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CLAIMS CLAIMS PROCEDUREPROCEDURE

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INSURANCE INSURANCE BUSINESS BUSINESS ABROADABROAD

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CLAIMS PROCEDURE• Claim – a demand made by Insured on

the Insurer to redeem the promise made by Insurer

• Insurer to check – Happening of insured event Obligations of Insurer Performance by Insured

• Persons entitled to demand performance –nominees, assignees, prohibitory orders etc

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Claims Procedure (Contd.)

• Notice of loss to IC – immediate notice to allow IC to investigate

• Notice to others (i.e. Police, Railways) – where required

• Insurer to check – Validity of policy on date of

occurrence of loss Loss/damage by peril insured Notice of loss received without

undue delay

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INVESTIGATION & ASSESSMENTINVESTIGATION & ASSESSMENT• Duly completed Claim form – to be

submitted by Insured Loss is small – IC officer to investigate to

determine cause and extent of loss Other claims – entrusted to independent

licensed professional surveyors Personal Accident claims – Report from

attending Doctor specifying cause accident or nature of illness with medical evidence

Third party claims personal injuries- medical opinion, Surveyors report property loss on

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SURVEYORS & LOSS SURVEYORS & LOSS ASSESSORSASSESSORS

• Licensed Surveyors to assess loss – IRDA Regulations in 7 classes of insurance –Fire, Marine Cargo Marine Hull, Engineering, Motor, Miscellaneous, Loss of Profit

• Marine Claims – different line, Average Adjuster - General

Average Loss Surveyors - Other losses (total

loss, partial loss)

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CLAIM DOCUMENTSCLAIM DOCUMENTS

• Claim forms and all correspondence from IC marked `without prejudice` - no liability admitted

• Claim Forms – forms designed to elicit full information of circumstances of loss-date, time, cause, extent etc

• Other documents to substantiate claims – Driving licence, RC, Police Report, (Motor), Metrological Office (Cyclone) etc

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ARBITRATION, SETTLEMENT & ARBITRATION, SETTLEMENT & RECOVERIESRECOVERIES

• Arbitration Mechanism - prescribed in Arbitration and Conciliation Act 1996 Advantageous for both parties – Cost

effective, expeditious, informal, private proceedings

• Settlement - Claim found in order – amount paid and entries recorded in books

• Salvage – partially damaged property, upon claim settlement salvage belongs to IC

• Recoveries – IC entitled under law of subrogation

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INSURANCE BUSINESS INSURANCE BUSINESS ABROADABROAD

• Life insurance market growing bigger and faster -

Country Non-life(US $ bn)

Rank Life(US $ bn)

Rank

USAJapan

GermanyUK

FranceS Korea

India

460.6189.1168.0565.6638.4514.12.46

123451030

443.41356.7355.63

152.7275.1514.12.46

12534719

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INTERNATIONAL COMPARISONINTERNATIONAL COMPARISONPENETRATION

(PREMIUM AS % OF GDP)

• United States 4.32

• Canada 3.31

• UK 3.05

• Germany 3.55

• Japan 2.30

• South Korea 2.89

• China 0.61

• India 0.54

DENSITY ( PREMIUM PER CAPITA) USD

• USA 1474.4

• Canada 700.6

• UK 741.5

• Germany 913.5

• Japan 805.5

• South Korea 262.3

• China 5.0

• India 2.4

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INTERNATIONAL REGULATIONSINTERNATIONAL REGULATIONS

• Intense competition - Countries have moved more to less restrictive Flexible Market driven insurance

regulations – UK, Chile, Hongkong, Netherlands

Intensive not only following prudential norms but also product pricing and content- Germany, Japan, Korea, Switzerland, India and developing countries

Canada – falls between extremes USA- varies between States

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INSURANCE MARKET – INSURANCE MARKET – USA & CANADAUSA & CANADA

• Insurance market shared by - Provincial Government and Federal Government

• Federal Govt. – regulates Foreign insurers and Federally chartered insurers representing 90% market Federal Govt. – imposes Regulatory

requirements of Financial reporting, Capital requirements, Investment constraints and solvency criteria

Provincial Govt. – deals with licensing of agents,

Brokers matters relating to policyholders

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INSURANCE MARKET – INSURANCE MARKET – SINGLE EU MARKETSINGLE EU MARKET

• World's second largest non-life

insurance market - share 31% Consists of big three markets –

o1st Tier - Germany, France and UKo2nd Tier – Italy, Netherlands, Switzerland and

Spain Each other European country's share – 1%

• Three principles adopted (Unresolved)

Home country control; Minimum harmonization of

essential regulations; Mutual recognition

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INSURANCE MARKET – ASIAINSURANCE MARKET – ASIA • Japan – world's second largest market

Follows closed non-life market- foreign IC have little opportunity; moving towards gradual liberalization

Non-life insurance market – 26% of Japan total insurance volume

• South Korea – regulated by Finance and Economic Bureaus and Insurance Supervisory Board

• China – previously shrouded in secrecy, premier national insurer is Peoples Insurance Company; foreign companies also permitted now

• Africa – continent in its entirety represents less than 1% world's non-life market. South Africa has significant history

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MARKET INNOVATIONSMARKET INNOVATIONS• Directors and Officers Liability

Insurance – recent corporate scams and enactment of Sarbanes Oxley Act increased liability and accountability of Directors and Officers; recent survey (2002) shows 48% respondents declined to serve on Board due to stringent legal provisions and liabilities

• FAIR (Fair Access to Insurance Requirements) or Market Assistance Plan (MAP) - emerged in USA in residual market to handle risks which IC reluctant to cover; set up on shared or voluntary basis by State regulators for high risks poor loss records, inadequate safety measures

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Market Innovations (Contd.)Market Innovations (Contd.)• Income Bonds – introduced in UK in 1988;

provides guaranteed level of income of a predetermined period (usually 5 year)

• Single Premium Bond –investment contract where lump sum is paid to IC; offers tax advantage

• Universal Life Policies - flexible LI policies also called `variable` or `unbundled`; provides benefits of investment, health insurance, disability etc; level of cover and investment variable with premium; expensive with higher level of charges

• Contingent Business Interruption Insurance – covers business losses due to damage to premises, machinery or other insurable perils