A Study on Claim Management in Life Insurance (2022-2023) PDF

A study on Claim Management in Life Insurance A Project Report On A study on Claim Management in Life Insurance Submitted by Mr. Yash Rakesh Kondalkar Roll No-2021331 TYBBI – Semester VI Lala Lajpat Rai College of Commerce & Economics Mahalaxmi, Mumbai-34 Under the Guidance of Dr. Vaidehi Kamath Submitted to University of Mumbai Academic Year (2022-2023) I A study on Claim Management in Life Insurance Declaration I, Mr. Yash Kondalkar, Roll No: 2021331 the student of TYBBI (B.Com-Banking and Insurance) Semester VI (2022-2023) from Lala Lajpat Rai College of Commerce and Economics, Mahalaxmi, Mumbai-34, hereby declared that I have completed the Project on “ A study on Claim Management in Life Insurance”. The information submitted by me in this project is true and original to the best of my knowledge. ____________________ (Signature of Student) Mr. Yash R. Kondalkar II A study on Claim Management in Life Insurance CERTIFICATE This is to certify that Mr. Yash R. Kondalkar, Roll No: 2021331 the student of TYBBI (B.Com-Banking and Insurance) Semester VI (2022-2023) has successfully completed the project on “A study on Claim Management in Life Insurance” under the guidance of Dr. Vaidehi Kamath. __________________ __________________ ________________ Project Guide BBI Coordinator Principal __________________ __________________ Internal Examiner External Examiner ____________________ College Seal III A study on Claim Management in Life Insurance AKNOWLEDGEMENT To the list who all have helped me is difficult because they are so numerous and the depth is so enormous. I would like to acknowledge the following as being idealistic channel and fresh dimensions in the completion of this project. I take this to thank the University of Mumbai for giving me chance to do this project. I would like to thanks my Principal, Dr. Neelam Arora for providing the necessary facilities required for completion of this project. I take this opportunity to thanks the Coordinator, Dr. Vaidehi Kamath, for her moral support and guidance. I would like to thanks my College Library, for having provided various reference books and magazines related to my project. Lastly, I would like to thanks each and every person who directly or indirectly helped me in the completion of the project especially my Parents and Peers who supported me throughout my project. I would thankful towards my Respondents for cooperating in completion of this project by filling my questionnaire. IV A study on Claim Management in Life Insurance Executive Summary The field of insurance has taken a giant leap at the threshold of twentieth century. Insurance have become an integral part of life of man all over the globe. The proverb 'Need is the mother of invention' is proving equally correct in case of insurance have already had a considerable impact on many aspects of our society. Claims management is another important aspect on insurance. It is complex in nature that is true but it is a driving force to plant confidence in the hearts of people. Claims Management is one of the most challenging business processes in the insurance industry. With the number of stakeholders involved, the dependencies and the logistics, there is a need is to eliminate manual interventions. For many organizations, claim management and administration is viewed solely as a service operation. Claim management is expected to run the claim process efficiently and keep expenses low, but little attention is given to leveraging high-impact opportunities afforded through effective data management. In fact, the data captured in the claim process, which all too often are underutilized, are rich in valuable information for those who know how to extract and analyze it. Claims management is an expert system which generates the rules and regulations for the assessment of general damages using the key information contained in medical reports, surveyor report, loss assessor's reports, claimant's petition and the procedures or conditions and warrenties contained in the policy document. The claims management regulates the payment of general damages and also payment of the loss of future earnings. This project is just a gist about how the insurance companies settle the claims, the procedure that is followed, the intermediaries that are involved in the process and so on. This project throws light on various aspects on claims management and the problems faced by them. V A study on Claim Management in Life Insurance Index Title Page No. Chapter No. 1 Introduction 1.1. Introduction to Life Insurance 1-27 1.2. Brief History of the Insurance Sector 1.3. Life Insurance in India 1.4. Life Insurance Corporation of India 1.5. Claim in Insurance 1.6. Claim Management 1.7. Delay in claims settlement 1.8. Procedure of Claim Management in Life Insurance 1.9. Types of Claims 1.10 Frauds in Claims Settlement 1.11.Documents required for life insurance claim management 2 Research Methodology 2.1. Research problem 28-29 2.2. Objective of the study 2.3. Scope of study 2.4. Need for survey 2.5. Assumptions made for present study 2.6. Hypothesis 2.7. Collection of data 2.8. Sampling plan 2.9. Limitations 3 Literature Overview 30-32 4 Data Analysis & Interpretation 33-43 5 Case Studies 44-47 Case - 1 : Life Insurance Corporation of India V/S Mrs. Sunanda Kanthale Case - 2 : Life Insurance Corporation of India V/S Mrs. Neelam Mehta Case - 3 : Life Insurance Corporation of India V/S Mrs. Lily Rani Roy 6 Findings & Conclusion 48-49 6.1. Findings 6.2. Conclusion 7 Suggestion 50 Bibliography 51 Webliography 52 Annexure 53-54 VI To study on Claim Management in Life Insurance CHAPTER - 1 : INTRODUCTION 1.1 Introduction to Life Insurance Insurance is a promise of compensation for specific potential future losses in exchange for a periodic payment. Insurance is designed to protect the financial wellbeing of an individual, company or other entity in case of unexpected losses of unexpected loss. Agreeing to the terms of an insurance policy creates a contract between the insured and insurer. In exchange for payments from the insured(called premium), the insurer agrees to pay the policy holder a sum of money upon the occurrence of a specific events. Human life is subject to risks of death and disability due to natural and accidental causes. When human life is lost or a person is disabled permanently or temporarily there is loss of income to the household. The family is put to hardship. Sometimes survival itself is at stake for the dependents. Risks unpredictable. Death/disability may occur when one least expects it. An individual can protect himself or herself against such contingencies through life insurance. Though human life cannot be valued, a monetary sum could be determined which is based on loss of income in future years. Hence in life insurance, the sum assured is by way of a benefit in the case of life insurance. The primary purpose of life insurance is the protection of family. It is uncertainty that is risk, which gives rise to the necessity for some form of protection against the financial loss arising from death. Hence in life insurance, the sum assured is by way of a benefit in the case of life insurance. Insurance substitutes this uncertainty. Insurance is various forms protects against such misfortunes by having the losses of the unfortunate few paid by the contribution of the many that are exposed to the same risk. This is the essence of insurance- the sharing of losses and substitute of certainty for uncertainty. There are a variety of life insurance products to suits to the needs of various categories of People-children, youth, women, middle-aged persons, old people; and also, rural people etc. Life insurance products could be purchased from registered life insurers notified by the IRDA. 1 To study on Claim Management in Life Insurance Insurers appoints insurances agents to sell their products should receive proper advice from insurance agents/insurers so that a right product could be chosen to suit particular financial needs. Insurance is a protection against economical loss arising due to an unexpected event. In any type of insurance coverage claim settlement plays very important part. Claims settlement is an integral part of the insurance business. Growth in insurance business is depended on the people, the customers and consumers of service. Insurance is an arrangement by which the losses incurred by a small number of insureds are divided over many exposed to same type of risks. Insurance contract is a contract by which one party called the insurer promises to save the other party, the insured on payment of consideration known as the premium. A right of insured to receive the amount secured under the policy of insurance contract promised by insurer is called claim. Claims can be maturity claims arise because of survival up to the end of the policy term i.e. to the date of maturity, survival benefits due to survival up to a specified period during the term, death claims arise due to death of the life assured during the term. Policy holders or nominees must first file an insurance claim before any money can be provided. An insurance claim is provided by an insurance company.The insurance company may or may not approve the claim, based on their own assessment of the condition under which claim is made. Individuals pays regular or sometime single premium for their insurance coverage. Most of the time these premiums are used to settle another person’s insurance claim or to build up the available assets of the insurance company. When claims are filed, the insured has to observe the settled rules and procedures and the insurer has also to reciprocate in a similar manner by undertaking appropriate steps for speedy disposal of claims. It is true that claims settlement is complex in nature, but it is the driving force to plant confidence in the hearts of people, in general and beneficiaries in specific. Insurance claim is a right of insured under a contract of insurance. The insurer promises to save the insured or nominees/assignees of the insured on happening of event or risk insured. Disputes crop up in the payment of claim when the insurer and the insured understand the process of claims payment in a different way. It is obvious for the insurance company to protect and guard the interests of the policyholders. An insurance claim is the only way to officially apply for benefits under an insurance policy, but until the insurance company has assessed the situation it will remain only a claim, not a pay-out. 2 To study on Claim Management in Life Insurance a) Benefits of Life Insurance: Life insurance provides life cover that protects you and your family in case of an unexpected event happens. Some of the benefits of life insurance in India are  Financial Protection: A life insurance policy helps to minimize the risk of financial difficulties which would be faced by the families in case of the sudden death of the policyholder.  