CHAPTER NO.

CLAIM PROCEDURE
APRINCIPLES OF CLAIMS HANDLING APPLIED TO MOTOR INSURANCE
THE ROLE OF THE CLAIM DEPARTMENT The claim department had been described as the shop window of insurance compan . The claim handlin! can effect a polic holder"s decision as to whether the renew their current insurer or not. Therefore the role of the claim department is to# $ndemnif the polic holder in accordance with the co%er purchased. Ensure that onl %alid claims are paid. Pro%ide a fast& fair and efficient claim ser%ice. 'eal with the (Third Part claims whilst protectin! the polic holder interests. Protect the fund of premium a!ainst o%erpa ment& fraud and e)penses incurred due to inefficient claims handlin! processes Pro%ide a hi!h de!ree of ser%ice and also ensure that claims are %alid. Then *uantif accuratel each claim.

PRINCIPLES APPLYING TO CLAIMS

INSURABLE INTEREST At the time of claim the insured must show that the ha%e insurable interest in the sub+ect matter of insurance. The must be able to demonstrate that the sub+ect matter e)ists at the time of loss. That the will benefit from its continued e)istence and shall suffer financiall
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b its loss.

In motor insurance t e insura!"e interest e#ist e$%

The owner of the motor %ehicle or motor c cle. An who is dri%in! or usin! motor %ehicle or motor c cle has an interest in an liabilities incurred due to their use of it. A person ha%in! rentin! a %ehicle b the term of the rental a!reement is liable for the loss or dama!e sustained. INDEMNITY .otor policies are sub+ect to indemnit /ub+ect to polic limits and e)clusions The polic holder should be placed in the same financial position after the loss as he en+o ed immediatel prior to it. The personal accident benefits are not sub+ect to indemnit . CONTRIBUTION 0here there are two or more insurance co%er part or all the loss then Each contributes to the loss on proportionate basis to ensure that the polic holder does not !ain more than the indemnit . The motor polic contains either contribution or non-contribution clauses. 0here there are both policies with the same clause then the loss will be shared e*uall . The other use of the term contribution relates to (Betterment1 where the condition of the insured car is better after the loss and repair than it was prior to it. $t applies to 2atteries& replaced parts etc. /o depreciation will be char!ed from the insured for betterment before deli%er of the car. SUBROGATION $t is the ri!ht of an insurer& followin! pa ment of claim& to ta3e o%er the insured4s ri!ht of reco%er from a third part responsible for the loss. $f the insured claim indemnit from an insurer and then also ac*uire further pa ment from a ne!li!ent third part then this would result in a profit to the
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insured and mean that principle of indemnit had not been met. The insurer can reco%er from a third part after pa ment of claim onl . Pa ment that can be claimed is limited to the amount paid out under the polic . The insurer cannot reco%er from a third part before it has actuall settle6d its own insured"s claims. This is to be a !reat disad%anta!e b not ha%in! complete control of proceedin!& sa dela in action b the insurer a!ainst third part . To o%ercome this disad%anta!e& policies include a condition to pursue subro!ation before claim is paid. NOTIFICATION CONDITION

