of the premium paid

and declared are bonuses. The payment of profits is a condition inserted as a

clause in the policy itself and it becomes an obligation on the insurer to pay the

amount of such profit as may be accrued to the insured.

Dispute in payment of maturity claims:

The disputes arising in such cases are general and may be restricted to the

proof of age, if the age is not admitted at the time of issuing the policy

document and about the good title of the claimant on the policy. In case of the

insurer shrugging off his liability to make the payment of profits which are

accrued to the insured upon maturity and in case the payment of profit is as per

the contract, the insurer has every right to move to the court and to claim for

such payment. The policy document and scheme of the policy contains the

details of the payment and the payment made accordingly may not drag the

parties into litigations.

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SURVIVAL BENEFITS

If the Life Assured survives the premium paying period and the policy

continues in full force, provided all premiums have been paid, but no further

premiums are required to be paid

‘Survival Benefits’ is a type of policy popularly known as ‘Money Back’

policy. Payment in these cases is easy because -

There is no need on the part of the policyholder to prove the happening of

the event

The policyholder is alive so Proof of Title does not pose any problem,

and

The Insurance Company need not await any claim from the policyholder

and take initiative to settle the claims expeditiously.

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NATIONAL ELECTRONIC FUND TRANSFER (NEFT)

The payment under your policy/ies will be to be credited, directly to your

Bank account through electronic mode of payment only. For this purpose, we

require your bank details for making the policy payment through NEFT

(National Electronic Fund Transfer). The details of NEFT are described below.

You are requested to submit the NEFT mandate along with necessary

enclosures to settle the payment under your policy through NEFT. Kindly note,

it is not possible for us to settle the policy payment in any other mode of

payment like cheque.

What is a NEFT?

It is a nationwide system that facilitates to transfer a fund from one account

of any bank branch to another account of any bank branch. This system is

operated by Reserve Bank of India. For transfer of funds the participating banks

have to be NEFT enabled. At present around 74000 Banks all over India are

participating under NEFT system. Advantages of NEFT system for LIC Policy holders / Annuitants :

The policy holder / claimant will get the credit in his own account on

the due date of payment irrespective of the location of his bank.

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NEFT will ensure speedier and secure mode of payment.

There will be no extra charges to the policy holders / claimant.

SMS and E-mail alerts may also be provided wherever the policy

payment is made to the policyholder/ claimants’ account through

NEFT.

Each payment from LIC through NEFT will create one UTR(Unique

Transaction Reference) number. If there is any problem in credit to

the account, policy holders / claimant can confirm from their bank by

quoting this UTR no. In other words it is easy to track a transaction of

NEFT, using UTR number.

Important information to the Policy holder / claimants opting for

NEFT :

All the items mentioned in the enclosed mandate form should be filled

correctly. This mandate can be used for 6 different policy numbers of

the same policyholder..

The completed mandate for NEFT should be sent to our Branch,

servicing at least one of the policies, listed in the mandate.

The policy holder / claimant should also submit either a cancelled

blank cheque leaf or the photo copy of the page of the passbook /

cheque book where details of the Bank account are mentioned.

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If within two days of the due date, the amount is not credited to your

Bank Account, then you may contact the branch where you have

submitted the NEFT mandate.

The account of the policy holder / annuitant should be operational at

the time of receipt of policy payment.

Before submitting the mandate form, the policyholder/ claimant

should confirm from his bank that it is NEFT enabled.

Policy holder’s/ claimants’ name under the policy should match with

that of Bank A/c, else it is likely to be rejected.

NRI accounts are guided by FEMA regulations; LIC has decided not

to include NRI accounts for fund transfer. So policy holders /

annuitants are requested not to submit their NRI account details.

After submission of NEFT details, if there is any change in bank

details then fresh mandate form will have to be submitted.

If you are getting the annuity payments through ECS mode from our

IPP cells, you may opt for payment by NEFT by submitting the

mandate or continue to receive the annuity payment in the existing

ECS mode.

