Without the benefit of direct involvement in numerous insurance claim payments, I would probably be among those that so loudly criticize insurance companies for dodging claims payment. This is not, however, thumbs-up to the claims department of every insurance firm out there because as the saying goes 'there is no smoke without fire'.
To highlight the operation of those companies (and they are in the majority) that honour their promise to pay all genuine claims this article outlines the techniques adopted by these organizations in dealing with losses reported by policyholders.
The Legal Position
The Legal Position
Insurance is a legal contract between the insurer and the insured and the legal position is for the party seeking to rely upon a contractual term to prove their case.
Against this backdrop, if a policyholder is seeking to claim an indemnity based upon the cover offered by the policy then
To ensure that every policyholder understands what is expected of him and consequently aid Insurers in establishing admissibility as well as quantum of a claim, the claims condition is incorporated into every policy document. This sets out what the insured has to do in the event of a loss which may lead to a claim. It covers notice of loss, assistance to the insurer and proof of loss. This may also include a control of proceedings clause and a non-admission of liability clause.
Notification of Claim. Immediate notification of claim is required of the insured. Insurers insist on being notified at the earliest in order that a full investigation can commence. Delay often results in loss of evidence or witnesses being unable to recall the incident fully. Most insurers would act on notification made via a phone call.
Early notification also enables insurers to set reserves for the potential liabilities involved in the claim.
Proof of Loss. As stated earlier, the policyholder is duty bound to prove that a loss occurred. From supplying particulars of the loss to convincing the insurer with supporting documents that the loss not only occurred but that is covered by an insured peril.
This burden shifts to the insurance company if at any point it alleges that the details supplied by the policyholder are doubtful.
Assistance to the Insurer. This would usually require cooperating with investigation of the claim which would either be carried out by insurers’ staff or by a loss adjuster acting on the insurer’s behalf. In simple cases the documentary evidence supplied by the insured may be all the insurer requires. A thorough investigation becomes necessary as the nature and extent of the loss becomes more complex.
Settlement. Once liability and quantum is agreed having reviewed the substantiating documents, prompt payment of the agreed sum follows. Settlement of claim in indemnity policies can either be via cash payment, replacement, repair or replacement.
Uncovering Fraud In Insurance
Against this backdrop, if a policyholder is seeking to claim an indemnity based upon the cover offered by the policy then
- he or she must prove that the loss occurred
- establish the loss that occurred was actually covered by the terms of the policy
- and finally demonstrate the amount of loss in order to claim an indemnity
To ensure that every policyholder understands what is expected of him and consequently aid Insurers in establishing admissibility as well as quantum of a claim, the claims condition is incorporated into every policy document. This sets out what the insured has to do in the event of a loss which may lead to a claim. It covers notice of loss, assistance to the insurer and proof of loss. This may also include a control of proceedings clause and a non-admission of liability clause.
Notification of Claim. Immediate notification of claim is required of the insured. Insurers insist on being notified at the earliest in order that a full investigation can commence. Delay often results in loss of evidence or witnesses being unable to recall the incident fully. Most insurers would act on notification made via a phone call.
Early notification also enables insurers to set reserves for the potential liabilities involved in the claim.
Proof of Loss. As stated earlier, the policyholder is duty bound to prove that a loss occurred. From supplying particulars of the loss to convincing the insurer with supporting documents that the loss not only occurred but that is covered by an insured peril.
This burden shifts to the insurance company if at any point it alleges that the details supplied by the policyholder are doubtful.
Assistance to the Insurer. This would usually require cooperating with investigation of the claim which would either be carried out by insurers’ staff or by a loss adjuster acting on the insurer’s behalf. In simple cases the documentary evidence supplied by the insured may be all the insurer requires. A thorough investigation becomes necessary as the nature and extent of the loss becomes more complex.
Settlement. Once liability and quantum is agreed having reviewed the substantiating documents, prompt payment of the agreed sum follows. Settlement of claim in indemnity policies can either be via cash payment, replacement, repair or replacement.
Uncovering Fraud In Insurance
The premium paid by every policyholder is received by the insurer into a fund or pool for that type of risk and the claims of those suffering losses are paid out of this pool.
© InsuranceInBoldPrints
As custodians of the insurance fund on behalf of other policyholders, insurers have a duty to ensure that only genuine claimants get a share of the pool. The reference to genuine claimants might surprise those who believe that all reported losses are legitimate but the sad truth is that some policyholders do report bogus insurance claims.
In a case recently concluded at the high court a couple was jailed for 6 weeks for attempting to obtain a fraudulent motor insurance claim. This is just one of the numerous cases insurance companies have to sift through on a daily basis in order to ascertain admissibility of a reported claim. Sometimes this claim processing leave some policyholders frustrated and understandably so especially for those still dealing with the traumatic experience which is the subject of the claim.
Some of the fraudulent claims, unfortunately, go undetected and ultimately contribute to increased premiums borne by other policyholders.
Grievance procedure
© InsuranceInBoldPrints
As custodians of the insurance fund on behalf of other policyholders, insurers have a duty to ensure that only genuine claimants get a share of the pool. The reference to genuine claimants might surprise those who believe that all reported losses are legitimate but the sad truth is that some policyholders do report bogus insurance claims.
In a case recently concluded at the high court a couple was jailed for 6 weeks for attempting to obtain a fraudulent motor insurance claim. This is just one of the numerous cases insurance companies have to sift through on a daily basis in order to ascertain admissibility of a reported claim. Sometimes this claim processing leave some policyholders frustrated and understandably so especially for those still dealing with the traumatic experience which is the subject of the claim.
Some of the fraudulent claims, unfortunately, go undetected and ultimately contribute to increased premiums borne by other policyholders.
Grievance procedure
The insurer's promise is to pay for losses you suffer having received appropriate premium for that promise. If for any reason you are dissatisfied with how your claim is handled, your policy document sets out the options for seeking redress. You can start by making a formal complaint through your insurance broker or direct to the insurance company. If your complaint is not resolved at this point, you can contact the Financial Ombudsman Service.
Click here for tips on how to avoid crooked insurance companies
Click here for tips on how to avoid crooked insurance companies
No comments:
Post a Comment