Long Term Savings: Some life insurance plans offer you the opportunity to create wealth. If one wants to make long-term investments, it’s important to think about life insurance meaning. Such insurance plans help you make systematic savings and create wealth that can be used for your future goals.  Tax Savings: Life insurance offers tax dual benefits under prevailing laws as per Income Tax Act, 1961. You can avail of a deduction of up to Rs.1.5 lakh under Section 80C of the Income Tax Act. The maturity insurance plans may be completely tax-free. This tax benefit is under Section 10(10D) of the Income Tax Act.  Save Money: The premium paid by the customer is depending on age, life expectancy, and health, and gender. Life insurance gives you the ability to stick at low premium rates while you’re young compared to an older age.  Achieve Goals: Life insurance helps you achieve your long-term goals such as buying a home or planning your retirement, child education, traveling abroad, etc.  Get Peace of Mind: Death is unavoidable. In the case of your absence, your family may face financial difficulties so the least you can do for your family is to secure their financial future with a life insurance policy. b) Advantages of Life Insurance The following are the main life insurance advantages:  Return on Investment: Advantages of life insurance as an investment. Whenever you visit a financial advisor for financial planning you can see that most of them suggest you go for life insurance. They encourage you to invest in life insurance so that you and your loved ones are not only protected but also a considerable amount of returns can be obtained from the policy. Many life insurance schemes in India provide decent returns 3 To study on Claim Management in Life Insurance as well as bonuses that no other investment tools offer. Life insurance is considered one of the safest tools for investment as the money invested is returned to you or your family at the time of maturity or as a death benefit.  Death Benefit: In case of any unexpected event to you, which results in the loss of income to the family, the insurance company provides compensation in the form of the death benefit to the family. The nominee of the insured receives the death benefit as well as the accrued bonus if any, depending on the type of the policy. The death benefit can be claimed as a lump sum or monthly benefit, in which the monthly benefit option can be a boon for the family having old age people or disabled people.  Financial Security: This is the main advantage of life insurance. The main purpose of life insurance is financial protection. If the sudden demise of the insured can put the family in jeopardy. With no regular income, the family may soon face a financial crisis. Having a life insurance policy helps your family come out from any financial crisis after your sudden demise.  Income tax exemption: The premiums paid under the life insurance policy are eligible for income tax exemption under section 80C. At present under this section of income tax, you can avail of a maximum tax deduction of Rs.1.5Lakh.  Additional Coverage: Additional coverage is also called riders. The riders allow you to increase the coverage and get comprehensive coverage. Riders may include coverage against personal accident, waiver of premium payments, critical illness, loss of income due to a disability, etc.  Loan availability: In the event of any emergency such as a college fee or property purchase, the loan can be availed against your life insurance policy. These days almost all insurance companies are providing this option. When you apply for a loan a certain amount of your sum assured is provided as the loan amount.  Retirement Income: Life insurance policies can also be taken for the purpose of regular income after retirement. These policies are called annuity policies and are available with every life insurance company. If you take an annuity policy and pay a premium till your retirement age, then after your retirement monthly income is paid to you by the insurance company. 4 To study on Claim Management in Life Insurance c) Disadvantages of Life Insurance The following are the main life insurance disadvantages:  High premium for aged people: This is the major disadvantage of life insurance policy. The higher the age the higher would the premium to be paid in the life insurance. This is due to the simple fact that the risk increases with the age so is the premium. So, it is advisable to take life insurance at a very early age to prevent yourself from paying high premiums. There is a chance where the insurance companies have rejected or denied providing policy to old age people having ailments.  Difficult to calculate the returns: The returns on the life insurance policies are quite complicated and it is highly difficult to predict the returns. The returns from life insurance are purely based on market conditions and performance. So, a particular figure is difficult to arrive at in the case of life insurance unlike PPF and other fixed deposit schemes.  Complex Policies: In India, many insurance companies offer different types of life insurance plans. You can choose the best life insurance plan as per your requirement. But it can also create confusion in the minds of the customer because different insurance policies have different features. Some policies are simple, and some are not so simple. It can be daunting to choose the right life insurance policy.  Insurance Companies May Not Pay the Benefits: The insurance companies use various tricks to avoid paying the benefits even after the maturity of the policy and also, they have denied paying the sum assured or the death benefit to the policyholder or the nominee. They would mention many hidden charges or clauses to reduce the pay-out. So, it is important to carefully understand the details of the policy and choose a company that has a positive pay-out rate. Things to know about the merits and demerits of life insurance and the importance of having life insurance it is advisable to talk to our agents before entering a contract.  Awareness of Exclusions, Hidden clauses: Any financial product available in the market certainly has some exclusions and hidden clauses incorporated into it. It is your responsibility to find out those clauses and choose the right life insurance policy. For example, most of the policies don’t pay for suicide in the first year and almost all the policies exclude loss of life due to drugs overdose or involvement in criminal activities. 5 To study on Claim Management in Life Insurance (d) Features of life insurance Benefits The primary benefit offered by a life insurance policy is known as the death benefit, or the amount paid to the nominee upon the death of the policyholder. This amount is also known as the sum assured and could also include bonuses. In recent times, policies also offer a benefit upon maturity of the policy, in case the policyholder outlives the term. These benefits are popularly termed as maturity benefits. Riders A rider provides an enhanced amount of coverage to the policyholder and can be availed along with their insurance policy at a nominal cost. Some of the most popular riders are Accidental Death Benefit, Accidental and Permanent Disability Benefit, Waiver of Premium, etc. Investment Components Some life insurance plans come with the dual benefit of an investment component as well. With a single premium, you secure a life cover while also accumulating wealth through investments in a diverse portfolio. Depending on the terms and conditions of the plan, one can invest in equity, debt instruments or various combinations of both. Those opting for policies such as ULIPs can switch and redirect funds, as and when they please. Tax Benefits Various kinds of life insurance plans have different tax benefits as per relevant sections of the Income Tax Act. Generally, the premium paid for a life insurance policy tax-deductible up to Rs. 1.5 lakhs under Section 80C. The payout received from an insurance policy, too, is exempt from tax under Section 10(10D) of the ITA. Additionally, premiums paid toward riders like critical illness and surgical care can also be claimed as deductions under Section 80D. Loans component Your life insurance policy cannot just provide you with a life cover, but also help you during a crisis like loan repayment. One benefit of opting for a loan against a life insurance policy is that the rate of interest charged is lower than that of a personal loan. When you take a loan against a policy, you are essentially borrowing from yourself. The rate of interest for such a loan depends upon the premiums paid by you. 6 To study on Claim Management in Life Insurance 1.2. Brief History of the Insurance Sector: The business of life insurance in India in its existing from started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta, Later, Bombay Life Assurance Company was formed in 1823. Some of the important milestone in the life insurance in India are: 1912: The Indian Life Assurance Company Act enacted as the first statute to regulate the life insurance business. 