Technical means used to reduce the effects to be caused by the emergence of the damages in the insurance traffic are called insurance. The most frequently encountered two technical means are insurance, and other security systems protecting the person’s life and health are social security. The two most important features of the insurance file are obtained trust and the immobilization of the capital. Therefore, insurance sectors which are attained by the trust should be given particular importance to. In particular, completed the damage must be paid as soon as possible, should not be hidden things in these areas. Because the principle of trust owns the most significant features at the same time in the insurance sector. Purchasers of insurance should not forget the importance of the insurance company’s business principles and steps of operations such as claims handling the processes of their possessions. These important steps in their absence will lead to long-lasting feelings of loss in their economical and psychological.

By placing an immunity over people, in the meantime situation that an accident would expose during, insurance helps people to feel safe financially. The responsibility of insurance is not only the notification of such kind of situation and determination of the claims without delay but also helps that motion ratio and to overcome the problem as much as possible and feeling them that financial assistance by arranging such as bail increase of moral. The duty of insurance file to evaluate the situations and to determine the claims is called the handle of the claim. In addition to creating the insurance dynamics, speed and reliableness are the needs of the policy owner and this matter involves mutual trust. A well-defined claim process in the institution has got that insurance is given priority stand before all sorts of competing. Therefore, how the decision about the claim, and what kind of activities are done by the insurer until the completion all have to be presented clearly in the insurance file.

1.1. Definition and Importance of Claims Handling

To understand the meaning of the claim, it is very essential to understand insurance. Understanding the meaning of insurance from the contractual point of view, insurance is a contract where a person or an institution promises to provide a specified amount of service. According to Glass, «a contract by which one party in consideration of a price paid to him adequate to the risk he assumes (that is, the just amount of the premium), undertakes to indemnify another against liabilities or losses consisting of a risk to another.» The parties entering into an insurance contract are called insurer and insured. The time when the loss happens is known as the occurrence of loss. The amount for which insurance is taken is known as sum insured. The claim occurring in the insurance deal with the application made by the assured to the insurer for indemnity under the insurance policy held with respect to the subject matter of the insurance policy.

2. Key Players in the Claims Handling Process

When a claim is presented to an insurer for any type of policy, the process followed is similar. It is the different types of claim that necessitate specialist study and the execution of coverage before proceeding to process the claim. In this study, we are focusing entirely on life claims, life TPD (total and permanently disabled) and/or trauma claims. This presents different issues to short-tail claims, so we need to double our previous study time to understand the indicators of fraud and how to identify them and when discovered, what action to take. Key players in the process are customers, claimants, employees at the claims office, and the managers of claims offices. Each of these key players has access/control over claims information and rewards and costs associated with processing and handling claims.

2.1. Roles of Insured Parties

2. Legal entities directly participate in insurance in insurance agreements in the broadest range insurance and investment programs.

1. Insured persons include those present within the trade profiles their interests associated apartments, garages, small mechanized repair shops, hunting-fishing equipment, and other things, cottages, country houses, buildings, pets, livestock, construction machinery and equipment, stocks, bonds, property at the safe deposit box.

These are parties that either directly (in the event of a loss) or indirectly (in the event of another claim) use the insurer’s services. Insured parties can be insured and uninsured. The main insured parties in insurance are in the major types of insurance and reinsurance companies and their mutuals, reinsurance Syndicates at Lloyds, underwriting agencies, and interchangeable at insurance companies of other countries, branches of Soviet insurance companies, strakhosotsiums.

3. Types of Insurance Claims

These are the two categories, each sub-divided into several others according to the occurrence or not of one or several conditions, sub-limits, exclusions, and similar. For disputed claims, it will be necessary for the insolvent to introduce somewhere circuits that will legally discuss the issue and build an eventual settlement. If one does not exist, such as a special administrative proceeding for these claims, then general rules like common law ones will apply to handling. For undisputed claims, a direct access to a company is required. This is, obviously, a problem when companies and especially insurance companies, in accordance with the complexity of the insurance activities and its technical demerit, tend to be extremely bureaucratic. The direct access is at risk for a device that is designed to protect the company and whose scope has nothing to do with the process of occurrence and the simplicity it carries.