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PROCEDURE FOR SETTLEMENT OF CLAIMS

Claims procedure in respect of a life insurance policy:

A life insurance policy shall state the primary documents which are

normally required to be submitted by a claimant in support of a claim.

A life insurance company, upon receiving a claim, shall process the claim

without delay. Any queries or requirement of additional documents, to the

extent possible, shall be raised all at once and not in a piece-meal manner,

within a period of 15 days of the receipt of the claim.

A claim under a life policy shall be paid or be disputed giving all the

relevant reasons, within 30 days from the date of receipt of all relevant

papers and clarifications required. However, where the circumstances of a

claim warrant an investigation in the opinion of the insurance company, it

shall initiate and complete such investigation at the earliest. Where in the

opinion of the insurance company the circumstances of a claim warrant

an investigation, it shall initiate and complete such investigation at the

earliest, in any case not later than 6 months from the time of lodging the

claim.

Subject to the provisions of section 47 of the Act, where a claim is ready

for payment but the payment cannot be made due to any reasons of a

proper identification of the payee, the life insurer shall hold the amount

for the benefit of the payee and such an amount shall earn interest at the

rate applicable to a savings bank account with a scheduled bank (effective

from 30 days following the submission of all papers and information).

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Where there is a delay on the part of the insurer in processing a claim for

a reason other than the one covered by sub-regulation (4), the life

insurance company shall pay interest on the claim amount at a rate which

is 2% above the bank rate prevalent at the beginning of the financial year

in which the claim is reviewed by it.

Settlement of maturity claims:

Under LIC, claims can arise on maturity of policy of the policyholder. The

processing of claims by maturity is normally undertaken by Divisional Office of

LIC about two months before the date of maturity. . The LIC sends intimation

before the maturity date. If the notice of maturity is not received and the date of

maturity is known to the policyholder, then the policyholder can take the

necessary steps to get the due Maturity amount. The Corporation sends Maturity

Intimation along with the discharge forms to the policyholder informing him

about the requirements for the settlement of claim.

1) In case the maturity intimation is not received by the policyholder till

around 2 months before the date on which the policy matures, he should

contact the concerned Divisional Office and obtain a copy of the maturity

intimation.

2) Policy Document (if not in the custody of LIC as security for loan):

On receipt of the maturity intimation, the policyholder should send the

original policy document along with the last receipt of insurance premium

paid. The policy document needs to be submitted in original unless it is in

custody of LIC as security for loan.

3) Age proof document (if age has not been admitted earlier):

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The policyholder should also submit his age proof to the Corporation in

case it has not already been submitted. In case, the policyholder has

already submitted his age proof to LIC, the form of Discharge (Form No.

3825) to be executed by the policyholder, is also sent along with the

Maturity Intimation.

4) L.I.C. accepts following documents as valid age proofs:

Horoscope of the assured

Certificate relating to the baptism ceremony among Christians

Birth certificate from the Municipal Corporation

High School Certificate

Service book.

5) Discharge Form No. 3825 duly stamped & signed, attested by a witness:

The form of Discharge (Form 3825) should then be properly filled, signed

and sent to the Office of LIC from which it was issued. The signature

must be on a revenue stamp and must be attested by a witness.

6) Assignment / Reassignment Deed, if any:

In case the policy or any Deed of Assignment or Re-assignment is lost by

the policyholder, he has to submit an indemnity bond along with a

reliable surety of sound financial standing acceptable to LIC. The

indemnity bond has to be in a particular format (Form 3815). In such a

case the claim is settled in the absence of the policy document.

7) Existence certificates in case of children’s Deferred Assurance & Pure

Endowment Policies.

8) In due course, LIC sends a cheque to the policyholder for the money due

to him as per the terms of the policy.

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LIC upon the receipt of the claim form will act in the following manner:

LIC will send an acknowledgement to the effect that the claim form has

been received and the aforesaid document will also state that the insurer

is in the process of checking all the necessary items and will get back to

the claimant shortly.

