GENERAL OVERVIEW AND PRINCIPLES OF CLAIMS CHAPTER 8
CHAPTER 8
GENERAL OVERVIEW AND
PRINCIPLES OF CLAIMS
Learning Outcomes
When you have completed this chapter you will be able to
explain the general aims of an insurer’s claims department;
list and briefly describe the information needed to verify the policy
details at the claim stage;
explain why the claims department needs to verify the policy
details at the claim stage;
discuss the impact on a claim of the discovery that information had
been concealed from the life insurer’s underwriter at the inception
of the policy;
explain how the validity of a claim can be established;
describe how the average life insurer deals with early claims;
explain the general policy amongst life insurers when dealing with
a claim where death was as a result of the suicide of the life
insured.
RSK3701 LI Page 182
Ver 31072011
, GENERAL OVERVIEW AND PRINCIPLES OF CLAIMS CHAPTER 8
The aims and objectives of any claims department in a life insurance office is the payment of
claims as efficiently and speedily as possible. Allied to this is, however, the need to make
sure that every claim is valid, and that the right amount is being paid to the correct person.
An insurance contract is essentially an agreement between the life insurer and the proposer,
arising after:
the proposer has provided the insurer with all the required information;
declared that the information is complete and correct; and
on the basis of this information, the insurer has accepted the proposal and sent a policy
document to the policyowner.
When any policy claim is considered, the insurer deems it as being in the interests of all its
policyholders to ensure that the information that was provided in the proposal, was indeed
complete and correct, and that any payment is made within the provisions of the policy.
The general aims of an insurer’s claims policy, including ex-gratia payments, is to:
empower claims staff to deviate from certain provisions of the policy contract where
necessary, in order to benefit the policyowner and his dependants;
lay down guidelines regarding the extent to which information provided by the claimant
must be checked;
provide claims staff with the necessary assistance needed in the interpretation of policy
provisions;
limit or prevent inconsistency in decision making; and
strive towards the principle of fairness at all times.
8.1 VERIFICATION OF INFORMATION
(“RETROSPECTIVE UNDERWRITING”)
One of the first procedures to be followed by the claims staff, upon receiving a claim against
a policy, is to verify all information relevant to the policy contract. This includes calling for the
file and checking the information provided at the inception of the contract, on the proposal
form with the information provided with the claims documentation.
This must at no time be considered as underwriting at claims stage. The aim and objective is
merely to verify information, and check that no non-disclosure of a material fact that could
have affected the risk was withheld.
8.1.1 INSURABLE INTEREST
Insurable interest can be defined as the legal right to insure, and means that the proposer
must have an actual, recognised relationship with the person to be insured, as a result of
which he would suffer a financial loss if the event being insured against occurs.
RSK3701 LI Page 183
Ver 31072011
CHAPTER 8
GENERAL OVERVIEW AND
PRINCIPLES OF CLAIMS
Learning Outcomes
When you have completed this chapter you will be able to
explain the general aims of an insurer’s claims department;
list and briefly describe the information needed to verify the policy
details at the claim stage;
explain why the claims department needs to verify the policy
details at the claim stage;
discuss the impact on a claim of the discovery that information had
been concealed from the life insurer’s underwriter at the inception
of the policy;
explain how the validity of a claim can be established;
describe how the average life insurer deals with early claims;
explain the general policy amongst life insurers when dealing with
a claim where death was as a result of the suicide of the life
insured.
RSK3701 LI Page 182
Ver 31072011
, GENERAL OVERVIEW AND PRINCIPLES OF CLAIMS CHAPTER 8
The aims and objectives of any claims department in a life insurance office is the payment of
claims as efficiently and speedily as possible. Allied to this is, however, the need to make
sure that every claim is valid, and that the right amount is being paid to the correct person.
An insurance contract is essentially an agreement between the life insurer and the proposer,
arising after:
the proposer has provided the insurer with all the required information;
declared that the information is complete and correct; and
on the basis of this information, the insurer has accepted the proposal and sent a policy
document to the policyowner.
When any policy claim is considered, the insurer deems it as being in the interests of all its
policyholders to ensure that the information that was provided in the proposal, was indeed
complete and correct, and that any payment is made within the provisions of the policy.
The general aims of an insurer’s claims policy, including ex-gratia payments, is to:
empower claims staff to deviate from certain provisions of the policy contract where
necessary, in order to benefit the policyowner and his dependants;
lay down guidelines regarding the extent to which information provided by the claimant
must be checked;
provide claims staff with the necessary assistance needed in the interpretation of policy
provisions;
limit or prevent inconsistency in decision making; and
strive towards the principle of fairness at all times.
8.1 VERIFICATION OF INFORMATION
(“RETROSPECTIVE UNDERWRITING”)
One of the first procedures to be followed by the claims staff, upon receiving a claim against
a policy, is to verify all information relevant to the policy contract. This includes calling for the
file and checking the information provided at the inception of the contract, on the proposal
form with the information provided with the claims documentation.
This must at no time be considered as underwriting at claims stage. The aim and objective is
merely to verify information, and check that no non-disclosure of a material fact that could
have affected the risk was withheld.
8.1.1 INSURABLE INTEREST
Insurable interest can be defined as the legal right to insure, and means that the proposer
must have an actual, recognised relationship with the person to be insured, as a result of
which he would suffer a financial loss if the event being insured against occurs.
RSK3701 LI Page 183
Ver 31072011