The first one, known as disputed claims, is the subject of an administrative proceeding, having as its outcome the recognition of the referred right and the attempt to quantify it. This claim compels legal action since the relationship is not straight and, therefore, is not easily settled. The second one is known as undisputed claims, and is perceived, according to the terms of the policy, without further negotiations between the insolvent and the benefactor. These are very simple to handle and are quickly settled. Due to specific issues, life insurance claims are not enclosed in the two mentioned categories, where perceived claims are not always transmitted to the benefactor. As it may be observed in this classification, the way a claim is handled by an insurance company is a business card for the company and in general for all members of a professional sector.

There are two main types of claims that an insurance company has to settle or cover. The occurrence of these claims, as well as the way they are handled, is the surest way for insurance companies to gain the confidence and the respect of the public. In other words, these are a test for the insurance company. It is important to know before these that these claims require a legal relationship to exist among the insurer, the benefactor, and the insolvent. These are the three interested parties and hence the naming of the possible claims.

3.1. Property and Casualty Claims

3.1. Property and Casualty Claims An insurance contract generally requires that the occurrence of a claim or loss must be reported to the insurer as a precondition to the indemnification. In commercial lines, the claims are generally reported to the insurer by the named insured. In personal lines, the claims are generally reported by the broker or the agent. In reality, the claim is often first reported to the broker who, in turn, will notify the insurer. If the broker is not involved, the insured may directly report the claim to the claims office of the insurer.

1) Claimants bring their claims to the attention of the insurance organization. Examples of claimants are the insured under an insurance contract, their beneficiaries (in case of life insurance) and other third parties who claim that they have suffered a financial loss as a result of the occurrence of a fortuitous event against which the insurance contract provides indemnification cover. The occurrence of such an event is often referred to as a «loss» or «claim.»

This part of the course involves a discussion on the specialized management of the claims function of an insurance organization. The principal participants in the claims-handling process are as follows:

4. Initiating a Claim

An inefficient or ineffective move in this connection may result in damages greater than those initially caused, which in fact is the damages that constitute the essence of this chapter. As for the successful management of other duties, an insurer is required to handle claims in a professional and expedite manner. The main motive underlying this requirement is to prevent excessive financial burden upon the insurer, who is expected to take cash advances from the local financial market to rebuild his resources, which itself sublimates the reinsurer to undertake a significant proportion of the losses at the time of their occurring. As previously said, the occurrence and/or increase of the risk naturally increase the cost of the risk, so managing expenses in relation to others is no longer of any concern after assessing the management of a service or claim/loss.

Unquestionably, initiating a claim is one of the most important occasions for the insurer. But often, the interested parties are not fully aware of their rights and obligations and do not have a reliable basis to adjust their behavior from this moment on, which may result in harmful misunderstandings or non-fulfillment of the legal requirements. Needless to mention that a claim may eventually pose a very serious threat to the survival of insured risks, and that is why the affected person or the insured risk carrier try to seek refuge in an insurance policy when something unpredictable causes harm upon them or the insured risk.

4.1. Notification of Loss

The insured has the responsibility to report the occurrence of events that would result in a legal liability of the insurance company to pay. It does not mean that the notification of loss should only originate from the insured. Finnish insurance practices embrace the marketing strategy where the adviser (the agent or broker) is told to call on all policyholders regularly in the areas concerning the practical proposition. Such action is instruction being given on what should be done for loss notification to take place.

Claims were paid. This means that 60% of the total premium was paid out as losses. The high premium charged and the competitive state in the business of insurance can justify the effective and efficient handling of losses in insurance.

The important process in the business of insurance is the handling of claims, which involves a series of steps or activities between the insured or injured party and the insurance company. Generally, the occurrence of a loss is followed by the report of the loss to the insurance company. The general guidelines as well as the actual processes or steps in the notification of, investigation of, and settlement of losses in insurance are provided. It deals particularly with an operational facet of non-life insurance and specifies the steps and level of the insurance company involved in the activities as well as the imperative reaction time needed in handling each activity. The high premium charged and the competitive state in the business of insurance can justify the effective and efficient handling of losses in insurance.

5. Investigating and Validating Claims

The other way of validating claims is to use an outsourced claims validation service. Data answers for claims from the subject is often the identity of accidents reported by drawing down data held for motor and casualty (serious accidents). Car policyholders can be expected to inform their insurers of allegations, so data marketing is sourced and used to get more claims notified. Once a potential claim is spotted, the insurance subject can request reports in relation to the people involved in the loss. They will then refer the reports themselves, and may go on to take additional steps following details contained in the reports. Mastermind is highly effective when working in conjunction with claims outsourcing from a claimant prior to an exchange of information, evidence of a consistent set of programs, and systematic discovery of accidents will improve detection times for all types of injury, reducing the elapsed period between the loss event and effective management of claims.