On the happenin! of an e%ent !i%in! rise to a claim under the polic & it is a condition to inform the insured promptl . CLAIM NOTIFICATION METHODES The followin! are %arious claim notification methods. An acci&ent re'ort (orm used to be the main method b which claims were notified to insurer. Now a da 4s ma+orit of claims are ad%ised o%er telephone. $f bro3er in%ol%ed. The are too as3ed to use this method. Also details of incidents can be entered strai!ht to computer. $nformation can also be obtained from the repairer /ome insurer pro%ides (statement o( insurance.1 The information pro%ided b the insured to be filled b the insurer and then sent to insured for completion and %erification. T e main 'ur'ose o( o!tainin% an acci&ent re'ort (orm or statement o( insurance are)* To pro%ide the polic holder with a con%enient medium throu!h which to ad%ise claim details. To ensure that all information pertinent to claims obtained earl and accuratel . Enable (%alidation1 of claims& that it is properl co%ered under the polic . To assist in dealin! with the claims *uic3l and efficientl . To pro%ide the polic holder4s current details in order to update underwritin! record.
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 To chec3 to insure that the information disclosed at inception and 7or renewal was accurate and full. To assist in dealin! with liabilit issues. T e Main Hea&in%s containe& +it in t is (orm , to%et er +it t eir 'ur'ose, are as (o""o+s. POLICY DETAILS The polic detail identif the polic record and confirm whether it has recentl been incepted or renewed. POLICYHOLDER DETAIL These details are mainl re*uired that correct polic has been identified information alread held are correct. DRI-ER $f the dri%er co%er under the terms of the polic . $f the dri%er had permission from the polic holder to dri%e the %ehicle. $f not then the claim is not pa able -e ic"e.Motorc/c"e $s the 8ehicle of .otor C cle is the same co%er under the polic as per our computer records. $s there an modification in the %ehicle7motor c cle. Use o( t e 0e ic"e /ome time the use of the %ehicle is restricted. Therefore it is necessar to determent the use at the time of incident. Dama%e to t e 0e ic"e The dama!es must be consistent with the accident circumstances. Therefore inspection is re*uired.
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 Detai" o( Acci&ent The accident must be within the polic period. Ot er 'art/ in0o"0e& 9or e)ample Third part in+ur or propert dama!e. $t helps in reser%in! and assessin! the loss. 1itnesses The e e witness helps to determine the responsibilities of occurrence. Dece"eration an& Si%nature This declares that the information supplied is true to the best of 3nowled!e and belief and pro%ides for the si!natures of the polic holder and possibl the dri%er. Ot er c"auses re"e0ant to c"aims Reasona!"e Care C"ause The polic holder to ta3e all reasonable steps to protect the %ehicle7motor c cle from the loss or dama!e and to 3eep it in a roadworth condition. Frau& C"ause $n common law& an polic tainted with fraud is :%oid4. A polic that is %oid in law is treated as thou!h it ne%er e)isted. A claim is fraudulent 0hich will includes !ross e)a!!eration /upported with the use of for!ed documents The polic holder would not ha%e an ri!ht to reclaim premiums paid. Co*O'eration C"ause Once an incident is notified& insurers will need the co-operation of the polic holder and or dri%er& who should pro%ide %er assistance. A&mission o( Lia!i"it/
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/hould the polic holder of the dri%er admit blame to a third part claimant then the position of the insurer ma be pre+udiced. The polic call for no such admission to be made. Ar!itration The polic calls for an dispute o%er *uantum that is the amount of claim& to be referred to an arbitrator before an le!al action can be ta3en a!ainst the insurer.

ACCIDENTAL DAMAGES CLAIMS

The reputation of an insurer can rise or fall on its claim handlin! ser%ice. Now a da s the polic holder e)pect prompt repair of their %ehicle 7 motorc cle. The claim for dama!ed to the polic holder"s %ehicle can onl be proceedin! if the co%er !ranted is on an Comprehensi%e basis. $f all the information recei%ed b the insurer& is sufficient to proceed with the matter& the insurer should immediatel order for repair if the loss is a minor one. $n case of ma+or loss the insurer nominate a sur%e or 7 en!ineer for inspection and sur%e of the %ehicle. $f repair of not economical then the %ehicle ma be treated as Total <oss. $f repair is economical then the polic holder can choose their own repairer. 2ut most of the insurer has now formed panels of repairers and the were endea%or to place wor3 with them. PANEL 1OR2SHOPS The insurer will normall ha%e formed relationships with those Repairers who were prepared to offer a reasonable hourl rate in e)chan!e for !uaranteed wor3. The are often referred to as Panel Repairers. The must ha%e necessar e*uipment and must be able to wor3 on all standard models and models in such a wa as to maintain& the effecti%eness of manufacturers" warranties.
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 /uch repairers ha%e to be customer-focused and willin! to submit to *ualit standards. The ma also be a member of one of the reco!ni=ed %ehicle 7 motorc cle repairer or!ani=ation& such as -e ic"e Bui"&ers3 an& Re'air Association $ The labor rate is a!reed b the insurer with the repairer. $n case of replacement of parts& the price of the parts must be controlled b manufacturer4s price list.

AD-ANTAGES OF PANEL REPAIRERS

An ad%anta!e for an appro%ed repairer process is that the !ara!e can be trusted to start wor3 immediatel without the need of an en!ineer4s inspection. The need for en!ineer to see the %ehicle can be reduced b a!reein! that repairers will use one of the CO.P>TER$/E' E/T$.AT$N? /@/TE. now on the mar3et. Appro%ed repairer will also normall collect& store and redeli%er the polic holders %ehicle 7 motor c cle. A recent inno%ation had been the use of remote 0i&eo assessment$ 8ideo ima!es of the e)tent of the dama!ed to a %ehicle 7 motorc cle. $t does enable an en!ineer to assess the nature and cost of the repair wor3& plus the appropriate labor wor3 necessar to complete the repair& without actuall lea%in! the office. .ost reasonable si=e repairers now offer some form of alternati%e transport while the ha%e a customer4s %ehicle in for repair. These are commonl 3nown as COURTESY CARS$ .ost of the insurers insist upon a%ailabilit of courtes cars from their panel of appro%ed repairers. Howe%er& some insurers ha%e !one as far as arran!in! their own source of Rental 8ehicles. REPLACEMENT OF PARTS The cost of parts forms about half of the a%era!e repair bill. $nsurers are often loo3in! to reduce the cost of repair& bearin! in mind the e)tent of the premium paid.
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 The use of secondhand parts in %ehicle repair has been a feature in man countries for a number of ears and could be considered en%ironmentall friendl . Another source of competiti%el priced parts is that of non-proprietar parts i.e non-manufacturer. These are often made b the same companies that suppl %ehicle manufacturers and turned out on the same presses to the same *ualit .

