chapter 8 - claims

8/13/2019 Chapter 8 - Claims

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CLAIMS


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CLAIMS PROCEDURE

Notification of loss

Validation of coverageClaims registerInvestigation of the claim

Ascertaining the amount of loss Ascertain subrogation rights and contributionduties


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1. Notification of loss

Is a condition of most policies for insured tonotify the insurer of the loss immediatelyMay be in verbal or writ tenFurnish full particulars if loss occurs within astipulated period

Notice been sent to agent, agent shouldinform the insurer within 3 working daysThe duty to minimize the loss


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2. Validation of coverageInsurer shall make a preliminary check to ensure avalid claim exists

Conditions for a valid claim : Is the policy in force ? Has premium been paid ? Is the loss caused by an insured peril ? Is the subject matter affected are the same insured under

the policy ? Has notice of loss been given without undue delay?

If a valid claim exists, a claimant will be given a claimform or accident report form


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3. Claim register

Section 47 Ins. Act 1996 : every insurer shall

maintain and up-date register of all insuranceclaims immediately upon the insurerbecoming aware of itNone of these claims shall be removed fromthe register as long as the insurer is stillliable for the claims


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4. Investigation of the claim

Issuance of claim form does not mean insurer admitsliability

A thorough investigation is needed to determinewhether an insurer is liable for the loss or notInvestigation varies depending on the size andcomplexity of the claimClaims above certain level will be investigated indetail by a claim official employed by the insurer orloss adjuster


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Ascertaining the validity of a claim &

amount of loss

Existence of lossLoss caused by peril insuredLoss is not excluded under the policySubject matt er affected is the same as insured underthe policyLoss occurred within the location permittedThe person making a claim is the rightful claimant

Any breach of condition/warranties Amount/quantum of loss


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5. Ascertaining the amount of loss

Property damaged/ lost value of lostitem/estimates repair, replacement or reinstatementLiability claims subject to negotiation betweeninsurer and person suffering the injury or propertydamageSolicitor vs claim officialFailure to reach an agreement, dispute is resolvedthrough arbitration or in court


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6. Ascertain subrogation rights and

contribution duties

Subrogation rights insurer will take action

to make appropriate recoveries form thirdpartyContribution an insurer may be required topay a proportion of the loss


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SETTLEMENT OF CLAIMS

Methods of settlement : Cash Repair Replace reinstate

Letter of probate or administration to validate theclaimantClaimant is required to execute a proper dischargebefore a settlement


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AVERAGE

Under-insurance

To penalise the insured who hasunderinsured his property Agent has to recognise under insurance


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Average

Amount payable =Sum insured X Amount of loss

Value of property

i. SI : RM100,000, Value RM100,000, Loss RM80,000ii. SI : RM80,000, Value RM100,000, Loss RM80,000


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RECOVERIES

Co-insurers, reinsurers, third parties

(subrogation) & other insurers (contribution.


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REPUDIATION OF LIABILITY

No loss / damage as reported

Loss was not caused by insured perilThe policy is void due to breach of condition /warranty


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DISPUTES

Dispute issues :

Whether the insurer is liable Quantum of loss if the insurer is liable

Disputes are resolved through : Negotiation Litigation Arbitration Mediation


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Negotiation

Claim official will try to settle the dispute

through discussionRejection of claim explain the reason whyQuantum of loss negotiate for an amicablecompromise


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Litigation

Claimant does not happy with the discussion

may take the dispute to courtInsurer usually consider litigation as a lastresortThey would try to settle it out of court unlessit involves a huge claim or an important pointof principle


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Arbitration

All disputes relating to quantum only will

have to be referred to arbitration before courtaction can be takenIs speedier and less costly, and hearing isdone in private


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Mediation

Insurance Mediation Bureau to deal disputesbetween insurers and personal policyholdersThey will investigate and decide on the disputeInsurers must abide by IMB decision up toRM100,000Policyholders are not bound by the decision , maytake action in courtIMB is financed by PIAM and policyholders will notbe charged


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POST SETTLEMENT ACTIONWhen claim has been paid, the insurer may : The policy is automatically terminated when an insurer has paid :

a total lossThe full sum insured

A capital sum benefit under personal accident policy Any claim under fidelity guarantee policy

Reduce the sum insured , reinstate the policy , impose new termsand conditions

Claim involves a partial loss amount of loss will be deducted fromthe sum insuredThus be under insured insured is advised to reinstate the policy

A claim may reveal adverse features which warrant new terms andconditions. Insured is free either to accept the new terms andconditions or decline insurance

chapter 8 - claims

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