1. The regular update system. 2. Automated services. 3. Loss adjusters. The regular update system is a set of reports that contains details about claims. Each report relates to a single claim and has a standard format. Information is often not complete.

In trying to investigate a claim, the insurer is looking to verify that the claim is: a) Covered by the policy. b) Adopted in. c) Related to the incident (if there is any doubt). The insurer is also checking that the claim is: d) Not fraudulent. This is checked in cases where the claim looks suspicious, and e) Does not include any non-disclosure of material fact. If the policyholder did not tell the insurer about things that would have been pertinent to the formation of the contract (in their place, the insurer might have rejected cover, offered special terms or made a different contract) then the claim might be voidable, under UK law, as a result of non-disclosure of material fact. There are three main ways in which the insurer can obtain information about the claim in the course of their normal activities. These are:

The insurer will contact the policyholder to verify any gaps in the information or details already provided. They will also start an investigation of the loss. This investigation may be carried out by specialist investigators. The policy provides for this kind of thing, usually by saying that the insurer can carry out investigations if they think this is necessary. The insurer is not limited to using professional investigators though. Any information they uncover about the claim will be used to help validate the claim. No one likes dealing with insurance but it must be done right. It is important that the insurer get things thoroughly checked out so the right decision is made regarding the validity of the claim. If things go wrong, the insurance company could be providing funds to the wrong person. Such funds would of course have to be repaid, but not without an argument occurring.

When the insurer receives a notice of a claim, they must establish that the claim is valid, both in terms of the insurance policy and in reality. This is an internal check performed by the insurer. The insurer begins by checking the policy of insurance and the claim. If the claim is obviously invalid, either because it is not allowed under the terms of the policy or because it is completely without foundation, then the claim will be rejected at the outset. This means that the claimant will get nothing, since the insurer has not taken any action. In the United Kingdom, this is called deliberating a claim, in the latter case because it is devoid of merit. For example, under a motor policy for a car, there must be a valid driving licence in operation at the time of the loss. If the policyholder is a young driver without a full licence and has had a fault accident, the claim will often be turned down outright.

5.1. Documentation and Evidence Gathering

All the circumstances surrounding each claim have to be studied and documented following the insurance standards and summaries of the computer application that can be offered to all the parties involved in the administration of the liability-insurance of the company. Despite intelligent information systems and new technology for document management, record-keeping has still not been easy yet. The ITIZE RIPE-2013 project developed numerous data for the value and use of the information aiming at the indicator of the sophisticated regulation and of the companies’ practices that affect or can affect that data value. Collecting doubts about a claim has to be based on the information that is determined by answers from order the genuine value of the evidence, the case, or from forward regularly completed checklists. A checklist method bases on simple questions, created for each type of claim, data to 20 categories of insured goods, utilizing economic information and with other shape of statistics investigation that the damage being maintained.

Any insurance information has the capacity for dual or multiple functions: information about the claimant, fact, location, period, significance, and calculation of loss, responsibility for the damages, and previous indications of the risk becoming a fact (damaged, hazards, or insured); the estimation of the amount that should be paid from the insurance agreement which changes into records about the cost (claim adjustment, claim settlement); and information about the damages and/or repairing, request for the repayment of the costs, proof for the damage or might be regarded as who pays, in the sense to be related to the control and computation of the reserve approvals of an insurer. Information gathering task does not only mean to search and collect evidence and documentation. It also involves identifying and documenting in the case file the persons, dependents, or the right holder to the insurance proceeds, the claimant, or the possible indirect (the victim), the assets, the insured good or life, and the risk. The investigation of each claim has to be complete and comprehensive covering every aspect, and the documentation and evidence checklist defines what is and what is not covered. The collection of evidence and documentation task is a complex and dynamic one, which can be divided into the following stages: Identification of the needs – period, location, and distance; study the claim – identify the type of information, the geographical area, and the range of documents. This procedure includes the evaluation of both the requested evidence documents.