1928: The Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amend to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and Foreign insurers and provident societies taken over by the central government and nationalised. LIC formed by an Act of parliament, viz. LIC Act, 1956 with a capital contribution of Rs. 5 Crore from the Government of India The General insurance business in India, on the other hand, can trace roots of the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British. Some of the important milestone in the general insurance business in India are: 1907: The Indian Mercantile Insurance Ltd. Set up, the first company to transact all classes of general insurance business. 1957: General Insurance Council, a of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and some business practices. 1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. 7 To study on Claim Management in Life Insurance 1972: The General Insurance Business(Nationalisation) Act, 1972 nationalised the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies viz, the National Insurance Company Ltd., the Oriental Insurance Company Ltd., and the United India Insurance Company Ltd. GIC incorporated as a company. In 1993, Malhotra Committee headed by former Finance Secretary and RBI Governor R.N.Malhotra was formed to evaluate the Indian insurance industry and recommend its future direction. The Malhotra committee was set up with the objective of complementing the reforms initiated in the financial sector. The reforms were aimed at creating a more efficient and competitive financial system suitable for the requirements of the economy keeping in mind the structural changes currently underway and recognizing that insurance is an important part of the overall financial system where it was necessary to address the need for similar reforms. Thereafter many changes have taken place in the insurance sector. Insurance sector in India was liberalized in March 2000 with the passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry restriction for private players and allowing foreign players to enter the market with some limits on direct foreign ownership. There is a 26% equity cap for foreign partners in an insurance company. There is a proposal to increase this limit to 49%. The opening up for the insurance sector has led to rapid growth of the sector. Presently, there are 16 life insurance companies and 15 non-life insurance companies in the market. The potential for growth of insurance industry in India is immense as nearly 80%of Indian population is without life insurance cover while health insurance and non-life insurance continues to be well below international standards. Furthermore, over the medium and long term, India’s insurance market will continue to experience major changes as its operating environment increasingly deregulates. On the hand, a mix new product, new delivery system and a greater awareness of risk will generate growth. On the other hand, competition will remain intense as a private sector insurer and those about to enter India seek to win market share from the more established public sector entities. 8 To study on Claim Management in Life Insurance 1.3. Life Insurance in India Life Insurance in India in the year 1818 business of life insurance in India in its existing form started with the establishment of the Oriental Life Insurance Company in Kolkata. It was started by Mr. Bipin Behari Dasgupta and Europeans living in India were their primary customers. The first native insurance provider in India was formed in 1870 with the name Bombay Mutual Life Assurance Society. As on till date there are total 23 Life Insurance Companies in India. Life Insurance Corporation of India, ICICI Prudential Life Insurance Company, Bajaj Allianz Life Insurance Company, and HDFC Standard Life Insurance Company Etc., are the few names of Public sector and Private sector companies. In life insurance there are two important parties to the contract, the policy holder and the insurer. Basically, life insurance policies are legal contract between the policy holder and the insurer, terms and conditions are to be describing on it. It is a contract between the policy holder and the insurer to pay nominee a sum of money on the occurrence of the insured person’s death or in the case of maturity of the policy, policy holder will receives whatever amount he has deposited as premium plus bonus on it. In return policy holder agrees to pay fix amount of premium on regular basis or in lump sum (one-time premium payment) to the insurer. Life insurance is mainly taken for two objectives, first is for risk coverage and second is for the investment objective. Risk coverage: - Lump sum payment is provided if specific event occurred. Investment: -Money is invested with a motive of getting greater return. Following are the types of the Life Insurance:- Term Life Insurance Whole Life Insurance Endowment Life Insurance Money Back Life Insurance Unit Linked Insurance 9 To study on Claim Management in Life Insurance 1.4. Life Insurance Corporation of India: There are various types of risk in life which can be covered with the help of Life Insurance policies, for this purpose Life Insurance Corporation of India (LIC) was created on 1st September 1956, after the parliament of India passed the Life Insurance Corporation act on the 19th of June 1956. Till 2000 it enjoyed a monopoly status and better known as synonymous of Life Insurance. LIC of India is one of India’s leading financial institutions, offering complete financial solutions that cover every sphere of life. Its customer base is approx. 23 crores which is the largest in terms of Insurance Company. LIC has hundred divisional offices and has established extensive training facilities at all levels. They have their own Management Development Institute, seven Zonal Training Centers and 35 Sales Training Centers. As on till date LIC’s staff strength is of 1.24 Lakh employees and 2048 branches and over Eleven Lakh agents. It is the second biggest Real Estate Owner after Indian Railways. In terms of Claim settlement, 97% maturity claim settled on or before due date, due to its prompt claim settlement LIC is No.1 insurance company in the world in terms of claim paid. LIC of India is one of India’s leading financial institutions, offering complete financial solutions that encompass every sphere of life. From commercial banking to stock broking to mutual funds to life insurance to investment banking, the group caters to the financials needs of individuals and corporate. It has been started with the objectives of spreading Life Insurance widely and in particular to the rural areas; to meet the various life insurance needs of the community that would arise in the changing social and economic environment.The LIC has a net of over Rs. 1,800 crores. 10 To study on Claim Management in Life Insurance (a) Claims settlement process followed by LIC of India The LIC of India has laid emphasis on prompt settlement of death as well as maturity claims. Claims are normally paid however if found any fraudulent then it is referred to claim committee operating in zonal offices and central offices. The process for settlement of maturity and death claims is as follows as: The death claim amount is payable in both conditions, when policy’s premiums is paid up-to-date and where the death occurs within the days of grace. After receiving information regarding death of the Life Assured the Branch office required following things: 1. Claim form A – Claimant’s Statement giving details of the deceased and the claimant. 2. Certified extract from Death Register 3. Documentary proof of age, if age is not admitted 4. Evidence of title to the deceased’s estate if the policy is not nominated, assigned or issued under M.W.P. Act. 5. Original Policy Document The following additional forms are required if death occurs within three years from the date of risk or from date of revival/reinstatement: 1. Claim Form B – Medical Attendant’s Certificate to be completed by the Medical Attendant of the deceased during his/her last illness 2. Claim Form B1 – if the life assured received treatment in a hospital 3. Claim form B2 – to be completed by the Medical Attendant who treated the deceased life assured prior to his last illness. 4. Claim Form C – Certificate of Identity and burial or cremation to be completed and signed 11 To study on Claim Management in Life Insurance by a person of known character and responsibility 5. Claim form E – Certificate by Employer if the assured was employed person. 6. If death was due to accident or unnatural cause certified copies of the First Information Report (FIR), the Post-mortem report and Police Investigation Report. These additional forms are required at the time of investigation by the officials of the Corporation and to prove the genuineness of the claim. 12 To study on Claim Management in Life Insurance 1.5. Claim in Insurance An insurance claim is the actual application for benefits provided by an insurance company. Policy holders must first file insurance claim before any money can be disbursed to the hospital or repair shop or other contracted service. The insurance company may or may not approve the claim, based on their own assessment of the circumstances. Individual who take out home, life, health, or automobile insurance policies must maintain regular payments called premiums to the insurers. Most of the times these premiums used to settle another insurance claim or build up available assets of the insurance company. When claims are filed, the insured has to observed the settled rule and procedures and the insurers has also to reciprocated in a similar manner by undertaking appropriated steps for speedy disposal of claims. It is true that claim settlement is complex in nature, but it is driving force to plant confidence in the hearts of people, in general and beneficiaries is specifies. Insurance claim is a right of insured under a contract of insurance. Insurance contract is a contract by which one party called the insurer promise to save the other party, the insured on the payments of consideration known as premium. The insurer promise to save insured are nominees/assignees of the insured on happening of event or risk insured. Disputes crop up in the payment of claim when the insurer and the insured understand the process of claims payments in a different way. Claim settlement