The anatomy of an insurance claim

An insurance policy dictates what "loss" is covered by the policy. It is simply a promise to pay, if a certain loss occurs and the eligibility requirements under the policy are met. So, if a person buys an individual life insurance policy, pays the premium on time, meets all requirements stated in the policy and later dies, the policy states that a sum of money will be paid to a beneficiary. A person can pay for an individual life policy for many years and the policy is only worth something when they die. To collect the benefits under a policy a claim must be filed. For life insurance, a claim form must usually be completed and a certified death certificate must be provided. The death certificate is proof that the loss actually occurred, ie.death. The documents are submitted to the company that wrote the policy with a request to pay, also known as a claim. Once the insurance company received a claim, there is three directions the claim can go: pay, deny or investigation.

Many people unfairly feel like insurance companies are all alike. They feel that the insurance companies are all looking for a way not to pay claim. It is my experience that this is not true. A claims person is in the position of determining eligibility for coverage and determining who to pay, if the loss is a covered loss. A good insurance claims team will look to make "the correct decision" as soon as possible and pay all meritorious claims as quickly as possible. This a very simple high level picture of how claims work. All insurance claims departments are different and have unique requirements and procedures.

The International Claim Association is an organization that promotes efficiency, effectiveness and high standards of performance in their member companies.

The ICA requires adherence to the following "Statement of Principles" (see www.claim.org/about):

The International Claim Association, in recognition of the need to continue public trust and confidence in the insurance industry, reaffirms the following principles:

1. Any individual who has, or believes he has, a claim is entitled to courteous, fair and just treatment; and shall receive with reasonable promptness an acknowledgment of any communications with respect to his claim.

2. Every claimant is entitled to prompt investigation of all facts, an objective evaluation and the fair and equitable settlement of his claim as soon as liability has become reasonably clear.

3. Claimants are to be treated equally and without considerations other than those dictated by the provisions of their contracts.

4. Claimants shall not be compelled to institute unnecessary litigation in order to recover amounts due, nor shall the failure to settle a claim under one policy or one portion of a policy be used to influence settlement under another policy or portion of a policy.

5. Recognizing the obligation to pay promptly all just claims, there is an equal obligation to protect the insurance-buying public from increased costs due to fraudulent or non-meritorious claims.

6. Procedures and practices shall be established to prevent misrepresentation of pertinent facts or policy provisions, to avoid unfair advantage by reason of superior knowledge, and to maintain accurate insurance claim records as privileged and confidential.

7. Reasonable standards shall be implemented to provide for adequate personnel, systems and procedures to effectively service claims. These standards shall be such as to eliminate unnecessary delays or requirements, over-insistence on technicalities, and excessive appraisals or examinations. Claim personnel shall be encouraged and assisted in further developing their knowledge, expertise, and professionalism in the field of claim administration.

I have worked in insurance claims for thirty two plus years. I have always looked to ICA's seven principles as a guide for how insurance claims are to be handled.

If you have questions, feel like you are dealing with a company that is not adhering to these principles, or are simply having difficulty with a claim, send me an email at brianbullock.consulting@gmail.com and I will be happy to review and discuss your situation. I am not an attorney, but my years in the industry provide me with the tools to evaluate your situation. Again, almost all insurance companies realize that claim time is very emotional for the claimants and are tasked with "doing the right thing". Normally, if there is a delay, they are simply gathering all of the necessary information to make an informed, proper decision.

I welcome any comments, good and bad, regarding your experiences in filing an insurance claim.