Conceptual clarification: The collection of evidence and documentation in the process of handling insurance claims is the stage that requires special attention and priority above any other activities. Without collecting the evidence, the obligation to pay the insurance compensation cannot be met. This will cause a breach of contractual obligations and, in the best case, insurers’ goodwill or worse, litigation. Evidence and documentation are often used as synonyms in the theory of evidence, but they have different meanings. Evidence refers to the facts through which the fact sought to be proven may be established, while documentation is the collection of qualitative documentary information or data, which can be produced in the form of printed materials or multimedia and can be digitalized, kept, shared, or has value.

6. Assessing and Evaluating Claims

There are cases where claims made from insureds have not been well thought of or have been exaggerated, and there have also been situations in which they were reported where the insureds were not at all aware of such losses or even the consequences. This kind of situation should be immediately reported as a case of fraud and be fully investigated. Sufficient efforts should also be aimed at ensuring that everything is gathered in evidence for the insurance of the specialist available for the purposes of effectively pursuing the required corrective measures. It is foreseen that insurance service providers will then take a step to ensure that the settlement or payment of repair and other bill claims by the fact that this sufficient evidence would be at hand to support taking legal action against the offender.

6.3 Clarification of Inadequacies

World over, the operations involved in assessing and evaluating claims in insurance companies fall into a few or greater lack of recognized steps, which include the following: (i) Review and examination of conditions and terms of the insurance policy to ascertain whether the coverage was in force on the date of the reported claim; (ii) Review of the reported claim to make sure that the insurance against the particular line which has occurred; (iii) Check the overall conditions of the reported claim; (iv) Performance of the additional operation, which may involve repairs, or replacement contractors, suppliers, materials, and small sub-contractors; (v) Examination of the bottom number of the reported claim to ensure that it corresponds with the costs of allowable items; then (vi) Approval and make out the prepared estimate and/or invoice or contact the insured party for an explanation of the situation if further information is required.

6.2 Steps in the Assessment of Losses

Assessment and evaluation could be used interchangeably. It is also very difficult to bring both steps apart. However, the main objective is to establish what is involved in it. To assess a loss in insurance companies simply means to investigate the particular loss reported, having accepted the report as given without performing operations in respect of it, mindless of the merit or otherwise of such operations. It is interesting to note that it has been the practice in the past for an insurer, on receipt of a risk from an insured person, to perform no further operations until the occurrence of the loss. Primarily, much in practice continues to operate for claims obtained from many individuals. The motive here is primarily based on the fact that the period during which claims are reported in relation to the premium income received is an unsatisfactorily small percentage of these.

6.1 Overall Claims Assessment

6.1. Adjusting the Claim

The interest that we saw in the need to develop a structure of virtual intelligence, as nutritional compensation is very necessary. This structure could have great benefits, which depend on the knowledge will turn in time to work on the same. The specialist quite suggests that at times themselves. To be able corpuscular of claims can be an auxiliary. These medical clinic specializes in the satisfactory decision to handle a claim. The physician is responsible for gathering them and encoding the information, symptoms, and so forth. From these cases this study tested two algorithms with the intention of working differently and later having the characteristics of a specialist.

The project work is an attempt at studying the process of handling claims in insurance companies. This is aimed at improving some control measures in relation to the process of settling claims through the use of data processing restraint. This is significant since part of the statistical data pertains to insurance companies. Handling claims is the process of recording all necessary data required to expedite the payment of claims to which the company expects what is due to it from a reinsurance transaction. In other words, the process of handling claims involves the process of adjustment and cashiering making sure that the claimant promptly receives the necessary encouragement. The ways that have considered the problem are visual tools, slide squads, microprocessors, etc. Their development depends on the experience of specialists and the final working is not just the instrument, yet he has so little preserved their knowledge, allowing them, thus, to navigate through the variant cases. However, the tools will give many options, with which the regulation agency nutritious compensation is.

7. Settling Claims

While settling is an integral part of the adjustment process, many insurers have a separate subpart of the adjusting function involved with process q preparation for settlement; putting out the resources that the settlement process requires; and negotiating. The multiplicity of claims leads to volume considerations in obtaining the physical documentation. Failure to prepare for a substantial savings can lead to a horrific loss of time and energy. Most companies have various approaches to this problem. What is sound for one claim sometimes is not practical for another. In subrogation, for example, costs should be kept commensurate with the chances of recovery. Infrequent occurrences suggest that a master memorandum approach might be the best compromise. This is the situation, for instance, where a buyer of a washing machine has a coronary attack and little children use the machine to play with and become injured.