is an integral part of the insurance business which is a service industry and its growth is interwoven with the people, the customer and the consumer of service it is inevitable for insurance company to protect and guard interest of the policy holders. An insurance claim is the only way to officially apply for benefits under an insurance policy, but until insurance company has assessed the situation it will remain only a claim not a pay-out. 13 To study on Claim Management in Life Insurance 1.6. Claim Management Many insurers have recognized the need to improve the efficiency of their claim management process. They have streamlined processes, eliminated paper base forms and redistributed work to match the demands to skills. The objective of their efforts are to lower the cost while also increasing overall throughput. Efficiency improvement make tasks quicker and less costly execute. However, to realize even greater improvements in the claims handling process, insurers must also focus on the effectiveness on their claim’s decision. Claims handling costs typically represents 10% to 15% of net earned premium; in contrast, claims represents 40% to 65%. Insurers that expand their focus to include effective as well as efficient claims processing will find a far longer poll of saving opportunities. Technology can play a significant role by providing integrated channels for communication and collaboration. This would help the insurance company to increase employee productivity by reducing cycle time and defect rate and also increase employee participation and compliance. Claims processing involves collating and sharing large amount of information among multiple parties involved in a claim, from body soaps adjusters to investigators to lawyers and doctor and claimants and regulators. And it involves the knowledge of experience adjusters to determine be the fair and appropriate outcome of a claim. In fact, losses and loss expenses absorbs 80% of premium collected by carriers. Service representatives and claim adjusters need to access data from multiple sources when processing or assessing a claim, which delays settlement time and increases cost. Manual steps reduce transparency of the claims process and raise the risk of fraud, manipulation or simply human error. Customer retention is also a challenge-experts say that 75% of customers leave their insurer due to claim issues. 14 To study on Claim Management in Life Insurance (a) ADVANTAGES OF CLAIM MANAGEMENT SYSTEM Identifying attempted fraud And here, the even more important point is to reduce the huge sums that insurance companies lose annually because of people who make false claims and try to defraud the system to get money. Most of the time, they are staged alone or put in the position of a victim in order to receive money from the insurer. In India alone, more than $6 billion is lost annually due to attempted fraud. But these people who are trying to get insurance money do not realize that these losses are directly reflected in the insurance prices. If you see price increases, you will not be satisfied. So, the higher the fraud, the higher the price of insurance packages. As a result, at the time of the increase, the insurer’s customers who were loyal or trustworthy and only wanted a guarantee would discontinue the respective insurance service. Claim Management Systems can identify certain customer behaviors and signal them as suspects when they have been detected by the system. How is this possible? Most of the time, those who want to cheat the system make claims very often and are very insistent when it comes to receiving money. A client who has opened 10 claims for me in the last 2 years will be identified by the system as a possible fraud. Reducing costs We don’t have to talk strictly about insurance to argue that any automation will bring with it more time that can be used for other, more important things. Your expenses will also be reduced. However, in order to provide a comprehensive argument on the subject, we will also make use of the claim management system. Resolving a claim requires certain administrative actions that are often very costly in the case of those claims that are delayed. 15 To study on Claim Management in Life Insurance Customers become impatient and serious financial damage can occur. If the insurer found a solution to resolve these claims much faster, the costs would be drastically reduced. This is where the benefit of using a claim management system comes into play. Everything is automated, and the investigation process will be easier because all the information is centralized in one place on the claim’s management platform. Fewer legal problems The faster the claim is resolved, the further the insurance company stays out of litigation. Most of the time, the insurance company does its duty and honors every claim that comes from customers. But this verification and validation of a claim cannot be done without the approval of clear evidence. Through a claim management system, everything is simpler, faster, and the evidence can be validated more easily. ( b) FEATURES OF A CLAIM MANAGEMENT SYSTEM:  A simple submission process from any device Users need to have the possibility to complete a short and simple form using their smartphone or tablet. Claimants’ basic info, such as first name and last name (as well as other contact information) should be filled in automatically when the customer decides to submit a claim. This should be easy to do since the info is already in the carrier’s database. In addition, the claims process will be easier if customers understand intuitively how to attach photos of receipts or invoices to their claim.  Tracking claims progress Claimants need to be able to track the status and decision of consultants regarding their claim, further steps they have to take, as well as the final outcome.  All documents in customer’s pocket 16 To study on Claim Management in Life Insurance When the customer uses their insurer’s app, they need to store their paperwork such as copies of their ID, driving license and policy documents on their application.  Online claims payments Clients can save a lot of time if the transaction of claims can be done online. It also adds transparency to the process because both the customer and the consultant have access to the final decision of the claim.  Simplicity and security For fast and easy access one can log in with a PIN code that is easy to remember. Any claims information entered must not be lost until submitted. At the same time all personal data must be secured via encryption. It is also useful if most of your app’s features are available even if the user is offline. (c) FACTORS AFFECTING THE CLAIMS SETTLEMENT: The factors that affect the claims settlement are as follows: *The policy should be in force on the date of the event. *The risk and cause of event should be covered by the policy. * The cause of loss or the event should be directly related to the loss. A remote cause has no place in the settlement. The loss should not have been caused with an intention to gain from the situation. The preconditions or warranties have to be compiled with. When conditions to be fulfilled before affecting the cover of the policy, are not performed, the cover of insurance will not come into effect even though the premium is paid and accepted by the insurance company. 17 To study on Claim Management in Life Insurance *Presence of insurable interest, in case of the property insurances, at least at the time of happening of event or loss sufferings. Without having the insurable interest in the subject matter, no person can get benefit or compensation. The assured should suffer loss, actual or constructive, to get compensation. The assured should riot make benefits or gains out of the insurance contract as the insurance contract is of indemnity in nature. It only makes good the loss suffered by the assured and is not a source of gains. * Sufficient documentary evidence of loss should be presented along with the application form. * Multiple claims and reciprocal claims will be settled as per the terms of the contract of insurance. Right to appeal or file a petition with the tribunal or the courts cannot be withdrawn. If the terms of the policy insist upon arbitration, it is not the end of justice for the insurer or the assured. The insured may opt for the following alternatives while settling the claims: * Pay the claims as reported by the surveyor or the claims made by the insurer whichever is less. Take help of the agent or some other persons and compromise or to come to an agreement with the assured in case of a disputed claim. *If the claim is rejected there may be litigation on the insurer. The litigation will cost the insurer more, as the insurer has to pay the interest for the amount due if he loses the litigation. *Pay ex-gratia, if the claim is totally baseless and non-acceptable, on humanitarian grounds and to avoid complications in future. * Arrange to replace the asset either by repairing the same or by purchasing a similar asset from the market. 18 To study on Claim Management in Life Insurance * Repair the asset to provide the similar type of services as provided before the happening of event. 1.7. Delay in claims settlement The time value for the settlement of a claim is of importance. All claim papers have to be submitted within a limited period mentioned in the policy document or otherwise stated in the Act. In some cases, the death of a person or the accident of vehicle has to be intimated immediately either orally or in person, either by the policyholder or the claimant or by the representative of the claimant. The time element is very important in the claim’s payment for the following reasons: The delay in the claim’s settlement will have an adverse impact on the goodwill and marketing of the insurance. The cost of claims will increase with the extension of time. The insurer may be asked to pay the interest on the unpaid insurance amount because of the delay. The court may direct the insurer to pay the costs of the case to the assured, which results in mounting up of costs. *The delay in payment may lead to litigation which is expensive. * Unproductive use of manpower to defend, expenses incurred and waste of time on litigations will be an extra burden on the insurer. * Litigations will affect on the productive areas of the business particularly in the marketing of the insurance business. The delay also leads to the increasing number of cases with consumer protection councils. 