Then the insurer will ask for necessary documents that are required for

settlement of claims. The claimant has to provide all the necessary

documents that are being asked by the insurer.

After verification, the insurer arrives at the final amount that has to be

paid to the claimant and then prepares a cheque or such mode of payment

as has been agreed upon in the policy or between the claimant and the

insured.

Settlement of Death claims:

The death claim amount is payable in case of policies where premiums are

paid up-to-date or where the death occurs within the days of grace. The

following is the process of settlement of claims in case of death claims:

1) Intimation of death:

The first requirement of the Corporation in the case of death claim is that an

"intimation of death"’ should be sent to the branch office of the LIC from where

the policy was issued.

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The intimation needs to be sent by the person who is entitled to get the proceeds

of the policy. It may be:

The nominee or

The assignee of the policy or

The deceased policyholder’s nearest relative.

The letter of intimation of death should contain the following information:

name of the life assured

a statement that the life assured is dead;

the date of death;

the cause of death;

the place of death; and

policy number/s

Claimant’s relationship with the assured or his status (nominee, assignee,

etc.).

Soon after the receipt of the intimation of the death, the branch office sends

the necessary claim forms along with instructions regarding the procedure to be

followed by the claimant.

2) Submission of Proof of Death:

The proof of death required to be submitted is a certificate by Municipal

Death Registry or by a Public Record Office which maintains the records of

births and deaths in the locality. Besides this some other statements or

certificates are also required to be given in the prescribed Claim forms:

Statement from the doctor who attended the deceased policyholder’s

last illness.

33


Certificate of treatment in the hospital where the policyholder died or

was treated by the hospital authorities.

Certificate of burial or cremation to be given by an independent person

who attended the funeral and has seen the dead body.

Certificate from the employer if the policyholder was in employment at

the time of death.

3) Submission of Proof of Age:

The claimant should submit age proof of the policyholder to LIC in case it

has not already been submitted.

L.I.C. accepts following documents as valid age proofs:

(i) Horoscope of the assured

(ii) Certificate relating to the baptism ceremony among Christians

(iii) Birth certificate from the Municipal Corporation

(iv) High School Certificate

(v) Service book.

4) Certificate of Ownership:

When the policy is validly assigned, or a nominee has been designated in the

policy, no further proof of title is necessary. In any other case, the certificate of

title is necessary. In such a case the corporation would require legal evidence of

title such as Succession Certificate or Letters of Administration or Letters of

Probate or a Will.

5) Payment and Discharge:

34


After completing all the above formalities, the insurance company issues a

discharge form for completion, which is to be signed by the person entitled to

receive policy money. That is, it should be signed by:

The nominee, in case nomination was made under the policy;

The assignee, in case the policy was validity and unconditionally

assigned;

The legal representative or successor.

In due course, LIC sends the cheque for the amount due to the person

entitled to receive the same.

6) Early death claims:

If death occurs in less than three years from the date of the policy, following

requirements must be complied with:

Policy Document

Discharge Form 3801

Assignment / Re-assignment Deed, if any

Age Proof Document (if age has not been admitted earlier)

Certificate of treatment issued by the hospital authorities where the

deceased policyholder was treated last, on Claim Form ‘B1’ (F No. 3816)

Certificate by the employer if the deceased was an employee, on the

Claim Form ‘E’ (F No. 3787 revised)

Certificate of Death

Legal Evidence of Title (if policy is not assigned / nominated)

Claim Form ‘A’ (F No. 3783)

Statement from the Doctor who attended last the deceased policyholder,

on Claim Form ‘B’ (Form No. 3784 revised)

35


Certificate of Identity and burial by a person who attended the funeral on

Claim Form ‘C’ (F No. 3785 revised)

7) Non early claims:

If death occurs exactly or after 3 years from the date of the policy the

following requirements must be complied with:

Policy Document

Discharge Form 3801

Legal Evidence of Title

Death Certificate

Claim Form No. 3783A

Assignment / Re-assignment Deed, if any (if policy not assigned

/nominated)

Age Proof Document (if age has not been admitted earlier)

8) Ex-gratia Settlement of Death Claims:

Ex-gratia Settlement of Death Claims are not a right claim but on grounds of

humanity presently LIC is giving such claim amount for the policies which are

not in force but

If Death occurred after the expiry of grace period of premium due date

then Full Sum Assured along with the bonus will be payable as Ex-gratia

settlement.