This part of the claims process – settling claims – requires much of the same routine work that the other steps do. But in adjusting, here is where the necessary final decisions are recorded. Most adjusters can recall a few accounts attractive to the insured at the time of purchasing a policy and just as unattractive in the aftermath of a problem that should help illustrate many of the points made in this paper. If legalistic defenses of claims are ethically sound where surreptitious conditions exist, it follows that a case can be made for legalistic prosecution of all claims where a little artful dodging will protect resources needed by the majority of claimants. Such an ethical position not only eases the work of the interested adjuster. It also discourages interest in misstating conditions if the insurer acquires a reputation for legalistic claim defense.

7.1. Negotiation and Settlement

Since claims people ascertain how much payment is reasonable, the process can well begin by asking how they reach such conclusions. The characteristics of the process, whether it is formally structured as a model or not, give insights into the people and organizations that operate it, including the interest of these participants in perpetuating their roles in the process.

In addition to the important function of investigation (establishing the facts concerning the circumstances attending the alleged loss), our theory of the process of handling claims includes a stage called «negotiation and settlement.» This stage begins with the presentation of an argument by the claimant that his loss should be paid. Very often, this first demand is for a sum greatly in excess of what the evidence of damages or our other underwriting information appears to justify. The principal goal of this stage in the process is to persuade the court that a mutual adjustment is needed, perhaps as an alternative to, and ideally before legal action and the other, more sordid, aspects of claim handling occur. In any case, the principal issues revolve around the evaluation of the demand in terms of how much payment, if any, should be made.

8. Claims Payment Process

The following steps define the claim process performed by the insurance firms by determining the payment of the compensations related to the insurance period: the claim which has emerged should be examined within the scope of the policy, claims that transactions are not possible should be explained to the related people in writing, the necessary institutions should be employed to determine issues requiring special expertise. If the transaction is finalized, it is necessary to be conscious of the time value of the money and to perform compensation payment on time. The number of claim services rendered by the insurance companies indicates the quality level of the risk selection at the time of the sale. It can be observed that the insurance companies closely approach the client during the loss, providing maximum moral support to the insured and paying as soon as possible in terms of increasing the risk of their size.

The insurance contract is actually realized and finalized with the payment of the claim. The payment of the claim, meaning the compensation of the damage, is the last part of the claim process. The realization of the claim payment process starts with the determination of the scope of the claim following the claim application, and continues with the subsequent negotiations, control, experts’ reports if necessary, etc. If the claim is realized, the claimant’s payment process begins, whether it be an individual or institutional claimant. The process of realizing the claim in a loss of damage varies in different legal systems and is usually regulated in the insurance contracts. If it is not stipulated, it is determined by the law or the customer’s demand. However, the claim payment process is shaped according to the conditions and features of insurance.

8.1. Payment Methods and Timelines

When a company has purchased business insurance cover and has suffered a financial loss covered under the policy, the company can proceed to make a claim for indemnity from the insurance company. The claims process typically involves several stages, including the submission of the claim by the insured, the appointment of a loss assessor (where necessary), investigation of the loss by the insurance company, assessment payment decision, and eventually, payout by the insurance company. If the claim is substantial, the appointment of a loss assessor may be advisable. An insured can choose to appoint a loss assessor of their choice and then negotiate with the insurance company over the settlement of a claim using the services of the loss assessor. Depending upon how serious the loss is, the insured may want to consult a loss assessor before submitting the claim or consent to the insurance company appointing a loss assessor to investigate and determine the losses with the insurance company.

9. Claim Denial and Dispute Resolution

9.2. Causes of Denial Claims are usually denied when insurers establish that the occurrence that caused the damage was excluded from coverage, was beyond the scope of the insurance policy, or was misdescribed in proposal forms and policy documents. Other causes of denial are the failure of the claimant to fulfill the terms and conditions of the contract such as the failure to give sufficient details of the event leading to the claim, underinsurance, and the non-payment of premium.

9.1. Introduction The majority of claims are settled satisfactorily; however, a small proportion is not settled for a number of reasons. These are usually the result of one or both parties, the insurer and the insured, claiming that the terms and conditions of the insurance contract have either been broken or have not been complied with. In these situations, the claim is either denied completely or proffered on a conditional basis; alternatively, a settlement is reached on a compromise basis. Where parties fail to arrive at a solution, dispute resolution procedures are put into place, usually resulting in forced settlements, surrender of policies for a return of unearned premium, arbitration, or litigation. The latter is often very costly and can stretch over a long period of time.