19 To study on Claim Management in Life Insurance Thus, the delay in the settlement of the claims will have an impact on the present and future business of the insurance along with the cost burden. As such it is essential to have quicker claim settlements. The delay in claims settlement may be due to the following reasons: Late submission of claim form: The claim forms may be submitted late because of the ignorance or lack of knowledge of the existence of the insurance policies against the lives of the persons who face the event or no information is given to the beneficiaries or no nominations are made to the policy. Innocence and illiteracy of the assured: The assured or the claimant may fail to file the papers due to lack of knowledge, to file the insurance claims within a certain period or of the claim’s procedure. Not submitting the claims forms in full: If the claim forms are not properly filled, they will fail to provide the required information to settle the claims and as a result the claim settlement will be delayed for want of information. If sufficient proof or supporting documents are not submitted along with the claim form to facilitate claim assessor to know the date of the event or the cause of the event, claim settlement may be delayed. The insurer may not get the cooperation of the insured or the claimant to finalize the claim or arrive at some compromise. 20 To study on Claim Management in Life Insurance 1.8. Procedure of Claim Management in Life Insurance:- INSURER INSURED On Receipt of Claim, Type of Suffering Verify the Claim Loss or the Damage Review the Claim Understanding and application Identifying the cause of action Respond to Claimant Informing or Giving Notice of Claim or loss to Insurer Claim Investigation Providing Sufficient Proof of Loss to Insurer Claim negotiation Claim settlement Claim payment 21 Claim Management in Life Insurance 1.9. Types of Claims Understanding the requirements for various life insurance benefits (claims) is important for the customers. The overriding condition on claims is the payment of premiums I.e. Claims are only payable if premiums are paid up to date. There are various types of claims under life policies. The most common claims include: The general requirements for each of these claims are briefly explained below: Death Claim: This is a claim paid when the person insured dies. For a death claim to be paid the following basic conditions must be fulfilled. The policy documents, original death certificate, burial permit copy of the ID of the deceased must be provided to the insurance company. A report from the doctor who treated the decreased must be presented to the insurance company. Claims forms must be completed. A report from doctor who last treated the deceased person may be required. A police abstract report may be required where death occurs the, rough an accident. The documents required for payment of death claims are easily available and claimants need to immediately inform the insurance company where problems are encountered in securing the documents. The documents are usually so as to reduce the possibility of paying the wrong claimant. Many insurance companies will frequently waive certain requirements under certain special circumstances. Maturity Claims: A maturity claim is paid out mostly on endowment and education insurance policies whose duration has expired. For example, in an insurance policy with duration of 15 years, the maturity value will be paid on the 15th anniversary after affecting the policy. Payment of a maturity claim is a straightforward affair where the customer returns the original policy documents and signs a discharge form. The claim cheque is usually released in a period of about two weeks once all required conditions are fulfilled. 22 Claim Management in Life Insurance Partial Maturity Claims: Most endowment and education policies provide for payment of partial maturities after a given duration. The partial maturity is normally paid on set dates in the policy documents. A typical education policy of 10 years provides for payment of 20% of the sum insured after four years and every thereafter until expiry of the policy. The life insurance company usually prepares partial maturity cheques in an automated manner and the customer does not have to claim. The cheque is either sent directly to the customer or the nearest branch office for ease of collection. Surrender Value Claims: When a customer is unable to continue with the payment of premiums due to unplanned events like retrenchment or dismissal he has the of enchasing the policy to receive the surrender value so long as the policy has been in force for more than 3 years. The procedure for lodging this type of claim is very simple and is similar to the maturity claim whereby the customer returns the policy document and signs a discharge form. The claim cheque is then paid to the customer within two weeks. Policy Loans: This is strictly not a claim but a benefit given out by life companies for life policies that have been in force for at least three years. To receive a policy loan directly from a life company entails assigning the policy to the life company and receiving a loan cheque. The insurance policy can also be assigned to a bank and the loan is granted by the banks and the policy documents utilized as security for the loan. Disability Claims: This will arise in life policies where the customer purchases a personal accident policy rider as an additional benefit. Disability claims are payable subject to sufficient medical evidence being provided as proof of disablement. 23 Claim Management in Life Insurance 1.10. Frauds in Claims Settlement Insurance fraud is any deliberate deception/dishonesty committed against or by an insurance company, insurance agent, or consumer for unjustified financial gain. It occurs and may be committed at different points in the transaction by different parties such as policy owners, third- party, claimants, intermediaries and professionals who provide services to claimants. The nature of these frauds may vary from an inflated/exaggerated value of a legitimate claim to a completely fabricated or bogus claim where losses never really occurred. Promises made with no intention to perform them can be treated as a fraud. The essential components of an insurance fraud are:- Intent to deceive Desire to induce insurance company to pay more than it otherwise would. The fraudulent claims maybe of two categories: The cause or the claim itself is fraudulent The claim may be genuine but the method of calculation or the evidence, or the information submitted may be fraudulent in nature. As such any fraud made by the insured or the insurer in concluding the insurance contract or the claims settlement, makes the entire contract viocable at the option of the person on whom the fraud is played. Creating forged documents such as wills, legal heir certificates, assignments of the policies and other papers to support their claim, deliberate destruction of the insured subject with an intention to get the policy amount all constitute different types of frauds. Sometimes the frauds may also result from gross negligence or forbearance to use reasonable exertions and means at hand. The fraudulent claim by the assured will deprive him the right to claim as the insurer has the right to reject it. Examples of insurance fraud: 1) Creating a fraudulent claim 2) Overstating amount of loss 3) Misrepresenting facts to receive payment 4) Bogus agents/ sale of forged cover notes 24 A Claim Management in Life Insurance (i) How to protect yourself from a fraud: 1. Be wary of unregistered insurance agents. Before purchasing insurance, contact your insurance company to ensure the agent is an authorised agent. 2. Avoid paying premiums in cash. Opt to pay for premiums by cheque or, money order. Made payable to the insurance company instead of the agent. 3. Make sure you receive a written policy after payment of your first premium. 4. Immediately examine your insurance policy to ensure the coverage is what you have requested for and ensure that premium amount paid is reflected in the cover note/policy. Request for a receipt as evidence of payment of premium. 5. Do not sign a blank insurance application, or insurance claim form. 6. Be suspicious if the price of insurance seems suspiciously low from other insurance companies. 7. If you meet with an accident, be careful of strangers who offers you quick cash or urge you to deal with specific workshop, medical clinic or law firm. They could be part of a fraud syndicate. 8. Insist on detailed bills for repairs and medical services rendered and check for accuracy. 9. Discreetly contact your insurance company or the police if you are being defrauded or have been/are being persuaded to take part in a fraud. Provide as many details as possible about the incident - name of the individual(s) involved, amount, date(s) and type of fraud. 25 A Claim Management in Life Insurance 1.11. Documents required for Life Insurance Claim Process The life insurance policy offers financial security to individual and families in case of any unfortunate events like death and disability to the life assured. It is suggested that individual should avail life insurance policies of such insurers, which offer a high claim settlement ratio with easy documentation. Life insurance can be classified into three categories, i.e. Death Claims, Maturity Claim, & Riders Claims. Life insurance claim benefits are entertained by the nominee, in case of the untimely demise of the life assured. 