If Death occurred after three months but less than six months after the

expiry of first unpaid premium date half of the Sum Assured without

bonus will be paid as Ex-gratia.

36


If the death occurred between six months and one year from the due date of

the first unpaid premium date, claim may be considered to the extent of the

proportionate notional paid-up value on the basis of actual premium paid.

37


FACTORS AFFECTING THE CLAIMS SETTLEMENT

The factors that affect the claims settlement are as follows:

The policy should be in force on the date of the event.

The risk and cause of event should be covered by the policy.

The cause of loss or the event should be directly related to the loss. A

remote cause has no place in the settlement.

The loss should not have been caused with an intention to gain from the

situation.

The preconditions or warranties have to be compiled with. When

conditions to be fulfilled before affecting the cover of the policy, are not

performed, the cover of insurance will not come into effect even though

the premium is paid and accepted by the insurance company.

Presence of insurable interest, in case of the property insurances, at least

at the time of happening of event or loss sufferings. Without having the

insurable interest in the subject matter, no person can get benefit or

compensation.

The assured should suffer loss, actual or constructive, to get

compensation. The assured should riot make benefits or gains out of the

insurance contract as the insurance contract is of indemnity in nature. It

only makes good the loss suffered by the assured and is not a source of

gains.

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Sufficient documentary evidence of loss should be presented along with

the application form.

Multiple claims and reciprocal claims will be settled as per the terms of

the contract of insurance.

Right to appeal or file a petition with the tribunal or the courts cannot be

withdrawn. If the terms of the policy insist upon arbitration, it is not the

end of justice for the insurer or the assured.

The insured may opt for the following alternatives while settling the claims:

Pay the claims as reported by the surveyor or the claims made by the

insurer whichever is less.

Take help of the agent or some other persons and compromise or to come

to an agreement with the assured in case of a disputed claim.

If the claim is rejected there may be litigation on the insurer. The

litigation will cost the insurer more, as the insurer has to pay the interest

for the amount due if he losses the litigation.

Pay ex-gratia, if the claim is totally baseless and non-acceptable, on

humanitarian grounds and to avoid complications in future.

Arrange to replace the asset either by repairing the same or by purchasing

a similar asset from the market.

Repair the asset to provide the similar type of services as provided before

the happening of event.

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DELAY IN CLAIMS SETTLEMENT

The time value for the settlement of a claim is of importance. All claim

papers have to be submitted within a limited period mentioned in the policy

document or otherwise stated in the Act. In some cases, the death of a person or

the accident of vehicle has to be intimated immediately either orally or in

person, either by the policyholder or the claimant or by the representative of the

claimant.

The time element is very important in the claims payment for the following

reasons:

The delay in the claims settlement will have an adverse impact on the

goodwill and marketing of the insurance.

The cost of claims will increase with the extension of time.

The insurer may be asked to pay the interest on the unpaid insurance

amount because of the delay. The court may direct the insurer to pay the

costs of the case to the assured, which results in mounting up of costs.

The delay in payment may lead to litigation which is expensive.

Unproductive use of manpower to defend, expenses incurred and waste of

time on litigations will be an extra burden on the insurer.

Litigations will affect on the productive areas of the business particularly

in the marketing of the insurance business.

The delay also leads to the increasing number of cases with consumer

protection councils.

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Thus the delay in the settlement of the claims will have an impact on the

present and future business of the insurance along with the cost burden. As such

it is essential to have quicker claim settlements.

