Delhi violence: Insurers to simplify claims settlement process

Insurance companies may make the claims process simpler for those hit by loss of kin and property in the communal violence in Delhi.

Just as was done during Chennai and Kerala floods, the insurance companies may follow a similar procedure that will be less cumbersome.

Senior insurance executives told Moneycontrol that the initial estimates show that there could be insured claims to the tune of Rs 10 crore. A majority of the claims filed so far pertain to motor vehicle damage and business losses.

"A slightly relaxed claim process like in the case of the past floods will be done," said Sanjay Datta, Chief – Underwriting, Claims, Reinsurance and Actuary, ICICI Lombard General Insurance. He added that if there is damage the surveyor will look at the extent of damage.

Sources said that slain police official Ratan Lal’s death claim was settled by LIC within two days. Head constable Ratan Lal was killed in violence in northeast Delhi on February 24.

The surveyor

At a time when those affected by the incident are trying to assess the extent of damage, insurance companies are busy talking to surveyors to ensure that rightful claims are quickly settled. Insurers may seek a lesser set of documents to settle these claims.

At present, claims above Rs 50,000 for motor insurance and Rs 1 lakh for others, qualify for the services of insurance surveyors and loss assessors.

When a surveyor is appointed for assessing a claim, they get 30 days to review the filed claim and submit the report. The job of the surveyor is to physically review the property or vehicle that has been damaged and assess how much could the loss could be.

Insurers said that when it comes to violence-related incidents, the time limit of filing a claim is also usually not adhered to. Hence the claims settlement in these conditions takes longer.

The claims

Violence-related incidents involve two different type of claims: life claims and property/vehicle claims.

An insurance official said that companies have seen cases of fraudulent claims being filed in the past and hence they have to be careful.

“It is not possible to do away with surveys because there could be cases of people filing false or inflated claims during periods of crisis,” said an underwriting official at a state-owned general insurance company.

When it comes to life insurance claims for death, a simple certificate confirming the death is taken to pass the claims. Often large insurers like Life Insurance Corporation of India (LIC) set up special claims teams to handle cases related to both natural catastrophes like floods, earthquakes as well as man-made incidents like riots, accidents.

During the Chennai floods, insurance companies had done away with the practice of waiting for a death certificate in case a person’s body was not found. Instead, a statement from a municipal body or a list of deceased from government hospitals was considered adequate for settling death claims.

As per the general practice in the insurance industry, a company has to wait seven years before settling a death claim, in case a person is missing. After seven years, a person is presumed to be dead.

In general insurance, claims could be related to loss to property and equipment, business interruption as well as damage to machinery.

In these cases, the premium receipt, FIR report as well bills related to repairs/purchases have to be kept ready. However, for calamities like the Delhi violence it is likely that the surveyor’s report could be adequate to pass the claim.

In past incidents like the riots in Mumbai (then called Bombay) in 1992-93, procurement of policy documents for death claims and property claims was a challenging task since a majority papers were destroyed. The concept of electronic documentation did not exist back then which lead to claim delays.