5/28/2008 4:54 PM New Brand FMT-P2_28May08 1

For insurance purposes, a claim is a demand by a

person or business seeking to recover from an
insurance company for a loss that might be covered
by an insurance policy.
A claim representative, also called an adjuster, is a
person responsible for investigating, evaluating and
settling claims.
A claimant is anyone who submits a claim to an
insurance company.
The First Party
The Second Party
The Third Party (Third Party-Claimant)
CLAIMS
5/28/2008 4:54 PM New Brand FMT-P2_28May08 2
Responsibilities of the Claim Representative
The adjuster or the claim representative has the
following responsibilities in the processing of a
claim which are as under:-
To respond promptly to the submitted claim
To obtain adequate information
Reservation of Rights Letter
To properly evaluate the claim
To treat all parties fairly
CLAIMS
5/28/2008 4:54 PM New Brand FMT-P2_28May08 3
Types of Claim Representatives
Several different types of people participate
in claim handling, depending on the
circumstances. They are: -
Staff Claim Representatives (inside and outside)
Independent Adjusters
Agents - Draft Authority
Public Adjusters
CLAIMS
5/28/2008 4:54 PM New Brand FMT-P2_28May08 4
Internal Claim Administration
A Self Insurance Plan
Internal Claim Departments
Third Party Administrators (TPAs)

CLAIMS
5/28/2008 4:54 PM New Brand FMT-P2_28May08 5
Claim Handling Process
There are three steps that are involved in
processing most claims: -
Investigation
Valuation
Negotiation and Settlement
CLAIMS
5/28/2008 4:54 PM New Brand FMT-P2_28May08 6
Claim Handling Process
Property Insurance Claims
Step 1: Investigation
Determining the cause of loss and assessing damage
Verifying Coverage
Following are the checklist of questions which forms part of
verifying the coverage: -
Does insured has an insurable interest in the property?
Is damaged property covered under the policy?
Is the cause of loss covered under the policy?
Do any additional coverages, endorsements or limitations on
coverage apply?

CLAIMS
5/28/2008 4:54 PM New Brand FMT-P2_28May08 7
Claim Handling Process
Property Insurance Claims
Step 2: Valuation
For a claim representative the valuation of loss can be most difficult aspect of settling
property insurance claims. In order to indemnify the insured according to the policy
provisions, the claim representative must be able to answer two questions: -
How does the policy specify that the property be valued?
Actual Cash Value
Replacement Cost
Agreed Value
Based on that specification, what is the value of the damaged property?
Personal Property
Real Property
Square footage of the property
Quality of construction
Construction cost per square foot
CLAIMS
5/28/2008 4:54 PM New Brand FMT-P2_28May08 8
Claim Handling Process
Property Insurance Claims
Step 3: Negotiation and Settlement
After the valuation process is complete, the final part is
to arrive at a claim amount which shall be mutually
negotiated and settled between the parties to the
insurance contract.
The two other factors that can affect insurers cost
for property claims: -
Subrogation
Salvage rights - Constructive Total Loss
CLAIMS
5/28/2008 4:54 PM New Brand FMT-P2_28May08 9
Claim Handling Process
Liability Insurance Claims
Step 1: Investigation
Determining how the loss has occurred and assessing the
situation
Verifying Coverage
Step 2: Valuation
Damage
Compensatory Damage
General Damages
Special Damages
Punitive Damage
Step 3: Negotiation and Settlement
CLAIMS
5/28/2008 4:54 PM New Brand FMT-P2_28May08 10
Establishing Loss Reserves
Unfair Claim Practices Laws
These laws are state laws that specify claim practices that are illegal. The
prohibited claims practices usually include
Misrepresentation of pertinent facts or insurance policy provisions
relating to the coverage at issue in a claim.
Failure to acknowledge and promptly respond to communications with
respect to the claims arising out of insurance.
Actions that compelled an insured to sue to recover amounts due
under insurance policies by offering amounts that are substantially
lower than the amounts ultimately recovered in legal actions brought
by such insureds.
Refusing to pay claim without first conducting reasonable
investigation based on all available information.
CLAIMS
5/28/2008 4:54 PM New Brand FMT-P2_28May08 11


CLAIMS