9.1. Reasons for Denial

HMOs face a greater number of rejected claims because they are more scrutinizing as one technique to reduce costs and utilization being utilized by managed care companies. Managed care companies have also been found to be more difficult to resolve because of the differences in authority between patient and provider. A managed care company owns the provider and the patient’s need and ability to search for another source of coverage may be limited. In fact, managed care plans’ denial of medical services has significant financial implications since denials of coverage (underutilization of coverage) are not backed up by a contract which requires a refund to the consumers, plans may fail to provide needed medical services.

When the claimant experiences denial or underpayment, the most frequent form of a problem, the result is dissatisfaction with the insurance company. The claimant’s dissatisfaction may be handled informally or they may seek to resolve the matter formally. Companies resolve most rejections or underpayments formally. Moreover, some are never resolved. When the reasons for the denial remain unexplained, the claimant may choose not to pursue the matter because of the costs of pursuing the appeal or litigation or the delay in time disadvantage that results from initiating such action. Nonetheless, in over 15% of the cases where the claimant received a denial or underpayment, the claimant pursued their claim through the appeals process.

10. Technology and Innovation in Claims Handling

Furthermore, technology and information systems are an integral part of the customer management strategies developed by insurance companies. In fact, creating and sharing data and information effectively and efficiently, both within the company and with the related actors of the value chain, is of central importance for companies in order to improve their competitiveness and enhance the customer experience.

Claims handling processes represent an area in which innovation and the use of new technology can make substantial improvements in terms of reducing operational costs, cutting down time lag, and increasing accuracy in operations. However, it should be noted that technology provides companies with the opportunity to optimize or automate the whole claims management process. It is assumed that customer interest would be taken into account willingly by the company only when the elements of goodwill increase on their part. In particular, when estimating, the use of image recognition technology techniques could be favored. This could be significant in the face of a considerable growth in the claims file. This, in fact, could affect the capacity of the professionals working in this field to examine the large quantity of cases to be analyzed.

10.1. Use of AI and Machine Learning

Guideline 2: With AI and machine-learning-driven object detection and entity extraction methods, insurance companies are able to achieve several milestones in the effective processing of claims. Several problems are solved, and they are segmentation, entity extraction, adjustment item reading, structure change detection, and template change detection. They can eliminate a lot of human work and increase the effectiveness of processing claims and keeping the fraud ratio at a minimum. Claims segmentation is the identification of the presence of documents in a given file. Most state insurance regulators require that an insurance company send an explanation following a notification of a claim to advise the insured of the rights and responsibilities concerning the claim settlement process. Claims entity extraction is a process very similar to segmentation; however, this is focused on knowledge about the presence of letters or notes. These files contain metadata about the claim items.

With AI and machine-learning-driven object detection and entity extraction, life and non-life insurers are able to eliminate a lot of human work and increase the effectiveness of processing claims and keeping the fraud ratio at a minimum. Deep learning methods are effective for pattern recognition. Various algorithms such as VGG-16, SSD, YOLO, and many others provide the ability to identify the most complex patterns. Besides, with these models, insurers can find which documents are missing and estimate claim reason.

11. Regulatory Compliance and Ethics in Claims Handling

The principle of fair claims handling comes into play when individual companies develop their general claims handling practices. This approach is a matter of the company’s goals of providing satisfactory service to its customers. These good faith standards apply to suits of the insurance code and obligate an insurance carrier to treat fairly its policyholders. In doing so, the company must make every effort to close the claim so that it operates on equal footing with the claimant. The company must also make sure that the actions it takes do not cause further harm to the policyholder. The claims industry has become more customer-oriented, striving to perform in an ethical, professional manner to maintain, or retain, its current customer base in addition to attracting new customers. These claims practices directly affect the claimant and policyholder and are frequently components of fair and unfair settlement practices act inquiries in the administration of claims handling.