The delay in claims settlement may be due to the following reasons:

Late submission of claim form: The claim forms may be submitted late

because of the ignorance or lack of knowledge of the existence of the

insurance policies against the lives of the persons who face the event or

no information is given to the beneficiaries or no nominations are made to

the policy.

Innocence and illiteracy of the assured: The assured or the claimant

may fail to file the papers due to lack of knowledge, to file the insurance

claims within a certain period or of the claims procedure.

Not submitting the claims forms in full: If the claim forms are not

properly filled, they will fail to provide the required information to settle

the claims and as a result the claim settlement will be delayed for want of

information.

If sufficient proof or supporting documents are not submitted along with the

claim form to facilitate claim assessor to know the date of the event or the cause

of the event, claim settlement may be delayed.

The insurer may not get the cooperation of the insured or the claimant to

finalize the claim or arrive at some compromise.

Destroying the evidences, with or without intention, that could have

otherwise facilitated the estimation of the loss payable under the claim.

41


Not providing information about the changes in the constitution of the

organization or the changed address of the insured or the claimant or any

other information required to make a claim settlement.

The delay on the part of the insurer may be intentional or due to the

pressure of work.

Lack of motivation, lack of knowledge of importance of the claims

settlement, lack of awareness among the staff of the organizations or

defective supervision or organizational structure.

The delay in submission of claims or settlements can be avoided by making

the assured aware of the facts and importance of the insurance and procedure of

claims. The insurers can take the help of the agent or local staff to arrive at a

compromise with the claimants when the cases are of complex nature. The

organization should be so designed to avoid holding of papers at one or two

places. The staff should be trained and the importance of the claims

management should be driven into their minds. Use of latest technology to

assess the losses and recruitment of able staff will speed up claims settlement.

42


ROLE OF AGENTS IN CLAIMS SETTLEMENT

An agent is a primary source for procurement of insurance business and as

such his role is the corner stone for building a solid edifice of any life insurance

organization. To effect a good quality of life insurance sale, an agent must be

equipped with technical aspects of insurance knowledge, he must possess

analytical ability to analyze human needs, he must be abreast with up to date

knowledge of merits or demerits of other instruments of investment available in

the financial market, he must be endowed with a burning desire of social service

and over and above all this, he must possess and develop an undeterred

determination to succeed as a Life Insurance Salesman. In short he must be an

agent with professional approach in life insurance salesmanship. Such an

agency force is expected to be helpful not only in proper field underwriting but

also after sales. Servicing. Concomitant and essential elements for higher

retention of business.

The insurance company, being a corporate structure, does not deal directly

with the customers to promote the insurance business. It avails the help of

middlemen to undertake the promotion such on its behalf and the agents are

middlemen or intermediaries. Section 40 of Insurance Act 1938 authorizes the

payment of the remuneration to the agents for the services. Section 42 of the

Act enumerates the essential qualifications for their appointment and issuing of

licenses. The appointment of agents to procure policies of insurance is a general

practice among insurance companies all over the world. The agents are allowed

to market the insurance business but not allowed to issue the policies. The agent

has no right to conclude the insurance contract and the final approval or

rejection of contract proposal is vested with the insurer, the principal. But, in

promoting the insurance business, the agent binds the principal to all activities

43


such as receipt of premium, enquiries and publishing of information of the

insurance contracts and products.

The agent is bound by duty and responsibility to convey the message to the

insurer. But, giving the information to the agent does not bind the insurer as the

agent is appointed only to promote the insurance business. In times of disputes,

the agent is under an obligation to settle the issue of claims by way of

negotiations and mediations to retain the customer.

44


GUIDELINES FOR CLAIMS SETTLEMENT BY IRDA

PROPOSAL FOR INSURANCE:

Except in cases of a marine insurance cover, where current market

practices do not insist on a written proposal form, in all cases, a proposal

for grant of a cover, either for life business or for general business, must

be evidenced by a written document. It is the duty of an insurer to furnish

to the insured fees of charge, within 30 days of the acceptance of a

proposal, a copy of the proposal form.

