Basis of claims management
Claims management means and includes all the managerial decisions and processes concerning the settlement and payment of claims in accordance with the terms of insurance contract. It includes carrying out the entire claims process with a particular emphasis on monitoring and lowering the claims costs. The important elements of claims management are claims preparation, claims philosophy, claims processing and claims settlement.
The claims philosophy is defined as procedure or specified approach to settle the claims. It contains the claims management principles and also claims handling methods and procedures. The claims philosophy includes the preparation of guidelines regarding the receipt of claims from the insurers or claimants, analysis of the claims, consideration of the possible decision on the particular issues and disputes, evaluating the impact of the claims cost and expenses, relation of claims to the consumer satisfaction, monitoring the claim payment and improving the efficiency of the claims settlement and payment systems and avoiding unnecessary disputes of claims.
The claims process includes the basic claims procedure and handling of claims. The handling of claims includes the monitoring of situation or events, which cause the loss to the insured subject matter and give a cause to the insured to make a claim. The claims process contains two fold procedures to be followed by the insurer and insured. From the point of view of the insured, it includes the suffering of loss or the damage, understanding and identifying the cause of action, information or giving notice of claim or loss to the insurer, providing sufficient proof of loss to the insurer or his agent or the loss assessor and surveyors. The insurer, on the receipt of the claim from the insured, has to take certain immediate precautions such as verifying the claims, reviewing the claim application, respond to the claimant, carry out claims investigation, claims negotiation, claim settlement and claim payment.
Stages in claims system
1. Claims management:
Claims management is a managerial function in which the insurer has a definite role to play in analysis of data, processing of application, decision-making, budget planning, and business control and fund management. It is a subjective concept. In claims management, the attention is on making principles and guidelines for smooth and profitable settlement of claims in the hands of the insurer.
Claims management includes the entire process of claims handling and claims payment. This includes review of the claims performance, monitoring of claims expenses’, legal costs, settlement costs, compromises and planning for future payments and avoiding the delay and disputes in payment of claims. It is a control system that has an important place in the claims management. It also includes risk management techniques, loss assessment, and business forecasting and planning.
2. Claims handling:
Claims handling is the procedural way of processing a claims application. Claims handling involves utilization of the laid down principles as yardsticks and the measuring methods in settling the issues before it occurs. Claims handling is a traditional form of managing the claims settlements. It includes handling of various stages of the insurance claims. It is functional in nature such as claims review, investigation and understanding the negotiating process. It does not include any managerial outlook such as risk management, policy making and decision making.
Thus, it is concerned with the procedural methods and also interpretations of the claims philosophy. Claims handling may change from case to case depending on the merits of the claim, but it will not drastically change every moment. It is a flexible as well as a rigid way of handling the issues having interest of the insurer in mind. It is a systematic way of receiving the claims and following other procedures required for quicker and efficient payment of the claims. Every insurer has a standardized way of claims handling which will improve quality and customer service. The insurer’s commitment to the service of the customer is a part of the claims management.