CLAIMS

CLAIMS PROCEDURE

Notification of loss Validation of coverage Claims register Investigation of the claim Ascertaining the amount of loss Ascertain subrogation rights and contribution duties

1. Notification of loss

Is a condition of most policies for insured to notify the insurer of the loss immediately May be in verbal or written Furnish full particulars if loss occurs within a stipulated period Notice been sent to agent, agent should inform the insurer within 3 working days The duty to minimize the loss

2. Validation of coverage

Insurer shall make a preliminary check to ensure a valid 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 claim form or accident report form

3. Claim register

Section 47 Ins. Act 1996 : every insurer shall maintain and up-date register of all insurance claims immediately upon the insurer becoming aware of it None of these claims shall be removed from the register as long as the insurer is still liable for the claims

4. Investigation of the claim

Issuance of claim form does not mean insurer admits liability A thorough investigation is needed to determine whether an insurer is liable for the loss or not Investigation varies depending on the size and complexity of the claim Claims above certain level will be investigated in detail by a claim official employed by the insurer or loss adjuster

Ascertaining the validity of a claim & amount of loss

Existence of loss Loss caused by peril insured Loss is not excluded under the policy Subject matter affected is the same as insured under the policy Loss occurred within the location permitted The person making a claim is the rightful claimant Any breach of condition/warranties Amount/quantum of loss

5. Ascertaining the amount of loss

Property damaged/ lost value of lost item/estimates repair, replacement or reinstatement Liability claims subject to negotiation between insurer and person suffering the injury or property damage Solicitor vs claim official Failure to reach an agreement, dispute is resolved through arbitration or in court

6. Ascertain subrogation rights and contribution duties

Subrogation rights insurer will take action to make appropriate recoveries form third party Contribution an insurer may be required to pay a proportion of the loss

SETTLEMENT OF CLAIMS

Methods of settlement :

Cash Repair Replace reinstate

Letter of probate or administration to validate the claimant Claimant is required to execute a proper discharge before a settlement

AVERAGE

Under-insurance To penalise the insured who has underinsured his property Agent has to recognise under insurance

Average

Amount payable = Sum insured Value of property

i. ii.

X Amount of loss

SI : RM100,000, Value RM100,000, Loss RM80,000 SI : RM80,000, Value RM100,000, Loss RM80,000

RECOVERIES

Co-insurers, reinsurers, third parties (subrogation) & other insurers (contribution.

REPUDIATION OF LIABILITY

No loss / damage as reported Loss was not caused by insured peril The policy is void due to breach of condition / warranty

DISPUTES

Dispute issues :

Whether the insurer is liable Quantum of loss if the insurer is liable Negotiation Litigation Arbitration Mediation

Disputes are resolved through :

Negotiation

Claim official will try to settle the dispute through discussion Rejection of claim explain the reason why Quantum of loss negotiate for an amicable compromise

Litigation

Claimant does not happy with the discussion may take the dispute to court Insurer usually consider litigation as a last resort They would try to settle it out of court unless it involves a huge claim or an important point of principle

Arbitration

All disputes relating to quantum only will have to be referred to arbitration before court action can be taken Is speedier and less costly, and hearing is done in private

Mediation

Insurance Mediation Bureau to deal disputes between insurers and personal policyholders They will investigate and decide on the dispute Insurers must abide by IMB decision up to RM100,000 Policyholders are not bound by the decision, may take action in court IMB is financed by PIAM and policyholders will not be charged

POST SETTLEMENT ACTION

When claim has been paid, the insurer may :

The policy is automatically terminated when an insurer has paid :

a total loss The 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 terms and conditions

Claim involves a partial loss amount of loss will be deducted from the sum insured Thus be under insured insured is advised to reinstate the policy A claim may reveal adverse features which warrant new terms and conditions. Insured is free either to accept the new terms and conditions or decline insurance