Forms and documents used in the grant of cover may, depending upon the

circumstances of each case, be made available in languages recognized

under the Constitution of India.

In filling the form of proposal, the prospect is to be guided by the

provisions of Section 45 of the Act. Any proposal from seeking

information for grant of life cover may prominently state therein the

requirements of Section 45 of the Act.

Where a proposal form is not used, the insurer shall record the

information obtained orally or in writing, and confirm it within a period

of 15 days thereof with the proposer and incorporate the information in its

cover note or policy. The onus of proof shall rest with the insurer in

respect of any information not so recorded, where the insurer claims that

the proposer suppressed any material information or provided misleading

or false information on any matter material to the grant of a cover.

45


Wherever the benefit of nomination is available to the proposer, in terms

of the Act or the conditions of policy, the insurer shall draw the attention

of the proposer to it and encourage the prospect to avail the facility.

Proposals shall be processed by the insurer with speed and efficiency and

all decisions thereof shall be communicated by it in writing within a

reasonable period not exceeding 15 days from receipt of proposals by the

insurer.

MATTERS TO BE STATED IN LIFE INSURANCE POLICY:

A life insurance policy shall clearly state:

The name of the plan governing the policy, its terms and

conditions;

Whether it is participating in profits or not;

The basis of participation in profits such as cash bonus, deferred

bonus, simple or compound reversionary bonus;

The benefits payable and the contingencies upon which these are

payable and the other terms and conditions of the insurance

contract;

The details of the riders attaching to the main policy;

The date of commencement of risk and the date of maturity or

date(s) on which the benefits are payable;

The premiums payable, periodicity of payment, grace period

allowed for payment of the premium, the date the last installment

46


of premium, the implication of discontinuing the payment of an

installment(s) of premium and also the provisions of a guaranteed

surrender value.

The age at entry and whether the same has been admitted;

The policy requirements for

(a) Conversion of the policy into paid up policy,

(b) Surrender

(c) Non-forfeiture and

(d) Revival of lapsed policies;

Contingencies excluded from the scope of the cover, both in

respect of the main policy and the riders;

The provisions for nomination, assignment, and loans on security

of the policy and a statement that the rate of interest payable on

such loan amount shall be as prescribed by the insurer at the time

of taking the loan;

Any special clauses or conditions, such as, first pregnancy clause,

suicide clause etc.; and

The address of the insurer to which all communications in respect

of the policy shall be sent.

The documents that are normally required to be submitted by a

claimant in support of a claim under the policy.

While acting under regulation 6(1) in forwarding the policy to the

insured, the insurer shall inform by the letter forwarding the policy that

47


he has a period of 15 days from the date of receipt of the policy document

to review the terms and conditions of the policy and where the insured

disagrees to any of those terms or conditions, he has the option to return

the policy stating the reasons for his objection, when he shall be entitled

to a refund of the premium paid, subject only to a deduction of a

proportionate risk premium for the period on cover and the expenses

incurred by the insurer on medical examination of the proposer and

Stamp duty charges.

In respect of a unit linked policy, in addition to the deductions under sub-

regulation (2) of this regulation, the insurer shall also be entitled to

repurchase the unit at the price of the units on the date of cancellation.

In respect of a cover, where premium charged is dependent on age, the

insurer shall ensure that the age is admitted as far as possible before

issuance of the policy document. In case where age has not been admitted

by the time the policy is issued, the insurer shall make efforts to obtain

proof of age and admit the same as soon as possible.

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FRAUDS IN CLAIMS SETTLEMENT

Insurance fraud is any deliberate deception/dishonesty committed against or

by an insurance company, insurance agent, or consumer for unjustified financial

gain. It occurs and may be committed at different points in the transaction by

different parties such as policy owners, third-party claimants, intermediaries and

professionals who provide services to claimants. The nature of these frauds may

vary from an inflated/exaggerated value of a legitimate claim to a completely

fabricated or bogus claim where losses never really occurred. Promises made

with no intention to perform them can be treated as a fraud. The essential components of an insurance fraud are:-

Intent to deceive.