PAYABLE BY THE INSURER

The reasonable cost of remo%in! the %ehicle from the scene of an accident to the nearest competent repairer is co%ered under a motor insurance polic . The will pa the stora!e and reco%er cost for the %ehicle and then returnin! it after repair to the polic holder4s permanent address in the >B. $n case of Total <oss of the %ehicle the Towin! and ?ara!e char!es is pa able under the terms of the insurance polic .

SATISFACTION NOTE
At the time that the polic holder collects their car followin! repair& the will be as3ed to si!n what is normall termed a (/atisfaction Note ( The ob+ect of this note is to obtain the polic holder4s acceptance that the %ehicle had been returned in a satisfactor state and that the ha%e chec3ed and appro%ed the repair. 2ut this would not pre%ent the insured returnin! the %ehicle later the find an fault that had not been noticed followin! an inspection at repairers. >pon collection of the %ehicle& the polic holder will be re*uired to pa an a!reed contributions. These ma be of different t pes e.!. E)cess as shown in the polic 8AT where the polic holder is re!istered ta) pa er. An pri%ate wor3 carried out at the same time as the main repair An contribution for betterment.

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ROLE OF ENGINEER
The cost of repair authori=ed b an insurer is !enerall o%erseen b a team of en!ineers. The ma either be emplo ed in-house b the insurers or& The can be wor3in! for independent en!ineers and paid on a fee per case basis.

1OR2ING OF ENGINEERS
En!ineers will a!ree method and cost of each repair with !ara!e . The pro%ide repair authorit on behalf of the insurer. The will be a%ailable for consultation should somethin! chan!e durin! the course of repair and si!n off the final in%oice. $f repair is not economicall %iable then the en!ineer will declare the %ehicle an insurance write-off or Total <oss. The will calculate the pre-loss %alue of the %ehicle and& in some cases& will a!ree this with the %ehicle owner.

THEFT CLAIMS
Theft claims are sub+ect to different considerations to !eneral accident claims. There is a tendenc for man %ehicles reported to be stolen& to be reco%ered within a matter of da s or wee3s of the theft. $f the %ehicle is reco%ered in a dama!ed state& the insurer will proceed with the settlement of the claim in the usual wa . $f the %ehicle remains unreco%ered then the claim will be settled as per usual process. As such immediate notice of theft must be !i%en to the police authorit and also to the insurance compan . The followin! FEATURES must be considered for settlement of theft claim. 0e ha%e to see that

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 A theft loss happened shortl after inception of the polic especiall where the co%er is onl Third Part 9ire and Theft. 0here the .OT Certificate E.inistr of TransportF e)pires shortl after the loss& or there is no .OT Certificate in force at that time. $f the %ehicle is co%ered under the term of the polic or there is other problem in the polic . 0here the location of the 3e at the time of loss or alternati%el misplaced. $n%esti!ations could be made b the sur%e or or assessor on the instruction of the insurer. $f the %ehicle is reco%ered in a dama!ed state& the sur%e or ma chec3 if there is an si!n of forced entr for e)ample one or more door loc3s had been dama!ed& then this certainl raised the possibilit that the theft is !enuine. 0hether there is e%idence that the i!nition loc3 dama!ed or wire tempered. Otherwise there is a possibilit that a 3e has been used to ta3e the car. $f the insurer is satisfied that the %ehicle is not reco%ered& then it will normall wait a set or period before settlin! the %ehicle as ha%in! been stolen :permanentl 4. The insurer will ha%e settlement four or at the most si) wee3s& before dealin! with the claim. $f the %ehicle is subse*uentl reco%ered it will either be treated as /A<8A?E belon!in! to the insurer OR the claims mone will be re-paid and the %ehicle re%erts to the insurer4s ownership. This option is hardl e%er used in practice.

