Moment of truth: How to settle life insurance claims

Oct 08 2013, 12:08 IST
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Every life insurance company adopts its own philosophy regarding handling of claims. Every life insurance company adopts its own philosophy regarding handling of claims.
SummaryNo activity in life insurance is of higher importance than that leading to settlement of claims.

customers and create a future market for itself, it has to concentrate on deliverables like claim settlement to create a relationship of trust with the market.

Only such positive experience can infuse confidence in the customers and earn huge loyalty. About two decades back, when I was marketing head of LIC at its divisional office 1 at New Delhi, the senior divisional manager once took me to the window of his office in a multistory building at Connaught Place and, looking down at the busy street, he asked: “What must be done to make all these people believe that employees in this magnificent building of LIC will take care of their family if, on a fateful day, any one of them failed to return home.”

I could guess what was in his mind and resolved to devote all my energy and managerial skill in enhancing efficiency of claim settlement operations to the level of being best in the country.

Claim settlement often requires bold decisions. The real test of claim settlement procedure is speed. In most of the cases, it is observed that the sum assured is finally paid but only after causing acrimony. In such cases, companies lose money as well as credibility. I strongly believe that death claim settlement procedure implies enabling the claimants to complete the documentation.

Only a hassle-free process can make the market believe in life insurance as an essential financial instrument. Even if it is decided to repudiate a claim, the action must be completed promptly and courteously.

Once during my visit to an LIC branch, I asked the HoD of the claims department: “What do you do to expedite settlement?” He comfortably replied, “I immediately write letters calling for requirement and forward copies to the divisional office.”

This bureaucratic mindset was the root cause of very poor claims settlement record of that office. To eliminate such a mindset, an interface of various stakeholders was organised. This resulted in settlement of 90% of 65 pending cases in one day.

The system became responsive, sensitive and result-oriented. Every action taken thereafter by any manager had to satisfy one question: Will it help in prompt settlement of claim? While handling claims portfolio, indecision and procrastination tactics must be avoided. People handling claims must note that they are in business because there is a chance of a claim arising. In insurance, claim settlement is not only a moral obligation,

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