1. Death Claims a) Intimation of Claim The nominee should intimate about the claim in written form to the insurance company as early as possible. The details should consist of the policy number, name of the insured, date of death, place of death, name of the claimant, etc. the nominee can avail the claim intimation form by visiting the nearest branch of the insurance company or can download from the official website of the insurance provider. b) Submit Proper Documentation To get your claim settled easily, it requires that you submit your relevant documents the nominee will be asked to present given below documents to the insurer:  Death Certificate  Age of the Insured (Birth Certificate)  Original Policy Document  Any other documents requested by the insurer c) Claim Settlement The insurer needs to settle the claim within 30 days of receipt of all documents submitted by the insured. However, there might be a case where an insurer requires 26 A Claim Management in Life Insurance further investigation. Under this scenario, the insurer has to complete its procedure within six months from the date of receiving the written of claim. 2. Maturity Claims Under this claim process, the insurance company makes payments to the policy holder on completion of the policy or maturity date. The amount that is payable consists of sum assured plus any bonus/incentives. To avail this benefit, the policy holder is reached in advance by the insurance company with a bank discharged form. The policyholder is required to fill the form details along with the relevant documents and send it back to the bank. 3. Rider Claims: Riders are defined as an additional benefit offered by the insurer by paying an extra premium with the basic plan. Life insurance policy can be attached with different riders such as Accidental Riders, Critical Illness Rider, Hospital Cash Rider, Waiver of Premium Rider, etc. Under the rider claim process, different riders are settled through various means. Rider Claims such as Waiver of Premium , Accidental Death, etc. are settled following the process of death claim settlement. Other rider claims can be resolved by submitting relevant documents along with duly filled claim form and policy copy. 27 A Claim Management in Life Insurance CHAPTER - 2 : RESEARCH METHODOLOGY 2.1. Research Problem: The major role made by insurance programme is the indemnification of risk averse individual who mightly adverse affected by natural probabilistic phenomenon. Customer service has great importance in the insurance company. While the coverage of insurance industry is expanding day by day. This is because customer demanding insurance in today's worlds. 2.2. Objective of the study: To study claim management in Life insurance. To find out problem while taking insurance by people. To find out problem arising while claim settlement of life insurance. To find out overall satisfaction about life insurance. To study awareness of Claim Settlement among the Customers. 2.3. Scope of study: The survey method has been followed for the study well structure questionnaire to elicit the necessary data and get filled the details from the respondent. The study will also help to identify the customer satisfaction towards the claim management in life insurance. 2.4. Need for Survey: Insurance user pay premium, year after year trusting their policies to protect their lives or business in the event of a loss. However, there are innumerable instances where a genuine insurance user with a genuine loss and a seemingly valid claim, has been denied his claim amount in full or part. This happen because the insurance company is not able to estimate the total amount of claims. In life insurance claims the insurance company tries to reject the claims without knowing the causes of death or loss of the person. 2.5. Assumptions made for present study: a) Customer quires solved by insurance company personnel immediately. b) All people are engaged in claim management in life insurance. c) It is assuming that majority of customer are aware about claim management in life insurance. 28 A Claim Management in Life Insurance 2.6. Hypothesis: (i) Null Hypothesis: Some people are not aware about claim management in life insurance & not avail the claim management. (ii) Alternative Hypothesis: Majority people are aware about claim management in life insurance facility and they also take benefit of claim management in life insurance. 2.7. Collection of Data: Primary data & Secondary data are collected for present research study (i) Primary Data: The researcher collected the primary data personally through face to face interaction and also with the help of Google form. (ii) Secondary Data: The researcher data was collected through various ways that I Internet - www.investopedia.com www.wikipedia.com Newspaper - The Economics Times 2.8. Sampling Plan: The researcher approaches to 50 respondents. All 50 respondents respond to the questionnaire. The final study of project was done through based on these 50 respondents. The sample constituted of 50 respondents. The sample size was 50, the elements for samples i.e. the responds selected through selective sampling method. The analysis of data was done with help of mean percentage and excel sheet. 2.9. Limitation: Data for the study will collect from primary source (through questionnaires) and secondary sources (Magazines, Journals and Internet etc.), due to that replies can be biased (in case of questionnaires) and validity of data can’t be proving (in case of data collected through internet). The area of study is limited to Mumbai region; results may differ from place to place. 29 A Claim Management in Life Insurance CHAPTER - 3 : LITERATURE OVERVIEW According to complaints Sunanda Kanthale, her husband Manoharrao Kanthale who worked as a stores superintendent with the Amravati policy of Rs 20,000 on November 28, 1992. The policy which was a non-medical one was scheduled to mature on November 24, 2004, she said. Unfortunately, Manoharrao passed away on October 22 1993, 10 months and 25 days from the date of purchasing the instrument. Being the nominees in the policy, she asked for her claim for an account of Rs 40,000 (under double benefit provision in accident cases) and made and application to the Akola branch manager of LIC. The senior manager of LIC (Amravati Division) however refused to settle the claim vide his letter dated August 4, 1994. As the policy was a non-medical one, the reason given by the official for not settling the claim was also a bogus one, she alleged. Sunanda then wrote to the area manager of LIC, Mumbai, justifying her claim. The Mumbai office too (vide letter dated April 20, 1995) refused to settle the claim, Kanthale added. She then lodged a complaint with Akola District Consumers Grievances redressed forum. In the complaints, she applied to the forum to issuer the necessary directives to the LIC for paying Rs 40,000 along with 18% interest, a compensation of Rs 50,000 towards mental tension caused and Rs 1,000 towards legal expenses. Defending the stand taken by the company, the LIC refuted all the allegations made by Sunanda. Manoharrao, who held the policy, had kept the information about his health a secret while purchasing the instrument, the company alleged. The forum referred to columns 14 and 26 in the application for where the policy purchaser had made statements about his health. The form was duly signed by Dr.B.R Jain, the forum said. The LIC officials produced proofs before the forum regarding heart disorder of the policy holder and sick leave availed by him after taking the policy. However, they could not prove that Manoharrao was not well on the day of purchasing the policy. The District Consumer Grievance Redressal Forum has directed Senior Divisional Manager of Life Insurance Corporation (LIC) Amravati Area Manager, Mumbai and Branch Manager, Akola to pay Rs. 20,000 to Sunanda Kanthale towards insurance claim besides interest on the amount from October22, 1993, till the date of payments at a rate of 12%. The forum has also 30 A Claim Management in Life Insurance directed LIC to pay compensation of Rs 10,000 to the women for causing mental tension to her during the 4 years, after her husband’s death, in releasing the insurance amount. If the insurance company failed to pay the compensation within two months from the date of receipt of copy of the judgement, the company will be liable to pay interest at a rate of 18% on the amount till final payments besides legal expenses of Rs 250, the forum ruled. The forum also by the complaints, appeared, considering the troubles she had to face in the last four years for settlement of claim, the company should pay her Rs 10,000 towards compensation. Gupta P.K (2011), “Fundamental of Insurance”, Himalaya Publication House Mumbai. In this book author covers various aspects of Life Insurance, Life insurance players and Products, Claim settlement and Procedural aspects. Author also conceptualizes the Risks Management and Control Systems. The recent changes in the Insurance Sector are due to increase complexity of financial services, new and alternative insurance products etc. This book is very helpful for understanding the overall Life insurance sector. Karve Dr. Shrikrishna Laxman (2009), “Principles of Life Insurance”, Himalaya Publication House Mumbai. Through this book Author provide an Understanding of the elementary Principles of the life insurance and their Relevance, details nature of the life insurance contract and its applications, various factors affecting measurements of risk, in-depth details about various life insurance products and various legal provisions affecting life insurance contract and process and art of selling life insurance products. This book is found useful for even Layman who wants to understand the basic of life insurance. Tripathy Prava Nalini and Pal Prabir (2011), “Insurance Theory and Practice”, Prentice Hall of India Pvt. Ltd, New Delhi. The prime objective of the Authors is to provide insight into the operational policies, practices and vital issues with the latest trends in the insurance sector. In this book it is discuss into two parts, first part contains the overview of insurance and its importance in the service sector along with current development and future scope of insurance industry in India. The second part deals with various aspects of rural insurance and social insurance. This book broadly explains the dynamics