FIRE CLAIMS
The moti%e for such claims ma be %arious# The %ehicle ma not ha%e been in particularl !ood condition. The insured ma ha%e failed to obtain .OT Certificate. $t ma be that the ma3e and model of the car is undesirable perhaps due to its a!e and condition etc. 9or the polic holder& submittin! a spurious fire claim is preferable to bein! left with a car which would fetch little if sold on the open mar3et. 9ire claims comprise a small proportion of the total claims portfolio of an insurer and some fire claims are perfectl !enuine.
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$t is often the order car that is prone to such a loss due to the parts becomin! worn out and in particular& electrical wires becomin! fra ed or worn. Howe%er& the actual item or part that brea3s down will be e)cluded.

TOTAL LOSS CLAIMS

A Total <oss Claim is when the cost of repairin! the %ehicle e)ceeds the pre-accident %alue of the %ehicle. The settlement of claim is the mar3et %alue of sum insured whiche%er is less.

MAR2ET -ALUE
$t is the amount that it would cost to replace the %ehicle with one of the same ma4e& mo&e" and a%e& and in the same con&ition and with mi"ea%e is the mar3et %alue of that %ehicle.

SALE OF SAL-AGE
$f a claim is bein! settled on a total loss basis& then the insurer will retain the /A<8A?E and will sell it to offset costs. in%ariabl

Howe%er& motor %ehicle sal%a!e is& unfortunatel & the sub+ect of fraud on occasions. $t can be ta3en and used on stolen %ehicle. $t is for these reasons that the insurance industr & in con+unction with the bu ers and ?o%ernment departments& has sou!ht to control the disposal of sal%a!e. All sal%a!e reco!ni=ed in accordance with !uidelines issued b the '8<A. The cate!ories ran!e from :A4 to :'4. The cate!ories :'4& the lowest cate!or %ehicles are reported to the '8<A and the will enforce rules to ensure either no further re!istration of a %ehicle of re!istration documents is !ranted. To further safe!uard a!ainst fraud& $nsurers re!ister& throu!h A2$& all the total loss and thefts on an industr computer 3nown as .$A9TRE .otor $nsurance Anti 9raud and Theft Re!isterF database. An cash settlement will be made to an 3nown finance compan that has an outstandin! hire purchase or lease a!reement on the %ehicle. $n practice& this will occurs where the %ehicle is bein! treated as a total loss. /al%a!e companies b %ehicle upon the probable profit mar!in from resale either
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as a whole or as parts.

THIRD PARTY PROPERTY DAMAGE CLAIMS

$n case of Third Part propert 'ama!e Claims the insurer will& /ee3 statement from independent witnesses& Clarification ma be achie%ed b an e)amination of the scene of accident .Photo!raphs of the same. En!ineer4s report pertainin! to the dama!e sustained to the polic holder4s %ehicle. Acci&ent ten&s to !e t+o t/'es A fault accident& where the polic holder was wholl or partiall responsible or non-fault where the polic holder was e)onerated from blame. The latter t pe of incident would be where the polic holder4s %ehicle is struc3 in the rear. /e*uence of accident in%ol%in! more than one car encoura!e the claim under their own polic .

THIRD PARTY PERSONAL IN5URY CLAIMS

0here there is an accident in%ol%in! a Third part and in+uries are sustained& the followin! documents must be obtained. Police report /tatement of e e witness /tatement of parties in%ol%ed E)tent of in+ur .edical Reports etc.

CONTRIBUTORY NELIGENCE
The present law on contribution ne!li!ence <aw Reform E Contributor Ne!li!ence F Act&,D6; which states that a person"s dama!es will be reduced b an amount which is "+ust and e*uitable" ha%in! re!ard to person"s e)tent of responsibilit for the occurrence. That is the amount of reduction will be commensurate with the e)tent of their responsibilit . 9or e)ample#Pa!e#,5 of ,-

 The speed of both the %ehicle will ha%e to be considered. The manner of the dri%in! of the parties and their reaction time will be ta3en into account. Road conditions /tate of weather. 0hen seat belt is not utili=ed 9ail to wear crash Helmets. .isleadin! si!nal b the dri%er on the main road.

Con&uctin% t e c"aims
The insurer ma re*uire more detailed e%idence of the location of incident. 0hene%er there is a claim for personal in+ur . A medical e)amination of the claimant is essential b a doctor nominated b the insurer.

ADMISSION AND DENIAL OF LIABILITY

All the motor policies contain a condition that the insured must ma3e no admission of liabilit without the consent of the insurers. $f the matter is the sub+ect of court proceedin!s then an admission cannot be made without see3in! the specific consent of the polic holder. $t would be unwise to ma3e a cate!orical denial of liabilit before completin! in*uiries into the incident. $f a repudiation of liabilit is the decided course of action& this must be after careful consideration of all the e%idence. All communications should be conducted " without pre+udice".

