Insurance: Need for speed

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Published: April 28, 2015 1:28:18 AM

The insurance regulator is putting in place changes to ensure non-life claims get settled faster

Claim settlement for non-life insurance, whether it’s cars or machinery, is set to get faster as the insurance regulator wants companies to put in place more in-house surveyors and not rely on external agencies to do damage assessment, which usually takes a long time. The Insurance Regulatory and Development Authority of India (Irdai) has proposed to increase the limit for appointing external surveyors from R20,000 to R50,000 for motor claims and R1 lakh for other claims.

The proposed increase will enable companies to settle claims faster as insurers will not have to wait for the external surveyor’s report. Since surveyors are in short supply, they get overburdened and the delay in submission of reports escalates costs for insurers.

In the exposure draft, the regulator proposes to reduce the licence period for surveyors to three years and they have to qualify the surveyor examination conducted by the Insurance Institute of India or any other institute authorised by the regulator. Licences will be given for businesses such as motor, fire, marine, cargo, engineering and farming (crop insurance). Surveyors and loss assessors whose licences have been cancelled or suspended for any reason will have to submit an application for issuance of licence, after the expiry of a year from the date of such cancellation or suspension.

Insurance risk surveyors carry out assessment of vehicles, buildings, plant and machinery and other non-life objects that are insured by individuals or companies. The surveyor gives a report of the damage and, based on that report on the amount of losses, the insurance company processes the claim. The earlier version of the Insurance Act mandated that all claims in the non-life segment above R20,000 had to be surveyed by professional surveyors who are given a licence by the insurance regulator. A key part of the surveyor’s work is to produce reports to help companies decide on the terms and conditions of insurance policies.

The regulator has made it mandatory that those willing to obtain a licence to act as surveyors and loss assessors will have to be a member of the Indian Institute of Surveyors and Loss Assessors (IIISLA). This was done to impart proper guidance, education and training to perform duties and responsibilities within the code of conduct. A licensed surveyor can operate in more than three departments,  subject to clearing the requisite exam.

The regulator has underlined that for the purpose of upgrade of surveyor’s categorisation, IIISLA will introduce a continuous evaluation and skill development training. The period of the training will be more than 100 hours for licentiate, 50 hours for associate and 25 hours for fellow members. The evaluation committee will also have a member for Irdai and the insurance industry. Analysts say the new norms, when implemented, will bring in transparency and credibility in the way surveys are done for assessing damage for non-life claims.

In the exposure draft, the regulator has said that a surveyor will have to submit the report of the damage within 30 days. In special circumstances, the surveyor will intimate the insurer of any delay. Even survey firms, which are also licensed, will follow the norms applicable to individual licensed surveyors. The survey firms will make disclosures to IIISLA and Irdai about their employees’ terms and conditions of employment. Moreover, these firms are not permitted to
outsource work.

The insurance company will appoint a surveyor to assess the loss and damage, and then compare it with the claim of the insured. After satisfactory evaluation, the insurance company will initiate claim settlement. For instance, if a policyholder lodges a claim for compensation, the insurer will appoint another surveyor to assess the loss from the accident. The surveyors will then go and assess the extent of loss.

On the basis of the report submitted by the surveyor, the insurance company will be liable to settle the claim. Money will have to be paid within 30 days from the date of receipt. If the claim is ready for payment but money cannot be paid due to any reason, such an amount will earn interest at the rate applicable to a
savings bank account.

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