of insurance services. Bodla B.S, Garg M.C and Singh K.P (2003), “Insurance Fundamental, Environment and Procedures”, Deep &Deep Publication Pvt. Ltd, New Delhi Here Authors attempt to provide productive and meaningful contents on Insurance. In this book fundamentals of insurance, insurance environment and procedural aspects of insurance are explained in detail. Sharma Prasad Jagdish (2010), “Life Insurance Corporation of India, Marketing and Business”, Satyam Publication House, New Delhi. Author presented the facts and figures related to the business and marketing activities of the life insurance corporation of India. This book examines the organizational and functional aspects, objectives, Marketing Policies and services provided to 31 A Claim Management in Life Insurance the policy holders of the LIC of India. This book is very useful for those who are interested in marketing and business activities of the life insurance. Kothari Rajesh (2010),“Financial Services in India: Concept and application”, Sage Publication India P. Ltd, New Delhi. Here Author discusses on the essential concepts of the financial system, regulatory frame work, and various data of Financial Services, along with analyzing latest trends, new emerging area of banking, Insurance, mutual funds, securities and commodities. At the same time, it covers topics like real estate investment trust, consumer finance and Investment banking. Pathak V. Bharati. (2011), “The Indian Financial System: Markets, Institutions and Services”, Pearson Education of India, South Asia. In this book Author explain the Indian financial system as a complex amalgamation of various institutions, markets, regulations and laws, analyst, transactions, claims and liabilities. Topics like risk management, systematic investment plans, reverse mortgage loans and financial inclusion are also discussed. Fabozzi J. Frank, Modigliani Franco, Jones J. Frank and Michael G. Ferri (2001), “Foundations of Financial Markets and Institutions”, Prentice Hall of India Pvt. Ltd, New Delhi. Authors offered details of the revolutionary developments occurred in the world financial market and institution which includes innovations, globalizations and deregulations of the practices of the financial institutions. This book shows a unique perspective on how these institutions manage their assets and liabilities in a complicated environment. Siddaiah Thum Mulari (2011), “Financial Services”, Prentice Hall of India Pvt. Ltd, New Delhi. This book provides framework of range of financial products and services which are offered by the different financial institutions in India. Simplified presentations of framework and discussions of concepts with the help of real-life Indian examples, boxes, questions and case studies are the main characteristics of this book. Kutty k. Shashidharan (2008), “Managing Life Insurance”, Prentice Hall of India Pvt. Ltd, New Delhi. In this book Author provide analytical and complete view of every dimension of life insurance management in the sequence of its purpose, principles, purchase, products, process and people in a very easy to understand language. In this book details of the two core operations of an insurance company that is underwriting and claims are also discussed in detail. 32 A Claim Management in Life Insurance Chapter - 4 : Data Analysis & Interpretation 1) Gender Male Female Interpretation From the above diagram, we can see that 42% are male respondents and 58% of are female respondents. 33 A Claim Management in Life Insurance 2) Age 18-24 25-32 33-40 Above 40 Interpretation From the above diagram, we can see that 70% respondents are teenagers 18-24, 8% respondents are from 25-32 age, 10% of respondents are of the age of 33-40 & 12% respondents are above 40 age. 34 A Claim Management in Life Insurance 3) Are you aware about claim management? Yes No Interpretation From the above diagram, we can see that 70% of respondents were aware about claim management & 30% of respondents were not aware of claim management. 35 A Claim Management in Life Insurance 4) Have you applied for any claim settlement? Yes No Interpretation From the above diagram, we can see that 12% respondents were applied for claim settlement & 88% of respondents never applied for any claim settlement. 36 A Claim Management in Life Insurance 5) From where did you know about claim settlement? Insurance Broker Policy Documents Insurance Company Website Media & Advertisement Interpretation From the above diagram, we can see that 32% of respondents heard about claim settlement from their insurance broker, 24% of respondents read from policy documents, 18% of respondents read from insurance company website, 26% of respondents seen on media platform and advertisement regarding claim management. 37 A Claim Management in Life Insurance 6) How many times you approach in insurance office for inquiry about claim? 1 Time 2 Times 3 Times None Interpretation From the above diagram, we can see that 16% of respondents approached 1 time to insurance company office for inquiry about claim, 16% of respondents approached 2 times to insurance company office for inquiry about claim, 4% of respondents approached 3 times to insurance company office for inquiry about claim, 64% of respondents never approached to insurance company office for inquiry about claim. 38 A Claim Management in Life Insurance 7) How is the procedure of claim settlement? Easy Short Difficult Lengthy Interpretation From the above diagram, we can see that 26% respondents find claim settlement procedure is to be easy, 30% of respondents finds claim settlement procedure is to be short, 22% respondents finds claim settlement procedure is to be difficult, 22% of respondents find it to be lengthy. 39 A Claim Management in Life Insurance 8) How much time required for setting the claim? 15 days 1 Month 2 Month More than 2 Months Interpretation From the above diagram, we can see that 22% of respondents completed their claim setting within 15 days, 32% of respondents completed their claim setting within 1 month, 30% of respondents required 2 months to complete their claim setting, 16% of respondents took more than 2 months to complete their claim setting. 40 A Claim Management in Life Insurance 9) Do you faced any problem while setting the claim? Yes No Interpretation From the above diagram, we can see that 24% of respondents faced problem while setting the claim, 76% respondents didn’t face any problem while setting the claim. 41 A Claim Management in Life Insurance 10) Level of satisfaction with facilities provided by company? Satisfied Neutral Dissatisfied Interpretation From the above diagram, we can see that 42 % respondents satisfied with their claim settlement, 46% of respondents were having neutral feeling regarding their claim settlement, 12% of respondents were dissatisfied with their claim settlement. 42 A Claim Management in Life Insurance 11) Do you have any complaint against claim settlement? Yes No Interpretation From the above diagram, we can see that 20 % of respondents were having complaint regarding their claim setting, 80% of respondents didn’t have any complaint regarding their claim management. 43 A Claim Management in Life Insurance CHAPTER - 5 : CASE STUDIES CASE -1 Life insurance Corporation of India V/S Mrs. Sunanada Kanthale According to complaints Sunanda Kanthale. Her husband Manoharrao Kanthale who worked as a stores superintendent with the Amravati policy for Rs 20.000 on November28.1992.The policy which was anon-medical one was scheduled to mature on November 24.2004.she said Unfortunately Manoharrao passed away on October 22.1993.10 months and 25 days from the date of purchasing the instrument. Being the nominee in the policy. She asked for her claim for an account of Rs 40.000(under double benefit provision in accident (cases)and made an application to the Akola branch manager of LIC the senior manager of LIC (Amravati Division) however refused to sell the clam vide his letter dated Augus14.1994As the policy was an on medical one. There as on given by the official for not settling the claim was also a bogus one. she alleged Sunanda then wrote loathe area manager of LIC Mumbai. Justify in her claim. The Mumbai office too (vide) letter dated April 20, 1995）refused to settle the claim, Kanthale added. She then lodged a complaint with Akola District Consumers Grievances redressed forum. In the complaints, she applied to the forum to issuer the necessary directive to the LIC for paying Rs40,000 along with 18% interest a compensation of Rs 50,000 towards mental tension ca used and Rs1,000towards legal expenses Defending the stand taken by the company, the LIC refuted all the allegations made by Sunanda. Manoharrao who held the policy. Had kept the information about his heath a secret while purchasing the instrument the company alleged. The forum referred to columns14 and 26 in the Application for where the policy purchaser had made Statements about his health. The form was duly signed by Dr.B.R R Jain the forum said. The LIC officials produced Proofs before the forum regarding heart disorder of the policy holder and sick leave availed by him after taking the policy. However, they could not prove that Manoharrao Was not well on the day of purchasing the policy. 