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1ITHOUT PRE5UDIC
The e)pression " without pre+udice " means that An action ta3en or an opinion !i%en is not to be construed as an admission of liabilit . Correspondence mar3ed " without pre+udice " cannot be produced as e%idence in the le!al proceedin!s. This means that ne!otiations ma be underta3en freel .

OUT OF COURT SETTLEMENT

$n practice & man claims are settled without resortin! to a court decision. The insurer will 3een to do this in order to a%oid both le!al costs and administration.

MOTOR INDUSTRIESCOMPUTER DATABASE

Motor Insurance Anti Frau& an& T e(t Re%istere& 6 MIAFTR 7 The purpose of this re!ister is to record all motor %ehicle 7 .otor C cle that ha%e been sub+ect of a Total loss claim or ha%e been stolen and not reco%ered. Third part as well as insured losses are recorded and it is a%ailable to all companies& as well as <lo d"s. A number of ears a!o& .$A9TR was lin3ed with the database of E*uifa). The main purpose is to chec3 whether or not a finance arran!ement is current on the %ehicle. A recent enhancement to .$A9TR has seen a lin3 established with the Police National Computer EPNCF when a theft is re!istered&a "match" should occur& showin! the fact that the theft has been recorded with the police alon! with the police reference. The Re!ister was subse*uentl updated in 5GG6 3now 3nown as .$9TR5 to enable re!istrations and searches to be carried out online& pro%idin! real time information.
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CLAIM AND UNDER1RITING E8CHANGE The A2$ to!ether with E*uifa) decided to establish a series of re!isters 3nown as C>E . $t was intended that data %ase would contain information on all claims for different classes of insurance. A number of insurers ha%e decided to use C>E at inception& thus defeatin! nondisclosure and & possibl fraud e%en before co%er is !ranted.

NORTHERN IRELAND PERSONAL ACCIDENT REGISTER The insurer in Northern $reland are encoura!ed to re!ister details of persons claimin! personal in+ur from motor accidents etc. A match report will then be issued in the same wa as .$A9TR and C>E. MOTOR INSURER DATABASE $t pro%ides a list of all the %ehicles normall in the >B& plus the names and addresses of the re!istered 3eepers& to!ether with the correspondin! re!istration plates. Additionall the database incorporate particulars of each insurance polic that relates to %ehicle& includin! & the polic number& plus full detail of insurers& it also includes particulars of these %ehicles which are used on a road or other public place& but are not re*uired to be the sub+ect of insurance. The detail of bodies of indi%iduals who are responsible for compensatin! an in+ured third part mist also be recorded. At the moment& there is a ma)imum of ,6 da s allowed for an chan!e and the .$' details bein! amended. This will reduced to A da s& and the idea is that it will be updated in real time. FINANCIAL OMBUDSMAN SER-ICE
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The insurance Ombudsman 2ureau E$O2F was formed in ,DC3 to pro%ide personal insurance polic holders with an independent bod that could arbitrate on disputes without cost to the indi%idual. 9ollowin! the enactment of the financial /er%ices and .ar3ets Act&5GGG& the insurance ombudsman came part of 9O/ under the control of 9inancial /er%ice Authorit . .embership of the 9O/ is compulsor for all authori=ed insurers with e%er compan re*uired to participate and contribute funds to its operation.

The 9O/ is an entirel independent mechanism for dealin! with disputes. The Ombudsman onl deals with disputes where the insured is either a pri%ate indi%idual or a small commercial enterprises ha%in! a turno%er of less that Pound , .illion. $t is not concerned with commercial insurance for lar!er enterprises. The scheme onl operates where the dispute is between and insured and an insurer. The ombudsman aims is to pro%ide both impartial and independent conciliation of disputes between these two parties. The ombudsman ensures that all possible steps are ta3en b the insurance compan itself to tr to resol%e the dispute. $f the dispute remain unsol%ed& the ombudsman then steps in to re%iew the dispute and ma3e a decision. The ma)imum award which the ombudsman can made which is bindin! on the insurers is Pound ,GG&GGG. Acceptin! the decision results in the insurer bein! re*uired o pa an award & up to a monetar limit. The insurer is bound to b the ombudsman"s decision. The insured can either accept or re+ect the ombudsman"s decision. $f the insured re+ects the decision& the insured can still choose to issue le!al proceedin!s. Chapter No.3 Closed
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