Claims processing is a complex function in insurance. This function has to deal with the entire life-cycle, from the filing of claims by a customer to acceptance or rejection of the claims.

As explained in an earlier section of the chapter, a claim is when an insured reaches out to the insurance company in event of a damage. For example, suppose my car met with an accident, then I would have to incur its repair costs. However, if I have a motor insurance policy which is active (not expired), then these costs can be claimed from the insurance company. The process of asking for this money is called a claim.

Every insurance company has a process for the claim. An example process is shown in the following diagram:

The process is as shown in diagram and starts when an insured submits a claim(the process will vary from company to company. It can be done via any of means which was explained in section where we looked at the ways an insurance company provides service and was depicted Claims process flow diagram. The supporting documents need to be added. The next step is taken by the insurance company, which is to evaluate the claim (it goes through various checks, such as validity of policy, exclusion checks, and other policy terms). If the claim passes these checks then the company may do a claim investigation. This may involve physical visit by an insurance company representative to check the damage or validate bills, or any similar activity depending on the type of insurance.

Fraud checks can also be carried out if the company is not convinced about the claim. After all these steps, the claim will either be accepted or rejected. If accepted, the claim payout is done by the insurance company. There could be cases wherein on claim rejection the insured may take legal option to pursue the rejection.