Regulatory compliance and ethics play a vital role in claims handling. These principles are the framework under which a claims professional has to operate. It is essential for claims personnel, in all aspects of the claims function, to understand the importance of regulatory compliance. This understanding is essential to minimize the risk of violating state insurance regulations, which can result in heavy fines or the inability to operate in certain states or the inability to use some delivery systems. Compliance with state insurance regulations is not a gray area. It is black and white. Insurance regulations establish minimum standards set forth by the Department of Insurance in each state. However, each company, or the industry as a whole, can exceed the minimum standards legally. Each company must ensure that its current claims practices reflect the mandated state insurance regulations, policies, or procedures.

11.1. Legal and Ethical Considerations

All of these points, as well as the need for ethics, constitute the key to a good claims department. Claimants must be scrupulously dealt with in accordance with the policy contract. Not only is this a sharp application of the company in refusing to deal fairly with claimants, who could be their insureds someday, but also it is a basic point of self-interest. Unsatisfied claimants are more likely to challenge the corporation, thus preventing or at least postponing the importance of the claim. Moreover, the lawful and ethical treatment of claimants is just one part of a tangled web of social and professional responsibility that adds up to the corporate image and feels out its responsibility to the public. The claims person then must be a person of integrity, knowledge, compassion, and diplomacy. His actions in handling claims are also under the scrutiny of his fellow officers to fine-tune a product, which covers all the hazards, real and imagined, that the company can survive in its relationship with its policyholders.

The process of handling claims in insurance companies is often regulated by the laws of the state in which the particular insurer is doing business. Regulations may also come from the insurance department or superintendent of insurance of the state. Hence, the companies are required to keep records and maintain the claim handling system, which can be called by officers of the state department for examination at any time. Statutory limitations may be placed on the time within which claims must be settled. A claimant may have legal grounds on which to sue for an unsatisfactorily defensive position taken by an insurer. The one problem area is that of handling the subrogation interest of the company.

12. Challenges and Future Trends in Claims Handling

Handling firms are more and more adopted in the companies acting in the insurance market, representing support to the insurer in the events of claims. The handling firm is interested and aims that the insurance indemnity be processed more quickly, furthermore it gives the service to the market for companies with high volumes, especially those titled to the automakers, and also sees the settlement process as a business. Up to the present moment, the knowledge of the processes of a claim handled in the handling firm and at the insurance company are still scarce; for such reason the completion of this study is justified. It is observed that the handling firms offer wide protection for the insurance companies acting before, during and after the occurrence of the claim. Furthermore, they obtain indemnity from public or private companies that make the claim payment. Then, it is timely to investigate the activities developed by handling firms through studying the claim processing stages carried out in handling firms, once the attention of the handling firms in having the deadlines for settlement of the claims respected is under the control of an external company.

This paper overviews the information and notions that should be disclosed in the curriculum when teaching the course of Claims Handling of undergraduate and postgraduate courses at Rio Grande do Sul state educational institutions, or, for this matter, those from other Brazilian states. Knowing the contents within the subject of claims handling is important for adequate dissemination of knowledge, which in turn will result in the education of qualified undergraduate and postgraduate professionals. In the present situation, the market demands losses adjusted in a quicker time because the policyholder wishes that the insurance service be performed quickly, attending all the coverages already paid for in the insurance policy.

12.1. Fraud Detection and Prevention

Policyholders and third parties may cheat an insurance company by exaggerating the level of the costs they are going to claim. When the policyholders pay a lower premium, they take policies with lower limits: these limits are far below what could be claimed. With amounts lower than the limit, we do not need to check these values. They should represent the current market price of the objects. It is easier to claim lost or stolen things than others. The object was most likely not repaired or was already beyond repair. Apart from very expensive antiques, there are few manufacturers for these items. Their price is likely to be stable. Companies have to keep specific records, and wherever these products are distributed, it is necessary to pay attention. The previous suggestions are only stereotypes of fraud possibilities that insurance companies have to keep in mind all the time. Every case is different, but the fraudster uses the same method unless caught.

Fraud is a constant companion of insurance. Insurance companies pay significant amounts for fraud prevention and detection. Claims adjusters are responsible for the detection of such cases of fraud in their daily work. They should be experts in this domain. They have to deal with different people, and that makes things more complicated. A claim might not be a fraud, but a coincidence, a mistake, or a crime. Several crime types might occur as insurance fraud. We will briefly discuss some of these cases. There are many and various ways for policyholders, claimants, or third parties to commit insurance fraud. It is important that after a fraud is discovered in an insurance company, this information should be made known to all employees. They have to learn from others’ mistakes.

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