OVERVIEW OF THE UNDERWRITING PROCESS
In general, a claim is a defined event and as such all terms and conditions are defined in the policy, whether it is for individual or group business.
Claims assessment strategy involves two processes, the investigation into the validity of the original proposal form and the assessment of the life office’s liability under the contract.
The principles outlined in this document apply to individual business.
Objective of claims management
The overall objective of claims management is to manage risk. Risk management philosophies will vary from insurer to insurer as the product design and overall pricing will determine the risk the company is willing to accept.
While it is the business of insurers to pay valid claims, the life industry also needs to protect itself against anti-selection and/or fraud from policyholders and beneficiaries or other parties.
Communication between insurer and client should be transparent, which means clear and precise reasons should be communicated to the client – especially when a claim is repudiated. With open and transparent communication many misunderstandings can be avoided and/or misperceptions cleared this way.
Major influences on claims practice
Apart from aspects specific to each claim and policy conditions, claims practices are also influenced by:
- Insurance regulators and Ombudsman
- Prudential Authority
- Financial Services Conduct Authority
- FAIS Ombudsman
- Long-term Insurance Ombudsman
- Pension Fund Adjudicator
- The courts
With insurance policies, as with any other types of contracts, disputes may arise over interpretation of contract language or a given set of facts. Although every case with a dispute does not reach the courts and/or Ombudsman, those that do may constitute a very important influence on claim decisions in the future by resulting in precedent setting rulings.
The general public through various consumer associations
Although additional business may be generated among existing policyholders, the market for new customers consists of members of the public who are not currently policyholders. The insurer, therefore, needs to consider the image it presents to the general public.
Premiums from different types of product offerings account for a large portion of an insurer’s income, from which policy benefits are paid. Claim practices that are too liberal therefore hold financial implications for an insurer and potentially its policy holders in the form of increased premium rates.
The claim area delivers the promises that the intermediary has sold to the policyholder. Where a claim is denied, intermediaries are often the ones that bear the brunt of dissatisfaction from claimants. Feedback from intermediaries is therefore vital for identifying claim practices and processes that are more supportive of the distribution force in their interactions with claimants.
All these influences can exist simultaneously. How each company reacts to these influences and/or the weight ascribed to each, results in what the company decides to be prudent to their own claims philosophy. (All companies have the accountability to ensure that intermediaries who market their respective products are adequately trained and accredited to sell their products.)
Standard claim requirements
Prescribing standard requirements for the industry is not practical as products are not always the same even though they may appear to be. In addition, each company follows different claims procedures like whether they are willing to accept an original photocopy or fax version of a requirement. The following are basic requirements for different claim events but are not restricted to these:
Death – natural
Original certified copy of death certificate.
Original certified copy of ID of deceased.
Original certified copy of ID of claimant.
Death claim forms
Medical evidence if a policy is in force for less than three – five years (varies from life company to life company).
Death – unnatural
In addition to the above requirements:
- Police report
- Post mortem report
- Full inquest proceedings plus all statements and other evidence
- Proof of the full verdict in case of murder
- Disability type benefit
- Original certified copy of ID
- Proof of income prior to claim (example IRP5)
- Disability claim forms including all supporting substantive medical evidence obtained from treating doctors and/or specialists
- Job description from employer
- Dread disease (also known as critical illness or trauma cover)
- Original certified copy of ID
- Dread disease claim forms including all supporting substantive medical evidence obtained from treating doctors and/or specialists and test results, e.g. histology report.
In the case of retrenchment benefits, proof of employment and retrenchment from employer will be required.
Additional claim requirements
Even though there are standard claim requirements, each claim will ultimately dictate the requirements to assess the validity of the case. For example, even though standard requirements for a death claim is a death certificate, ID and where necessary a police report, it could be that the member died in a foreign country and therefore additional evidence would be required in terms of identifying the body. Other examples of requirements but not limited to these could be:
BI 1663: Notification of death (page 1)
Identification of body at SAPS
In the event where the deceased’s body cannot be found, a legal process needs to be followed where the court will issue a presumption of death order.