44 A Claim Management in Life Insurance The District Consumer Grievances Redressal Forum his Directed Senior Divisional Manager of Life Insurance Corporation (LIC) Amravati, Area Manager, Mumbai and Branch Manager, Akola to pay Rs 20,000 to Sunanda Kanthale towards insurance claim besides interest on the Amount from October 22, 1993，till the two payments. Case - 2 Life insurance Corporation of India V/S Neelam Mehta The case a rose following the refusal of LIC to pay the Insurance money following the death of her husband Mahendra bhai Mehta.LIC had repudiated the life policy Alleging that he had hid from it that he was suffering from diabetes at the time of taking the insurance policy in December 1993. On 6 November 1994 he died following a heart attack. Neelam told the consumer forum that she came to know that her husband had a life policy with LIC 3 months after his death, when she started receiving forms one after another to be filled through LIC agent. She then filled up all the relevant papers. She also formally informed LIC about death of her Husband and claimed the insurance money. There upon LIC intimated her that the claim for her husband's insurance policy was repudiated because the life assured had deliberately withheld information regarding his pre-existing illness which was diabetes' and which, it said had led to his death. It also alleged that because of this disease he had been hospitalized be for his death and that he was an insulin-dependent diabetic. Neelam represented to both the Bhavnagar and Ahmedabad office of LIC and later to its zonal office in Mumbai urging them to recommend her claim to their review committee. This request was made in September 1996 till now no decision had been taken and the' matter is still under consideration. She also denied that her husband was a diabetic or that he had been hospitalized for this. He had not been treated for any ailment during the 5 years preceding his death, she asserted. The forum comprising its president, K.D. Desai members Leena Desai and Malay bhai Kantharia，found that LIC has failed to prove that Mr. Mehta had made false statement and misrepresentation about his health. The burden of proving that there was a suppression of material fact and that it was made fraudulently 'lied on LIC and it had failed to 45 A Claim Management in Life Insurance prove it the forum observed. LIC therefore was legally and moral duty-bound to pay the claim， it said. Consumer disputes redressal forum，Ahmedabad，has directed LIC of India to pay up Rs. 50,000 plus 12% interest for 7 years，as insurance money due to after her husband's death. The forum also ordered payment of Rs. 5000 for causing mental agony, hardship and inconvenience to Neelam Ben.ItgrantedRs.3000 as cost. Case - 3 Life insurance Corporation of India v/s Lily Rani Roy The petitioner has purchased a life insurance policy from the appellate and premiums were paid regularly. The maturity of the Said policy was in 1978. Because of some personal reasons the claim was not filed. The petitioner had filed the claim after 13 years of its maturity. The LIC of India rejected the payment on a plea that claim is time barred claim and as such the claim will not be paid. The petitioner has filed a complaint with consumer council with a request to direct the LIC for the payment of the maturity claim as the policyholder had paid the entire premium till the date of the maturity and has the right to receive the claim amount. Assured held LIC guilty under Consumer Protection Act,1986Section (I) (g) for deficiency in service. But the LIC of India pleaded that the Corporation will be maintaining the records for a period of 5 years only and the Corporation Has received the claim notice from the petitioner in 1990 which is far beyond the time. The LIC also produced a photo copy of the maturity claim payment register showing the payment of the complainant's money 46 A Claim Management in Life Insurance After examining all the facts, the State forum has declared that the petitioners cannot claim the payment of policy as it is already time barred. On the decision of the State Commission, the petitioners filed a petition with the National Commission. The National Commission, after verifying the terms of the policy, has opined that through the payments of claim is time barred, the insurance company should have given notice to that effect or should include a clause in the policy document stating that the time Barred maturity claims will not be paid. As the Corporation has filed to bring this information has filed to bring this information to the notice of the policy holder or failed to create the awareness among the policyholders, it has failed in its duties and as such it is liable to pay the claim to the petitioners. Thus, the National Commission has ordered the payment of time barred Maturity claims. 47 A Claim Management in Life Insurance CHAPTER - 6 : FINDINGS & CONCLUSION 6.1. Findings 1.Majority of people having their life insurance policy In LIC. 2.Majority of people are aware about claim settlement. 3.Majority of people know about claim settlement while taking policy. 4.Majority of people have not applied for claim 5.Majority of people never gone to insurance office for inquiry about claim. 6.Majority of people have solved their queries by Insurance companies. 7.Majority of people have settled their claim through LIC. 8.Majority of people says that procedures is short in comparison of easy, difficult, & Lengthy for claim settlement 9.Majority of people required 1or 2month or more Than that for setting the claim. 10.Majority of people didn’t problem while setting a claim. 11.Majority of people have neutral & satisfying feeling regrading facilities provided by companies. 12.Majority of people claim are accepted by companies. 13.Majority of people claim are not rejected by the companies. 14.Majority of people not had any complaints regarding claim settlement. 48 A Claim Management in Life Insurance 6.2. Conclusion The insurance business is major service-oriented business in the world. The service offered by the industry is well recognized and utilized by the general public and commercial sector of the world. The life insurance business has covered nearly 40% of the population of the world. Global players with strong brand in the insurance company today set up there back office operation in low cost country manage capital on the global basis make use of their special skills worldwide and use their superior managerial ability to secure leadership positions in the industry. The claim management in an integral part of insurance. It involves the strong. processing and transmission of information relating to settlement of insurance claims. The use of Information Technology also plays an important role in claim settlement. In managing the claims handling The function insurers seek to balance the elements of customer satisfaction, administrative handling expenses and over payment leakages. As part of this balance act, fraudulent insurance practices area major business risk that must be managed and overcome. Disputes between insurers and insured over the validity of claims or claims handling practices occasionally escalate into litigation which should be solved with due care. In the fast scenario it will not be enough if companies have the futuristic strategies. Implementation of the strategies， effectively adapting them to ongoing changes can spell success. The success of claim management depends on the satisfaction of the customer. The customers are attracted to an insurance company by its state of art claim service. Therefore, before designing an IT system for claim management customer expectations are to be considered. The customers their needs knowledge of how the market works and what they want these are things that are important for an insurance company for serving the customers in a better manner through better technology. 49 A Claim Management in Life Insurance CHATPER - 7 : SUGGESTIONS 7.1. Suggestions  Companies should provide better facilities for claim settlement  Company procedure regarding claim management should be easy.  Companies should take short time while settling the claim.  Companies should not reject the claim without knowing the reason properly.  Companies should give better knowledge regarding Claim settlement  >Companies should solve the queries property regarding claim settlement  Companies should satisfy the consumer needs. 50 A Claim Management in Life Insurance BIBLOGRAGHY 1. Arora Kausal K. (1992), “Development Banking in India”, First Edition, Atlantic Publishers and Distributors, New Delhi 2. Arumugam Vijayakumar (2009), “Indian insurance sector in 21st century: an outlook”,Kalpaz Publications, New Delhi. 3. Babu G Ramesh (2005), “Financial Services in India”, Concept Publishing company, New Delhi. 4. Bhole L.M and Mahakud Jitendra (2009), “Financial Institutions and markets Structure, growth and Innovations”, TATA McGraw- Hill Companies, New Delhi. 5. Bodla B.S, Garg M.C and Singh K.P (2003), “Insurance Fundamental, Environment and Procedures”, Deep & Deep Publication Pvt. Ltd, New Delhi. 6. Gupta P.K (2011), “Fundamental of Insurance”, Himalaya Publication House, Mumbai 7. Kothari Rajesh (2010),“Financial Services in India : Concept and application” , Sage Publication India P. Ltd, New Delhi. 8. Kumar Naveen. Somashekher (2004), “Money bank International trade and public Finance”, Anmol Publication Pvt. Ltd, New Delhi. 9. Kutty k. Shashidharan (2008), “Managing Life Insurance”, Prentice Hall of India Pvt Ltd, New Delhi. The information is also taken from various sources such as books，magazines articles. Internet etc. Books： Theories and Practices in Insurance Insurance watch Business world Business today The Times of India 51 A Claim Management in Life Insurance Webliography www.insuremagic.com www.licindia.com www.icicprulife.com www.insurancewatch.com www.insuranceonline.com www.investopedia.com www.wikipedia.com Search engines: www.google.com www.ask.com 52 A Claim Management in Life Insurance Annexures To study on Claim Management in Life Insurance Data collection regarding Claim Management Email Name Gender Male Female Age 18-24 25-32 33-40 Above 40 1)Are you aware about claim management? Yes No 2) Have you applied for any claim settlement? Yes No 3) From where did you know about claim settlement? Insurance Broker Policy Documents Insurance Company Website Media & Advertisement 53 A Claim Management in Life Insurance 4) How many times you approach in insurance office for inquiry about claim? 1 Time 2 Times 3 Times None 5) How is the procedure of claim settlement? Easy Short Difficult Lengthy 6) How much time required for setting the claim? 15 Days Month 2 Months More than 2 Months 7) Do you faced any problem while setting the claim? Yes No 8) Level of satisfaction with facilities provided by company? Satisfied Neutral Dissatisfied 9) Do you have any complaint against claim settlement? Yes No 54

A Study on Claim Management in Life Insurance (2022-2023) PDF

Document Details

Tags

Related

Summary

Full Transcript

Upgrade to continue