Desire to induce insurance company to pay more than it otherwise would.

The fraudulent claims may be of two categories:

The cause or the claim itself is fraudulent.

The claim may be genuine but the method of calculation or the evidences,

or the information submitted may be fraudulent in nature.

As such any fraud made by the insured or the insurer in concluding the

insurance contract or the claims settlement, makes the entire contract viocable at

the option of the person on whom the fraud is played. Creating forged

documents such as wills, legal heir certificates, assignments of the policies and

other papers to support their claim, deliberate destruction of the insured subject

with an intention to get the policy amount all constitute different types of

frauds. Sometimes the frauds may also result from gross negligence or

forbearance to use reasonable exertions and means at hand. The fraudulent

49


claim by the assured will deprive him the right to claim as the insurer has the

right to reject it.

Examples of insurance fraud:

1) Creating a fraudulent claim

2) Overstating amount of loss

3) Misrepresenting facts to receive payment

4) Bogus agents/Sale of forged cover notes

How to protect yourself from a fraud:

1) Be wary of unregistered insurance agents. Before purchasing insurance,

contact your insurance company to ensure the agent is an authorized

agent.

2) Avoid paying premiums in cash. Opt to pay for premiums by cheque or

money order. Made payable to the insurance company instead of the

agent.

3) Make sure you receive a written policy after payment of your first

premium.

4) Immediately examine your insurance policy to ensure the coverage is

what you have requested for and ensure that the premium amount paid is

reflected in the cover note/policy. Request for a receipt as evidence of

payment of premium.

5) Do not sign a blank insurance application, or insurance claim form.

6) Be suspicious if the price of insurance seems suspiciously low from other

insurance companies.

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7) If you meet with an accident, be careful of strangers who offer you quick

cash or urge you to deal with specific workshops, medical clinic or law

firm. They could be part of a fraud syndicate.

8) Insist on detailed bills for repairs and medical services rendered and

check for accuracy.

9) Discreetly contact your insurance company or the police if you are being

defrauded or have been/are being persuaded to take part in a fraud.

Provide as many details as possible about the incident - name of the

individual(s) involved, amount, date(s), and type of fraud.

51


COMPARATIVE ANALYSIS OF LIFE INSURANCE

CORPORATION OF INDIA & ICICI PRUDENTIAL LIFE

INSURANCE

Parameters LIC ICICI Prudential

Life cover LIC provides only

anticipated cover

ICICI offers 2 options

Anticipated cover

Group Term

Cover

Customer service LIC is profit oriented

and customer service &

satisfaction are not its

main objectives.

ICICI is customer

oriented and customer

satisfaction and delight

are its main objectives.

Claims payment period The claims payment

period is long. It takes

almost a month to settle

the claims except in

some cases.

It settles the claims in 8-

10 working days.

Documentation Claims settlement here

involves a lot of

documentation work.

It settles the claims with

least documentation.

Use of technology LIC has only limited use

of technology in claims

settlement such as only

data is centralized.

In ICICI the claims

processing system is all

centralized from data

input till claims

payment.

52


Efficiency of employees The person’s employed

in claims department

does not have in-depth

knowledge and skills.

The person’s employed

in claims department in

ICICI are qualified

professionals in the field.

Infrastructure The infrastructure is not

attractive. They follow

all the traditional

practices.

The infrastructure is

attractive and modern.

53


CURRENT DATA OF LIFE INSURANCE CORPORATION OF

INDIA

Number of Policies Sold – The number of policies that LIC issues in a

fiscal year is only a reflection of how well the company is performing in

the market. The policies sold by the Insurance Company for the year

2012-13 were 3, 57, 24, 749.

