Win-win formula

Written by Saikat Neogi | Updated: Oct 2 2012, 07:00am hrs
Irdas draft guidelines aim to give more teeth to surveyors and loss assessors, which should benefit both insurers and policyholders

To streamline the process of assessing loss, the Insurance Regulatory and Development Authority (Irda) plans to give more teeth to the Indian Institute of Surveyors and Loss Assessors.

A surveyor and loss assessor (SLA) of general insurance has to be a member of the institute, obtain a licence, undergo specific training for skill upgradation and follow the code of ethics of the institute.

Surveyors are experts who assess the loss or damage caused and are a link between the insurer and the insured. The Insurance Act, 1938, mandates that all claims in the non-life segment above R20,000 have to be surveyed by professional surveyors who are given a licence by the insurance regulator. Insurance risk surveyors carry out surveys of vehicles, buildings, plant and machinery and other non-life objects that are insured by an individual policyholder or a corporate entity. The surveyor gives a report of the damage and, based on that report on the quantum of losses, the insurance company processes the claim.

The Irda, in its exposure draft, has said that outsourcing of survey work is prohibited as the insurer and the insured are two parties to the contract of the insurance. The regulator has proposed that those who are willing to obtain a licence to act as a surveyor and loss assessor will have to be a member of the Indian Institute of Insurance Surveyors and Loss Assessors (IIISLA). This will enable them to get proper guidance, education and training to perform their duties and responsibilities within the code of conduct.

The one-time membership fee to join the institute is R2,500, the annual fee is R1,000 for licentiate, R1,500 for an associate and R2,000 for fellow membership.

Current norms require an existing SLA to maintain proper records of the work done by him, maintain a register of survey work in an Irda-prescribed form and furnish annual returns to the insurance regulator. The Irda also maintains a register of licenced surveyors with minimum information required for renewing the licence.

A licenced surveyor will be allowed to operate in more than three departments currently allotted, subject to clearing the requisite exam.

The draft exposure has also said that for the purpose of up-gradation of the surveyor's categorisation, the IIISLA will have to introduce a continuous evaluation and skill development training and the period of the training will not be less than 100 hours for licentiate, 50 hours for associate and 25 hours for fellow members. The evaluation committee will also have a member from Irda and the insurance industry.

Analysts say the new norms, when implemented, will bring in transparency and credibility in the way the surveys are done for assessing the damage for non-life claims. Since claims are given based on the survey report, it is an important document with required evidential value, Suman Nath, an Irda-licenced SLA.

Even for survey firms, which are also licenced, they will follow the same norms that are applicable to individual licenced surveyor. The survey firms will make disclosure to IIISLA and Irda about their SLA employee's terms and conditions of employment.

Moreover, the draft exposure mentions that these firms are not permitted to outsource and will not be allowed to even franchise with other SLAs. The disclosure and compliance will form a part of their half-yearly and annual returns to the IIISLA and Irda.

Interestingly, the draft exposure underlines that if there is any practice of permitting automobile manufacturers and dealers to use the services of an interested SLA or SLA firms, due diligence has to be done by the insurer to ensure that the interest of the policyholder is not prejudiced and that of the insurer does not get affected due to act of omission and commission of unprofessional conduct.

The agreement or the memorandum of understanding (MoU) by the SLA, company and the insurer with the automobile manufacture or the dealer will have to be submitted to the IIISLA and the Irda for the purpose of record and compliance of notified rules, regulations and matter of conduct.

The draft exposure also puts a ceiling on business from a single client.

The insurance regulator has also proposed to issue comprehensive corporate governance guidelines to IIISLA pertaining to structure, role and responsibilities, accountability and functions. The IIISLA will establish a system of grievances redressal against its members through a committee.

If the insurer or the insured or the concerned department of Irda is not satisfied by the efforts made by the concerned member of the institute or the committee of the institute, an appeal can be made to member, non-life, of Irda and his decision will be final for disposal of such complaints.

Transparent claims

* Under Section 14 of Insurance Act, 1938, every insurer will have to maintain a register or record of claims

* Under Section 64U of the Act, an insurer cannot settle a claim above R20,000 unless it has received a report by the surveyor on the loss

* In cases where a surveyor has to be appointed for assessing a loss/claim, it has be done within 72 hours of the receipt of intimation from the insured

* The surveyor will have to communicate his findings to the insurer within 30 days of his appointment with a copy of the report

* On receipt of the survey report or the additional survey report, the insurer will have to settle the claim to the insured within 30 days

* If the insured is unable to furnish all particulars required by the surveyor, the latter will inform in writing to the insured about the delay