Operational and Actuarial Aspects of TakafulClaims Management

Sub TopicsImportance of Good Claims ManagementFamily TakafulGeneral TakafulThird Party Claims AssistanceClaims Disputes

ImportanceA claim can be defined as a ‘request for

reimbursement filed by the insured and addressed to the operator’

Claim is the ultimate test of responsibility of the takaful operator to compensate the economic loss of the participant as promptly and fairly as possible

Usually administered by the insurer’s claims department, however it may also involve adjusters, and third party administrators

ImportanceNeed to be efficient and effective as it has

marketing repercussions. Good claim services contributes to good image and better competitive position

Claims processing differ according to:a. type of cover, b. the amount of claim, and c. whether it is a personal or commercial claim;

Takaful operators have the right to safeguard its role as the trustee of the takaful fund by ensuring that all claims are genuine

RegulationsGeneral Takaful – JPIT3Family Takaful - No specific guideline but

embedded in prudential risk management framework and product guidelines and circular

Guidelines on claims settlement practices aim to:

a. improve claims processing,b. fraud control andc. risk management measures.

Claims Processing – In GeneralGeneral procedure for claim applicable to

all classes of family and general takaful plans :Check the policy or certificateNotify the takaful operatorProvide complete and correct information Keep copies of all documentsCommunicate frequently

Family Takaful ClaimsDeath claims:

Proof of deathProof of ageProof of title and ownership

Family Takaful ClaimsMaturity claims

To settle a maturity claim, a participant is usually required to provide the following proof of claims: If the participant is the insured

- Proof of age

- Proof of survival

- The original policy certificate

- Completed discharge voucher If the participant is not the insured

- a deed of assignment- a statement by the insured proving that he/she is

alive and is unable or not available to sign the survival certificate

Family Takaful ClaimsFor endowment policies, operators would normally

incorporate common settlement options such as:Cash proceedsConversion to annuityLeave maturity proceeds to the operator

Personal Accident, Sickness or Disability Benefit ClaimsFor the above stated claims, the participant must prove

to the satisfaction of the operator and comply with all other conditions of the contract ; for personal accident policies the doctorine of proximate cause is important;

Family Takaful ClaimsIt is customery for operators to issue form so as

to elicit information about the accidents and validation of all the documents given ; among the documents required for personal accident claims includes :

Medical leave chit

Medical report

Salary slip

Photographs depicting injury sustained

General Takaful ClaimsThe general procedures for claim applicable to all

classes of general takaful plan is as follows :

Notice of claim

Make a police report

Proof of loss

Investigation

Settlement of a claim

General Takaful ClaimsThe general procedures for claim applicable to all

classes of general takaful plan is as follows :

Notice of claim

Make a police report

Proof of loss

Investigation

Settlement of a claim

General Motor Takaful ClaimsClaims under motor takaful may arise under:

Own Damage Claims Partial Loss Total Loss Theft Windscreen

Lialbility to Third Party

Damage to property belonging to third party

Death and/ or bodily injury to third party

General Motor Takaful ClaimsProcessing of claims for Partial/Total Loss

Documents to be submitted are:

Claim form

Police report

Estimate of repairs

Copies of identification card and driving license

Copies of the registration card and road tax of the vehicle

General Motor Takaful ClaimsAppointment of adjuster

Approval

Reinspection

Discharge

Payment

General Motor Takaful ClaimsProcessing of Claims for windscreen

- claim form

- Copy of the participant’s identification card;

- Photographs of the damaged windscreen;

- The bill for replacement of the damaged windscreen

General Motor Takaful ClaimsThird Party

- operator liable only to indemnify against liability to third party ;

- liability to third party should be viewed strictly from the provision of the law;

- offer for settlement made directly to claimant;

- proper discharge must be obtained from the claimant ;

- liability of the participant can only be determined by the court ;

- panel lawyers can be appointed if deemed necessary

Loss AdjustersInvestigates and evaluates damages

independentlyAssess liability and quantum payable by

the takaful operator Communicating with participants,

claimants, beneficiaries, public authorities and others such as witnesses.

Negotiate with contractors on time and cost of repairs for the purpose of making an offer of settlement to the participant.

Protect the interest of the takaful fund when dealing with claimants

Claims DisputeWhen a dispute arises, it may be resolved

through the following channels :Negotiation – ex gratiaLitigationArbitrationMediation

Financial Mediation Bureau