Total Life Insurance Premium Earned – A major fraction of the

premium earned by a life insurance company goes into the fund that is

deployed to pay the insured when he/she files a claim. It becomes a

measure of how financially sound an insurer is. Thus, the premium

earned by LIC 2, 02,889.28(in crores).

Claims Settlement Ratio – Assessing the claim settlement ratio is the

most significant criteria in establishing the credibility of a life insurer.

Put simply, claim settlement is the ratio of the number of claims settled

to the total number of claims filed in a particular fiscal year. Needless to

say, LIC rules the rooster here too. The highest Claim Settlement Ratio

(CSR) that LIC boasts of is primarily the reason, why it gets to enjoy the

trust of the major chunk of the market.

54


Life Insurance Corporation of India

No. of Claims filed 7,31,336

No. of Claims paid 712,501

Claims Settlement Ratio 97.42

55


CASE STUDY

Life Insurance Corporation of India v/s Neelam Mehta

The case arose following the refusal of LIC to pay the insurance money

following the death of her husband Mahendrabhai Mehta. LIC had repudiated

the life policy alleging that he had hid from it that he was suffering from

diabetes at the time of taking the insurance policy in December 1993. On 6

November 1994 he died following a heart attack. Neelam told the consumer

forum that she came to know that her husband had a life policy with LIC three

months after his death, when she started receiving 'forms one after another to be

filled through LIC agent'. She then filled up all the relevant papers.

She also formally informed LIC about the death of her husband and

claimed the insurance money. thereupon, LIC intimated her that the claim for

her husband's insurance policy was repudiated because the life assured had

'deliberately' withheld information regarding his 'pre-existing illness which was

diabetes' and which, it said, had led to his death. It also alleged that because of

this disease he had been hospitalized before his death and that he was a insulin-

dependent diabetic. Neelam represented to both the Bhavnagar and Ahmadabad

offices of LIC and later to its zonal office in Mumbai urging them to

recommend her claim to the review committee.

This request was made in September 1996 and till now no decision had

been taken and the 'matter is still under consideration'. She also denied that her

husband was a diabetic or that he had been hospitalized for this. He had not

been treated for any ailment during the five years preceding his death, she

asserted. The forum comprising its president, K.D. Desai, members Leena Desai

and Malaybhai Kantharia, found that LIC had failed to prove that Mr. Mehta

had made false statement and misrepresentation about his health. "The burden

56


of proving that there was suppression of material fact and that it was made

fraudulently" lied on LIC and it had failed to prove it, the forum observed. LIC

therefore was legally and morally duty-bound to pay the claim, it said.

Consumer disputes redressal forum, Ahmadabad, has directed LIC of

India to pay up Rs. 50,000 plus 12 per cent interest for seven years, as insurance

money due to her after her husband's death. The forum also ordered payment of

Rs. 5000 for causing mental agony, hardship and inconvenience to Neelamben.

It granted Rs. 3000 as cost.

57


CONCLUSION

The insurance business is major service oriented business in the world. The

services offered by the insurance industry are well recognized and utilized by

the general public and commercial sector of the world. The life insurance

business has covered nearly 40% of the population of the world. Global players

with strong brands in the insurance industry today set up their back office

operation in low cost countries, manage capital on a global basis, make use of

their special skills worldwide and use their superior managerial ability to secure

leadership positions in the industry.

The claims management is an integral part of insurance. It involves the

storage, processing and transmission of information relating to settlement of

insurance claims. The use of Information Technology also plays a very

important role in claims settlement. 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’s over the

validity of claims or claims handling practices occasionally escalate into

litigation which should be solved with due care.

In this fast developing scenario it will not be enough if companies have the

futuristic strategies. Implementation of the strategies, effectively adapting them

to ongoing changes can spell success. The success of claim management

depends on the satisfaction of the customers. The customers are attracted to an

insurance company by its state of art claim service. Therefore, before designing

an IT system for claim management, customer’s expectations are to be taken in

to account.

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